A recent Fifth Circuit Court of Appeals decision involved the intersection of federal bankruptcy law and Texas law regarding ownership of a life insurance policy. The court determined that the insured and the beneficiaries of life-insurance policies can claim the cash surrender value of those policies as exempt. The claimed bankruptcy exemption for life insurance policies The Gordons, after filing for Chapter 7 bankruptcy, sought to exempt the surrender value of two life-insurance policies under Texas state law. The Trustee of their bankruptcy estate contested this exemption. His argument hing ..read more

In a very recent decision, the Fifth Circuit Court of Appeals affirmed a federal magistrate judge’s decision to deny life insurance benefits. The life insurance company claimed it was proper to deny the life insurance benefits to a widow, because her husband had misrepresented his smoking history on the life insurance application. After a bench trial the magistrate agreed and the court of appeals affirmed the denial decision. Mirna Guzman filed a lawsuit against Allstate over a life insurance policy of $250,000 bought by her late husband, Saul Guzman. In his life insurance application Mr. Guzm ..read more

Life insurance lawyer I handle a lot of life insurance cases.  Primarily in Texas, but at times in other states as well.  Life insurance beneficiary disputes make up half or more of my caseload.  Because I handle them so often, I have a good feel for not only the law but also the strategy of litigating and resolve the disputes.  Also, after a dozen years I have a good idea of which cases are strong and which have significant problems, either factually or legally.  I do take some difficult cases, but craft a strategy to maximize the result. Can a lawyer who does not rou ..read more

Understanding the Texas Slayer Statute Public policy obviously does not reward unjustified killing.  What happens to the life insurance proceeds if the beneficiary is a murderer? Fortunately, Texas has a law that addresses this issue. The Texas Slayer Statute, also known as the Slayer Rule, prohibits a killer from receiving benefits from life insurance proceeds. If the rule is an issue in a life insurance beneficiary interpleader, it is important to understand what the Texas Slayer Statute is, who is considered a slayer, what happens to insurance proceeds under the Slayer Rule, and how th ..read more

In In Re Richardson, the El Paso Court of appeals upheld a trial court’s order of contempt. A former husband was found in contempt for failing to comply with the divorce court’s judgment that he maintain a life insurance policy, with his former wife as the beneficiary for the benefit of their children. This obligation remained in effect so long as he owed child support payments. Summary of the Life Insurance Dispute Thomas Richardson and Julie Richardson were involved in a dispute over debts and assets from their marriage. . The court also required Thomas to maintain a life insurance policy fo ..read more

In a decision issued today, the Texas Supreme Court affirmed that the intent to deceive standard is still the law in Texas. I had written about the intent to deceive standard previously. Essentially, a life insurance company cannot deny payment on a claim because of a misrepresentation on a policy application, unless it can prove the applicant intended to deceive the life insurance company. The case is American National Insurance Company v. Arce. The court summarized the issue and opinion as: For more than a century, Texas courts have applied the settled rule that insurers may not avoid liab ..read more

We routinely handle life insurance beneficiary interpleader cases for clients. A life insurance company files an interpleader lawsuit when there are competing claims to life insurance benefits. Sometimes, the cases can be resolved by settlement during the court process. If the parties can not resolve the case by settlement, the court has to decide. Several years ago we represented a group of people who had been designated beneficiaries of a life insurance policy. The owner of the policy was suffering from cancer and designated our clients as the beneficiaries over a week before she died. Her h ..read more

Primerica v. Cruz, et al is a recent decision in a life insurance beneficiary interpleader case from the North District of Texas. The case involved a dispute over life insurance proceeds for a policy issued by Primerica to Patrick McClevland. The policy named Takeya Cruz as the primary beneficiary and Jennifer Mathis as the contingent beneficiary. McClevland died on September 8, 2020, and all three defendants, including Candice Exsentico, made separate claims on the policy proceeds. Primerica filed for interpleader, stating that it had no interest in the proceeds other than fulfilling its cont ..read more

Many people obtain life insurance through their employer.  If it is through a private employer, the life insurance benefits are governed by a federal law: the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA. One of the key provisions of ERISA is its preemption clause. ERISA preempts state laws that relate to employee benefit plans. This preemption includes those state law related to community property interests. Texas is a state that recognizes community property rights In Texas, property acquired during a marriage is considered community property, which mea ..read more

One common issue that I often encounter is a disagreement about whether a former spouse is entitled to receive life insurance benefits. A typical scenario is that a married couple buys life insurance and designates each other as the beneficiary. But when they get divorced, they forget to update the beneficiary designation. The first question I ask is whether the policy is governed by state or federal law? To determine this, I examine where the policy was purchased. If it was purchased individually through an agent or an online resource, the policy is usually governed by state law. However, if ..read more