Other Matters

Divorce and Beneficiary Designations

Texas Interpretation of Egelhoff

Weaver v. Keen, 43 S.W.3d 537 (Tex. App.—Waco 2001), affirmed on other grounds, Keen v. Weaver,
121 S.W.3d 721 (Tex. 2003).


Husband named Wife as the beneficiary of his annuity plan which was governed by ERISA. Husband died 13 years after divorcing Wife without changing the beneficiary designation. Relying on the beneficiary designation, the annuity company began paying Wife. Husband’s Mother, the contingent beneficiary, claimed the proceeds. The trial court rejected Mother’s claim and held that Wife was entitled to the proceeds.

The appellate court first heard this case before the United States Supreme Court decided Egelhoff v. Egelhoff, 121 S. Ct. 1322 (2001), in which the Court held that a Washington statute voiding the designation of an ex-spouse as the beneficiary of a pension plan was preempted by ERISA. The Texas court, following earlier Texas cases, held that the Texas redesignation statute (Family Code § 9.302) applied as federal common law and thus prevents Wife, a former spouse, from receiving the annuity benefits governed by ERISA absent an alternate designation.

The court then reviewed its decision after the Supreme Court handed down the Egelhoff decision. The court determined that its prior analysis was consistent with Egelhoff. First, the court discussed how its original decision indicated that ERISA preempts Texas law. The court then examined ERISA which is silent about the effect of divorce and concluded that it was justified in determining that federal common law included the automatic voiding of the designation of an ex-spouse as a beneficiary. The court also believed that the facts showed that Wife had waived her rights to the proceeds.

Moral: Despite the holding in this case, designations of beneficiaries on plans governed by ERISA should be promptly changed upon divorce.