Honorable Mortimer Brown
Exeoutive Seoretery
Teacher Retirement System of Texas
Austin, Texas
Dear Sir: Opinion No. O-9907
Re: Return of accumulated oontributiqns
upon~ death of member of Teacher
Retirement System under will, when
named beneficiary predeceases
member and when funds still in
custody of System at death of
beneficiary.
We are in receipt of your reoent request for an opinion by
this department in whioh you present the following state of
facts:
Edith Sparra and Annie Katherine Sparra,, sisters, were members
of the Teachers Retirement System of Texas and on forms pro-
vided for that purposes each designated the other as benefici-
ary to receive the return of their respective aocumulated con-
tributions in case of death before retirement. While her
designation was outstanding, Edith Sparra died on September 18,
1940. On September SL, 1940, Annie Katherine Sparra made the
following will:
"I bequeathe all of my earthly goods to Mrs. ,Karen
Sparra Rogers."
Before the accumulated contributions of Edith Sparra, deceased,
could be paid to Annie Katherine Sparra, the beneficiary,
Annie Sparra died on October 14, 1940, and the above quoted
will was duly proved and admitted to probate. The designation
of benafioiary of Annie Katherine Sparra, which is still on
file in your office, names Edith Sparra as beneficiary and
has not been ohanged unless the above quoted will disposes
of the accumulated contributions.
The printed form for designation of beneficiary used by your
office and which was signed by each of the deceased members in
question contains the following language8
"Should the beneficiary named above die before me and I
Honorable Mortimer Brown, page 2, O-2907
fail to name another, it is understood that my accumulated
contributions shall be paid as provided by the laws of
descent and distribution of Texas.”
Your letter continues as follows:
?Ihe question of whether or not the exeoution of this will
on September 21 (three days after the death of Edith
Sparrs) could be interpreted as naming another beneficiary
to receive the return of the acoumulated oontributions is
a point of concern to this office.
“1 . Is the Teacher Retirement System correot in the
assumption that the aocumulated oontributlons of Edith
Sparra, deceased, should be paid to Mrs. Karen Sparra
Rogers?
“2. Would the Teacher Retirement System of Texas be acting
in accordance with the law and be protected against any
further claim in regard to the accumulated contributions
of Annie Katherine Sparra, deceased, if the accumulated
contributions of Annie Katherine Sparra, deceased, were
paid to Mrs. Karen Sparra Rogers?
“3. If your answer to Question No. 2 is in the negative,
how should the accumulated contributions of Annie Katherine
Sparra, deceased, be handled?”
It is our opinion that you are correct in your assumption that the
accumulated oontributions of Edith Sparra, de.ceased, should be
paid to Mrs. Karen Sparra Rogers under the will of Annie Katherine
Sparra.
Section 5, Subsection 6, of the Teacher Retirement Act (S.B.47,
45th Leg.) contains the following provision:
“Should a member die before retirement, the amount of
his accumulated contributions standing to the credit of
his individual account shall be paid as provided by the
laws of descent and distribution of Texas unless he has
directed the acount to be paid otherwise.”
Edith Sparra has directed that her account be paid to her sister
Annie Katherine Sparra. U on the death of Edith Sparra, her
living beneficiary, Annie Ratherine Sparra, became entitled to
the accumulated contributions of her sister under the express
terms of the designation on file in your offioe. (See Opinion
O-2009, rendered to your department on March 20, 1940). The
interest of the designated beneficiary vested upon the death
of the member and the fact that payment had not been completed
prior to the death of such beneficiary would not defeat her
interest in the fund but the same would be subject to disposi-
tion as other property in her estate. (Further discussion and
i- .?
‘*
Honorable Mortimer Brown, page 3, O-2907
citation may be found in Opinion No. O-2009).
The section of the Retirement Act quoted above does not ax..
PresslY require any particular form or method for designating
a "beneficiary It bUt merely provides that upon the death of the
member his accumulated contributions shall be paid as provided
bY the laws of descent end distribution"unless he has directed
the acoount to be paid otherwise." Although there will ne-
cessarily be some question upon this point until the courts
have passed Upon the issue, it is our opinion, that when a
beneficiary has not been otherwise designated, or other direc-
tion given to pay the account, the accumulated contributions
standing in the account of the member may be disposed of bY
will. Former opinions by this department have never specifi-
cally decided this point.but various expressions therein would
seem to support 'this proposition. In certain types of designa-
tions of bene,fi&iaries in life insurance, it has been held that
the beneficiary acquires a vested interest in the proceeds of
the policy prior to the death of the insured, which rule is
based upon contract or applic,able statutes. 29 Am. Jur. p.
948 et seq; 14 R. C. L. p. 1378 et seq. In other cases the
beneficiary is held to have a mere expectency. In the case of
wills, if a devisee or legatee predeceases the testator the
gift as to him is deemed to have failed or lapsed. 44 Tex.
Jur. p* 805, S 237. The provision in the Act in question
authorizing a member to direct the payment of his accumulated
contributions, does not, in our opinion, contemplate that the
mere naming of a person to take the fund upon the death of the
member, should create a presently vested right in the so-called
beneficiary. In support of this conclusion we refer to Opinion
NO. O-129, Conference Opinion No. 3055, written by the presen,t
Chief Justice of the Texas Supreme Court wherein it is stated:
"With respect to the provision of the Act which declares
that a member while living may appoint in writing a
person to receive at the death of the member the residue
of his or her benefits, whether called oReturned Contri-
butlons,r PRetirement Benefitsr or PAnnUity,r it is to
be noted that such appointment does not give to the
appointee any present interest ln such benefits during
the life of the member. As to such appointee the title to
such residue does not ves% absolutely until tlhe.death of
the member. Of such an appointment is made, however, and
it is not subsequently revoked by the member, it would
entitle the appointee to receive suchresidue of the
mamberts benefits for the reason that this Act specifi-
cally so provides. In this respect the statute is similar
to the provisions usually contained in ordinary life
insurance policies, which authorize the insured to appoint,
in writing, a substitute beneficiary. Such an appointment,
as provided for in this Act, it is believed, maY be re-
called or revoked by the member."
Honorable Mortimer Brown, page 4, O-2907
The language quoted above from the designation of beneficiary
form, to which you call our attention, is susceptible to the
construction that it is a further or substitute designation
of the heirs, in the event the person named therein dies
before the member. Upon consideration of the form as a whole,
however, and its reference to the statute, we think this is not
the true purpose of the language. It apparently recognizes a
lapse of the designation in the event the beneficiary prede-
ceases the member and is intended to refer back to the statute
with then understanding that unless the member gives further
direction, the accumulations will be paid under the laws of
descent and distribution as provided in the Act.
It is our opinion that when the designated benefioiary of
Edith Sparra predeceased her, suoh designation failed and
lapsed, snd that the subsequent will of Annie Katherine Sparra
leaving all her earthly goods to Mrs. Karen Sparra Rogers, with
no other direction or designation outstanding, was a suffiaient
direction to pay her accumulated oontributions within the terms
of the statute. It follows that in our opinion you may pay to
Mrs. Karen Sparra Rogers the accumulated aontributions of
Annie Katherine Sparra and Edith Sparra, both deceased.
In view of the foregoing, your third question does not require
an answer.
Yours very truly
ATTORR'EYGENERALOF TEXAS
s/ Cecil C. Cammack
BY
Cecil C. CammaOk
Assistant
CCCnEP/og
APPROVEDDEC. 18, 1940
s/ Gerald C. Mann
ATTORNEYGENERALOF TEXAS
Approved Opinion Committee
By BWB, Chairman