## Facts

- In January 2000, Mark Wallace Dixson (Mark) and Tammie Sue Dixson (Tammie) married.
- During the marriage, Mark obtained a $300,000 annual renewable term life insurance policy from Banner Life Insurance Company (Banner Life).
- Premiums were initially paid with community funds, and Tammie was designated as the sole beneficiary.
- In 2003, Mark was diagnosed with a serious illness. As his condition worsened, the couple could no longer afford the premiums.
- A third party who served as the couple’s spiritual advisor paid the policy premiums in 2005 and 2006.
- In 2005, Mark changed the policy’s primary beneficiary from Tammie to his mother, Jackie Young.
- Mark also filed for divorce from Tammie. The divorce case remained pending when Mark later died in 2006.
- In 2006, through an attorney, Mark again changed the policy’s beneficiaries, naming Jackie as the primary beneficiary and his six children as contingent beneficiaries.
- After Mark’s death, Tammie and the Mark Wallace Dixson Irrevocable Trust asserted competing claims to the policy proceeds.
- The Trust contended the proceeds were Mark’s separate property, arguing the last premium was paid with funds gifted only to Mark.
- Banner Life filed an interpleader action to resolve the competing claims. The district court granted summary judgment in favor of the Trust, and Tammie appealed.

## Issues

1. Whether a term life insurance policy obtained during marriage and paid for with community funds (at least initially) is community property, even if later premiums are paid by a third party and characterized as a gift to the insured spouse.
2. Whether the insured spouse’s unilateral beneficiary changes can defeat the noninsured spouse’s one-half community property interest in the policy proceeds.
3. Whether Idaho Code § 41-1830, which favored life insurance made payable to a “married woman,” violates the Equal Protection Clause.

## Decision

- The Idaho Supreme Court reversed the district court’s summary judgment awarding the proceeds to the Trust and remanded for further proceedings consistent with its opinion.
- The Court held that the policy and its proceeds were community property to the extent acquired and maintained with community funds, and that later payments from another source did not erase the community’s existing interest.
- The Court held that Mark’s beneficiary changes could not dispose of Tammie’s one-half community interest; Mark could direct only his share to other beneficiaries.
- The Court agreed that Idaho Code § 41-1830 is unconstitutional because it discriminates based on sex and fails Equal Protection review.

## Legal Principles

- Property acquired during marriage is presumed to be community property; this presumption applies to life insurance obtained and paid for with community funds.
- A later premium payment from a different source does not automatically convert a community-funded policy into separate property; community and separate contributions may create proportional interests rather than a complete change in character.
- A spouse may make a beneficiary designation that affects only that spouse’s share of community property; one spouse cannot unilaterally transfer the other spouse’s one-half community interest to a third party.
- A statute that, on its face, treats men and women differently is subject to heightened Equal Protection review; a gender-based preference for “married women” as life-insurance beneficiaries is unconstitutional absent a sufficiently strong justification.

## Conclusion

The Idaho Supreme Court held that a term life policy obtained during marriage and funded with community money created a community property interest in the proceeds that was not eliminated by later third-party premium payments described as a gift to the insured. Because the insured spouse’s beneficiary changes could not divest the noninsured spouse’s one-half community interest, the summary judgment awarding the proceeds to the Trust was reversed and the case remanded for allocation consistent with community property rules. The Court also held Idaho Code § 41-1830 unconstitutional under the Equal Protection Clause.


Banner Life Insurance Co. v. Mark Wallace Dixson Irrevocable Trust, 206 P.3d 481 (2009)