After going wrapping up the divorce and property division process years ago, you might assume you had settled all matters with your ex.
However, after filing an insurance claim, you may find out that half of all of the proceeds may go to your former spouse. Is this legal? Unfortunately, per state law, it is.
Allocating insurance benefits in divorce
According to Texas law, the courts should divide or award the rights of insurance policies and/or benefits in a dissolution of marriage. However, if the courts do not do this for whatever reason, the policy will remain in effect until it expires. If the policy in question expires after you and your spouse finalize your divorce, there is a good chance that all or part of your claims money will go to your former spouse. In fact, the insurer is legally obligated to pay the proceeds of a valid claim in the following ways:
- To your former spouse, if the courts awarded the interest in the insured property to him or her
- To you and your former spouse in proportion to the interest the courts awarded each of you in the insured property
- To your former spouse, if the policy names a beneficiary who is directly related to him or her
- To you, if the policy names a beneficiary who is directly related to you
Paying claims as the policy dictates
If you or your former spouse failed to modify the endorsements on one or several policies to reflect your current situations and wishes, you may be out of luck if you attempt to change the policy after you file a claim. Insurance companies have a legal obligation to pay the proceeds of a claim in accordance with the policy.
It is easy to overlook certain issues, such as beneficiary designations, in divorce. Yet, oversights may prove costly in the long run. You can avoid them by identifying and examining each and every one of your assets so that you do not miss any important details.