A killer can't inherit
Texas, like many other states, prohibits a killer from receiving life insurance proceeds or inheriting from an estate. Such prohibitions are commonly referenced as either a "slayer statute" or a "slayer rule." The public policy is obviously that a killer should not financially benefit from a death he or she willfully causes. Given the sizes of many estates and life insurance policies, such scenarios are unfortunately not uncommon. Certainly, investigators and prosecutor will look to whether insurance or estate proceeds might have provided motive for a particular murder. There have even been some notorious cases of people taking out life insurance policies on acquaintances and then killing them for profit. Texas has a slayer statute that specifically addresses life insurance proceeds, and a slayer rule by common law remedy that courts use for heirs and estate beneficiaries. The statutory prohibition against a killer inheriting as a life insurance beneficiary is found in both the Texas Estates Code and the Texas Insurance Code. Texas Estates Code, section 201.058(b) provides:
(b) If a beneficiary of a life insurance policy or contract is convicted and sentenced as a principal or accomplice in wilfully bringing about the death of the insured, the proceeds of the insurance policy or contract shall be paid in the manner provided by the Insurance Code.
Texas Insurance Code, Section 1103.151 provides:
A beneficiary of a life insurance policy or contract 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.
Texas Insurance Code, Section 1103.152 provides:
(a) Except as provided by Subsection (b), if a beneficiary of a life insurance policy or contract forfeits an interest in the policy or contract under Section 1103.151, a contingent beneficiary named by the insured in the policy or contract is entitled to receive the proceeds of the policy or contract.
(b) A contingent beneficiary is not entitled to receive the proceeds of a life insurance policy or contract if the contingent beneficiary forfeits an interest in the policy or contract under Section 1103.151.
(c) If there is not a contingent beneficiary entitled to receive the proceeds of a life insurance policy or contract under Subsection (a), the nearest relative of the insured is entitled to receive those proceeds.
These seem relatively straightforward, but still leave room for interpretation. The major difference between the two statutes is that the Estates Code references a "conviction" but the Insurance Code does not. Obviously, a murder conviction in a criminal case is presumptive in a civil case involving a forfeiture claim. But even if there is no conviction, or the conviction is for negligent homicide, a competing claimant can still attempt to convince a jury in a civil case that the purported beneficiary willfully caused the death of the insured.
Complicating issues that may arise include:
A claim that the killing was in self defense; or
A claim that the killer was insane and therefore the killing was not "wilfull"
One of the leading Texas cases was decided in 1949. In Greer v. Franklin, the Texas Supreme Court found:
“willfully” means something more than that the beneficiary shall have intended the death of the insured to result from his or her acts, and the fact of illegality must also be present, but the word does not mean in substance “maliciously”; and
where the beneficiary intends to kill insured and the killing is illegal, beneficiary loses his or her rights under the policy even though killing was done under the immediate influence of sudden and violent passion from an adequate cause.
Many life insurance policies are purchased as an employment benefit. Life insurance purchased through an employer is typically not governed by Texas law, but instead by a federal law commonly known as ERISA. Anyone dealing with a beneficiary dispute regarding an ERISA life insurance policy should take care to consult with a lawyer experienced in handling ERISA cases. ERISA does not have a specific slayer provision. However, federal courts commonly find as a matter of federal common law that a killer of the insured should not receive life insurance proceeds. Texas does not have a general statute specifically dealing with slayers in the estate context, except for parents who kill their children. However, numerous Texas cases have found such prohibition as a matter of common law. In situations where the designated beneficiary killed the insured, Courts in Texas have routinely imposed a constructive trust on the proceeds. A constructive trust is an equitable remedy used to prevent unjust enrichment. Older Texas cases have found specific elements that must be met before the remedy will be imposed. But in a recent case, the Texas Supreme Court noted that a constructive trust is a broad remedy that will be imposed in equity when the facts show it will do justice. Whether the issue is life insurance or an estate, it is important for the decedent's heirs or contingent beneficiaries to obtain legal counsel as soon as possible. Neither a court or an insurance company are usually going to take it upon themselves to deny payment to the killer beneficiary. It is necessary to alert the insurance company of a slayer statute issue or bring action in court to deny the killer proceeds from an estate. When alerted to a beneficiary dispute, the life insurance company will usually file an interpleader and ask a court to determine who receives the proceeds. Once it appears the slayer prohibition may apply, the next step is determining who is next in line to receive the insurance proceeds or estate assets. The insurance company does not just keep the money and the estate funds do not just escheat to the state. With life insurance proceeds, any contingent beneficiaries are first in line, then the "nearest relative." With an estate, the proceeds may go to a residuary beneficiary under a will or to the nearest heirs.