## Facts

- Christopher Barnett was employed for about eleven years and participated in an employer-provided, ERISA-governed group life-insurance plan; the employer changed carriers and policy terms multiple times.
- A Prudential term life policy became the operative coverage; premiums were paid by payroll deductions from Christopher’s wages during his marriage to Marleen Barnett.
- While divorce proceedings were pending, Christopher changed the policy beneficiary designation from Marleen to his estate and executed a will naming his mother, Dora Barnett, as executrix and principal beneficiary.
- Christopher died before the divorce was finalized; Prudential paid roughly $170,000 in benefits to the estate pursuant to the plan documents, and the proceeds were distributed primarily to Dora and other recipients.
- Marleen sued the estate and Dora, asserting that the policy was community property and that the beneficiary change constituted fraud on the community; she sought a constructive trust over one-half of the proceeds.
- The trial court held ERISA preempted Marleen’s claims; the court of appeals reversed and allowed recovery; the Texas Supreme Court granted review.

## Issues

1. Whether the Prudential life-insurance policy obtained through an ERISA employee benefit plan was community property under Texas law.
2. If the policy was community property, whether ERISA preempted the surviving spouse’s state-law claims seeking fraud-on-the-community relief and a constructive trust over plan proceeds paid under the plan’s beneficiary designation.

## Decision

- The court held the Prudential policy was community property because premiums were paid from Christopher’s earnings during marriage.
- The court held ERISA preempted Marleen’s claims for constructive fraud on the community and imposition of a constructive trust on the ERISA plan proceeds.
- The court reversed the court of appeals to eliminate Marleen’s recovery of the policy proceeds on those theories, otherwise affirmed in part, and remanded for further proceedings consistent with its opinion.

## Legal Principles

- Under Texas law, an insurance policy acquired during marriage and paid with community funds (including wages earned during marriage) is generally community property.
- ERISA preempts state laws and state-law causes of action that “relate to” an employee benefit plan when they would alter, supplement, or interfere with plan administration or the plan’s written beneficiary designation.
- State-law remedies (including constructive trust and fraud-on-the-community theories) are preempted when used to redirect ERISA plan benefits away from the recipient determined by plan documents, because they conflict with ERISA’s uniform plan-administration scheme.

## Conclusion

The court recognized the life-insurance policy as community property but held that ERISA barred the surviving spouse from using state-law fraud-on-the-community and constructive-trust remedies to recapture plan proceeds paid according to the plan’s beneficiary designation.


Barnett v. Barnett, 67 S.W.3d 107 (Tex. 2001)