## Facts

- Kathleen Haley and Stephen D. Schleis married in 1975.
- During the marriage, Schleis obtained two employer-provided group term life-insurance policies and named Haley as the beneficiary.
- The premiums were paid with community property during the marriage.
- Schleis and Haley divorced on November 6, 1979.
- The divorce decree awarded Schleis “all the personal property in his possession at the time of the divorce,” and did not specifically address the life-insurance policies or beneficiary designations.
- The policies were term insurance, and the coverage purchased with the community-funded premium payments ended shortly after the divorce.
- Schleis died in 1980, and a dispute arose over whether Haley (as the named beneficiary) or Schleis’s estate should receive the death benefits.
- The personal representative of the estate moved for summary judgment, arguing that (1) Schleis had executed a beneficiary designation for only one of the policies and (2) the divorce decree’s award of personal property to Schleis divested Haley of any right to the proceeds.
- Haley also moved for summary judgment, claiming the proceeds as the named beneficiary.
- The district court granted summary judgment for the estate, finding no genuine issues of material fact; Haley appealed.

## Issues

1. Whether a divorce decree automatically terminates an ex-spouse’s status as the named beneficiary of a life-insurance policy when the decree generally awards the insured spouse “all personal property in his possession” but does not expressly dispose of the policy or beneficiary rights.
2. Whether the estate was entitled to summary judgment based on the claim that only one beneficiary designation existed for two employer group term life-insurance policies.

## Decision

- The Supreme Court of New Mexico reversed the grant of summary judgment for the estate.
- The court held that a divorce decree does not automatically sever an ex-spouse’s beneficiary interest in a life-insurance policy.
- The court concluded that the decree’s general award of personal property to Schleis did not, by itself, eliminate Haley’s beneficiary status because the decree did not specifically address the insurance policies or beneficiary rights.
- The court rejected the estate’s argument that the absence of a separate beneficiary form for the second policy established, as a matter of law, that the second policy’s proceeds belonged to the estate, given evidence that the employer required only one designation unless different beneficiaries were intended.
- The case was returned to the trial court for further proceedings consistent with the reversal.

## Legal Principles

- Divorce alone does not revoke a beneficiary designation on a life-insurance policy; termination requires a valid change of beneficiary or a divorce decree that specifically disposes of the policy or beneficiary rights in a way that conflicts with the designation.
- A divorce decree may defeat an ex-spouse’s claim to life-insurance proceeds when the decree specifically awards or disposes of the policy itself or clearly allocates the proceeds or beneficiary rights.
- A general award of “personal property in [a party’s] possession,” without express treatment of insurance policies or beneficiary designations, does not automatically divest an ex-spouse of beneficiary status.
- With term life insurance paid from community property, any community-property interest tied to the purchased term of coverage can end when that term ends; an ex-spouse may still claim proceeds based on beneficiary status, which is separate from ownership interests.
- Summary judgment is improper when the movant’s theories do not establish entitlement to judgment as a matter of law, including when employer administrative practices support competing conclusions about what a single beneficiary designation was intended to cover.

## Conclusion

The New Mexico Supreme Court reversed summary judgment for Schleis’s estate because the divorce decree’s general award of personal property to Schleis did not clearly dispose of the life-insurance beneficiary designations, and the estate’s reliance on a single beneficiary form for two group policies did not establish, as a matter of law, that the proceeds belonged to the estate rather than to Haley as the named beneficiary.


Matter of Estate of Schleis, 94 N.M. 561, 642 P.2d 164 (1982)