Surviving Spouse and Insurance Proceeds

Life insurance policy is separate property if purchased before marriage.  Under this circumstance, a surviving spouse is entitled only to a reimbursement of half the community funds used to pay the premiums during marriage.

If the policy was purchased during the marriage it is community property.  If this is the case and the deceased spouse named another besides surviving spouse as beneficiary, the deceased spouse effectively gifted the surviving spouse’s share of the asset outside the community.  That is a prima facie constructive fraud on the community.  It would then be up to the named beneficiary to show that deceased spouse provided for the surviving spouse with other assets to make up for that share of the policy proceeds.

Surviving Spouse’s first remedy is against deceased spouse’s estate.  If there are insufficient assets, surviving spouse can go directly after the named beneficiary. Be sure to notify the insurance company of a dispute so it won’t pay the named beneficiary.

Important to note that if deceased spouse purchased the policy through their employer, the beneficiary will note that ERISA preempts Texas law and normally the proceeds go to the named beneficiary