Texas: Beneficiary Disputes and Interpleader Under Texas Law

When Texas law decides the dispute

Texas law usually governs an individual life insurance policy or account when the owner lived in Texas or the contract says so. It often does not decide benefits under an employer plan covered by ERISA or under federal programs such as FEGLI, SGLI and the Thrift Savings Plan, where federal law sets who is paid. See federal programs before relying on any rule below.

Divorce and ex-spouse beneficiaries

Life insurance. If a divorce or annulment decree is rendered after the insured named the spouse as beneficiary of a policy in force at that time, the designation of the former spouse “is not effective” unless:¹

1. the decree designates the former spouse as the beneficiary;
2. the insured re-designates the former spouse after the decree; or
3. the former spouse is designated to receive the proceeds in trust for, on behalf of, or for the benefit of a child or a dependent of either former spouse.

The proceeds then go to the named alternative beneficiary or, if there is none, to the insured’s estate.¹

Retirement accounts and other financial plans. A parallel rule covers IRAs, employee stock option plans, stock options, and savings, bonus, profit-sharing and other employer or financial plans. If no alternative beneficiary is named, the benefits go to the designating former spouse, that is, the account holder. The rule does not apply to public retirement systems.¹

Insurer and payor protection. An insurer or plan that pays the former spouse anyway is liable to the rightful recipient only if, before paying, it received written notice at its home office from an interested person that the designation was not effective, and it had not interpleaded the proceeds into a court registry.¹ That is one reason Texas insurers interplead quickly once a dispute surfaces.

Wills, trusts and accounts. The Estates Code applies similar divorce rules to wills, to revocable trust provisions, and to multiple-party and pay-on-death accounts.²

Slayer rule

The Insurance Code says a beneficiary “forfeits the beneficiary’s interest in the policy or contract if the beneficiary is a principal or an accomplice in wilfully bringing about the death of the insured.” The money then goes to a contingent beneficiary or, if none, to the insured’s nearest relative.³ For other states, see the slayer rule guide.

In Symetra Life Ins. Co. v. Broderick (W.D. Tex. 2022), the insured’s husband, who the court’s report states killed her, never answered the interpleader, and the court entered default judgment for her mother, the contingent beneficiary, without reaching the merits.⁴

Simultaneous death and the 120-hour rule

Texas uses 120-hour survival rules. For life insurance, if the insured and the beneficiary die and there is no sufficient evidence that the beneficiary survived by 120 hours or more, the insured is treated as having survived the beneficiary. Heirs, devisees and contingent beneficiaries are subject to similar 120-hour rules.⁵

These rules do not apply where a will, trust, deed or insurance contract provides otherwise, so read the policy’s survivorship clause first.⁵ See simultaneous death.

Community property

Texas is a community property state. Property acquired by either spouse during marriage, other than separate property, is community property, and property possessed during or on dissolution of marriage is presumed to be community property. A spouse claiming separate property must prove it by clear and convincing evidence.⁶ The Estates Code addresses community life insurance proceeds where spouses die close in time.⁵

A surviving spouse may therefore claim a community share of a policy that names someone else, which is a frequent reason Texas insurers interplead. Federal programs can override such claims; see Wissner v. Wissner. So can ERISA: in Barnett v. Barnett, the Texas Supreme Court held that although an ERISA life policy bought during the marriage was community property, ERISA preempted the wife’s claims for constructive fraud on the community and a constructive trust over the proceeds.⁷ Federal courts in other community property states agree; see Sun Life v. Estate of Wheeler (W.D. Wash. 2020).

In Aetna v. Vacknitz (S.D. Tex. 2019), an ERISA plan case, the widow challenged an online change, made the night before the insured died, that named his former wife; she claimed he lacked capacity. Texas’s divorce statute would not have helped her, because it reaches only designations made before the decree,¹ and for an ERISA plan the plan documents control in any event. The insurer interpleaded about 15 months after the death, was discharged, and the claimants settled; final judgment came about seven months after the complaint, paying $25,000 of the $407,407.13 deposit to the widow and the rest, plus all accrued interest, to the former wife.⁸

How fast an insurer must pay, or interplead

Texas’s prompt-payment law treats a claim by a named beneficiary as a covered “claim.”⁹ In general, an insurer must acknowledge the claim within 15 days, accept or reject it within 15 business days after receiving everything it needs, and pay within five business days after accepting it.⁹

For disputed life insurance claims, the statute has a specific rule:

A life insurer that receives notice of an adverse, bona fide claim to all or part of the proceeds of the policy before the applicable payment deadline … shall pay the claim or properly file an interpleader action and tender the benefits into the registry of the court not later than the 90th day after the date the insurer receives all items, statements, and forms reasonably requested and required….

— Tex. Ins. Code § 542.058(c)

An insurer that misses that deadline owes damages under § 542.060 “until the claim is paid or an interpleader is properly filed”: interest on the claim at 18% a year plus reasonable and necessary attorney’s fees.⁹ Separately, interest on life insurance proceeds accrues from the date the insurer receives due proof of loss until it accepts the claim and offers to pay.³

Interpleader in Texas courts

In state court, Rule 43 of the Texas Rules of Civil Procedure allows interpleader when the plaintiff “is or may be exposed to double or multiple liability,” and the answer is due by 10:00 a.m. on the Monday after 20 days from service.¹⁰ Many Texas cases are filed in federal court instead; see statutory vs. Rule 22 interpleader and interpleader in state court.

Decisions

• Symetra Life Ins. Co. v. Broderick, No. 1:21-cv-00721-RP (W.D. Tex. July 27, 2022): default judgment for the contingent beneficiary against a primary beneficiary who never answered; “[w]hen only one of the claimants named in an interpleader action has answered, the court need not consider the merits.” Report and recommendation (PDF); default judgment (PDF).

• Athene Annuity & Life Co. v. Hernandez, No. 6:25-cv-00094-LS (W.D. Tex. Oct. 10, 2025): a default judgment, not a merits ruling. Three named beneficiaries of an annuity never answered, and the court ordered that they “take nothing from the disputed annuity contract proceeds,” so the surviving joint owner received the death benefit. The court had first denied his motion with leave to amend, observing that Rule 55 refers to a “plaintiff” and asking for authority for a defendant to take a default judgment against co-defendants. Default judgment (PDF); earlier order (PDF); summary.

• New York Life Ins. Co. v. Anderman, No. 4:25-cv-06165 (S.D. Tex. Apr. 27, 2026): a default judgment, not a merits ruling. A claimant named beneficiary of a policy and an annuity through changes made under a Louisiana power of attorney a week before the insured’s death never answered, and the court ordered that she “shall take nothing from the life insurance proceeds.” The son’s argument that the power of attorney did not let the agent name herself was never decided, and the order applies no state’s law. Default judgment (PDF); disbursement order; summary.

• Transamerica Life Ins. Co. v. Moore, No. 23-40375 (5th Cir. June 28, 2024): Fam. Code § 9.301 revoked a designation made before the marriage. govinfo.gov (PDF).

• Midland National Life Ins. Co. v. Santana-Ayala, No. 5:19-cv-00591-JKP (W.D. Tex. Jan. 2, 2020): a federal interpleader in which a spouse with a possible Texas community-property claim never answered. The court entered default judgment against that claimant, dismissed the insurer, and reduced the insurer’s requested fees, calling such awards “usually moderate.” govinfo.gov (PDF).

• Harris v. Wiggins (originally Primerica Life Ins. Co. v. Wiggins), No. 1:18-cv-00523-MAC (E.D. Tex. May 3, 2020): forgery, capacity and undue influence challenges to a late change of beneficiary failed on summary judgment. The court applied the Texas presumption of capacity and the three-part undue influence test from Rothermel v. Duncan, 369 S.W.2d 917 (Tex. 1963). Court order (PDF); summary.

• ReliaStar Life Ins. Co. v. Wiemer, No. 4:17-cv-00771 (E.D. Tex. Nov. 16, 2018; Apr. 3, 2019): a challenge to a late change of beneficiary settled with no ruling on capacity. The court paid out the fund by agreement and set up a trust for two minor children under Tex. Prop. Code § 142.005, but held it “lacked jurisdiction to approve the Settlement Agreement . . . as drafted” and later that its jurisdiction “extends only to the disposition of the Interpleaded Funds.” Opinion (PDF); later order (PDF); discussion.

• Metropolitan Life Ins. Co. v. Vasquez, No. 24-11024 (5th Cir. Oct. 1, 2025) (per curiam) (unpublished): a federal employee’s later beneficiary form, naming his widow, could not be located by the employer, which had on file only an earlier form naming his mother. A Fort Worth federal court held the later form ineffective without “indicia of receipt.” The Fifth Circuit reversed: under FEGLI a form is “received” when the insured hands it to an appropriate person at the employing office, and a supervisor’s testimony created a fact issue. The case later settled. Opinion (PDF); summary.

Related guides

• State law differences: compare Texas with Louisiana, California and other states.
• Divorce and beneficiary designations
• How a claim freezes payment
• The money: discharge, fees, and interest
• Glossary

Footnotes

1. Tex. Fam. Code §§ 9.301–9.302. Texas Constitution and Statutes. ↩ ↩² ↩³ ↩⁴ ↩⁵

2. Tex. Est. Code §§ 123.001, 123.052, 123.151. Texas Constitution and Statutes. ↩

3. Tex. Ins. Code §§ 1103.104, 1103.151–.152. Texas Constitution and Statutes. ↩ ↩²

4. Symetra Life Ins. Co. v. Broderick, No. 1:21-cv-00721-RP (W.D. Tex.), report and recommendation of the United States magistrate judge, ECF No. 20 (May 2, 2022), at 1–3, court order (PDF); order adopting report and recommendation, ECF No. 24 (July 27, 2022), court order (PDF); default judgment, ECF No. 25 (July 27, 2022), court judgment (PDF); amended order for disbursement, ECF No. 28 (Aug. 15, 2022); final judgment, ECF No. 29 (Oct. 11, 2022), court judgment (PDF). The discharge order is order granting interpleader relief and discharge, ECF No. 19 (May 2, 2022). ↩

5. Tex. Est. Code §§ 121.001, 121.052, 121.101–.102, 121.151, 121.153. Texas Constitution and Statutes. ↩ ↩² ↩³

6. Tex. Fam. Code §§ 3.001–3.003. Texas Constitution and Statutes. ↩

7. Barnett v. Barnett, 67 S.W.3d 107 (Tex. 2001). FindLaw (unofficial copy). ↩

8. Aetna Life Ins. Co. v. Vacknitz, No. 4:19-cv-01590 (S.D. Tex.): order granting interpleader and discharge, ECF No. 13 (Oct. 10, 2019); order of dismissal on announcement of settlement, ECF No. 17 (Oct. 29, 2019); final judgment, ECF No. 19 (Nov. 20, 2019), court judgment (PDF). The description of the claims comes from the case file, not from a ruling; no court decided capacity. ↩

9. Tex. Ins. Code §§ 542.051, 542.055–.058, 542.060 (§ 542.058(c) added in 2009 by S.B. 1812). Texas Constitution and Statutes. ↩ ↩² ↩³

10. Tex. R. Civ. P. 43, 99(b). Texas Judicial Branch. ↩