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
