Free Case
Evaluation
Call Us 24/7!

Call Toll Free

888.895.1920

Who Gets the Cash Value of the Life Insurance Policy in a Divorce?

screen-shot-2016-11-18-at-2-40-45-pm

A life insurance policy is a contract between an insurance company and the insured. That being said, a life insurance policy is typically governed by contract law, making the waters of dividing up assets in a Texas divorce a bit murkier than usual. Generally, in Texas, any payments made to a life insurance policy premium during the marriage are considered to be community property. This means that upon divorce, the premium values can be split between the two spouses, leaving the policy proceeds still payable to the policy’s beneficiary. Additionally, designations of ex-spouses as policy beneficiaries are usually not effective in Texas without the filing of a post-divorce decree declaring the ex-spouse as beneficiary. Texas also follows a special (and sometimes frustrating) rule called the “inception of title” rule in classifying proceeds from a life insurance policy. Ownership of the life insurance policy is established by the source of the funds for the initial policy premium. If that premium was paid before marriage or with funds clearly traceable to separate property, the policy remains separate property even though some/all subsequent premiums are paid with community property funds (a.k.a. money or income made during the marriage). This means that the policy’s full value will go to the deceased spouse’s estate/beneficiary upon death. However, the community estate has a claim for reimbursement of the value of the policy that can be attributed to the payment of premiums with community funds.

Latest News

× CLOSE

Schedule a Consultation

Get In Touch With Us Today

× CLOSE

Timing is critical. Get answers Immediately.

Submit the form below - we'll contact you back instantly, for free.

  • This field is for validation purposes and should be left unchanged.
0
Connecting
Please wait...
Send a message

Sorry, we aren't online at the moment. Leave a message.

Your name
* Email
* Describe your issue
Login now

Need more help? Save time by starting your support request online.

Your name
* Email
* Describe your issue
We're online!
Feedback

Help us help you better! Feel free to leave us any additional feedback.

How do you rate our support?