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Beneficiary disputes

Minor Beneficiaries in Interpleader Cases

When a child has a claim to a death benefit, the court must protect the child's interest. That usually means court approval of any settlement, and sometimes a guardian ad litem.

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On this page
  1. Why a child’s claim changes the case
  2. Who speaks for the child
  3. When courts appoint a guardian ad litem
  4. When courts do not require a guardian ad litem
  5. Where a child’s money goes
  6. When the adverse claimant does not answer
  7. Time
  8. Practical points
  9. Related guides

Why a child’s claim changes the case

Life insurance often names children, either as primary beneficiaries or as contingent beneficiaries who take if the primary beneficiary is disqualified. A child can also have an interest when a parent’s claim rests on a promise to use the money for the child.

An insurer generally cannot obtain a valid release from a minor. In Kansas, for example, a minor’s contracts can be disaffirmed by the minor within a reasonable time after reaching majority,1 so a settlement that includes a child must be reduced to judgment and approved by the court to be binding.2 Florida law says a settlement on behalf of a minor is not effective “unless approved by the court having jurisdiction of the action.”3 For these reasons, a case with a child claimant rarely ends with a simple agreement among the adults. See also named in an interpleader and life insurance.

Who speaks for the child

Under Federal Rule of Civil Procedure 17(c), a minor may be represented by a general guardian or a similar fiduciary, and a minor without a duly appointed representative “may sue by a next friend or by a guardian ad litem.” The court “must appoint a guardian ad litem—or issue another appropriate order” to protect an unrepresented minor.4

In the Eleventh Circuit, appointing a guardian ad litem is treated as a procedural question under Rule 17, even when state law would require one. As one Florida federal court quoted, “Unless a conflict of interest exists between the representative and minor, a district court need not even consider the question of whether a guardian ad litem should be appointed.”5 The decisions below show how that plays out.

When courts appoint a guardian ad litem

The parent’s claim conflicts with the child’s. In Mays v. Prudential (D. Colo.), a military life insurance (SGLI) case, the minor beneficiary’s mother offered to accept a division based on an earlier designation. The court noted that “any settlement should be approved by the court given that [the beneficiary] is a minor.” Because the mother’s and the child’s interests conflicted, the parties agreed a guardian ad litem was needed, and the court appointed one before later approving the minor’s settlement.6

No one represented the child in settlement talks. In Hartford Life & Accident Ins. Co. v. Nebergall (D. Kan.), an employer-plan case, the insured’s father and his former wife both claimed the benefit. The father said the insured named him so he could use the money to care for the insured’s minor daughter, and the former wife admitted the benefit was meant to care for her. The two adults settled and told the court part of the money would go to the child in trust. The magistrate judge refused to suspend deadlines: “The notice is silent as to who represented the minor daughter’s interests during settlement discussions, leading the court to surmise they were not represented.” The district judge then denied the proposed consent judgment, holding that the adults’ claim that the child had no legal or equitable interest was “incorrect,” given that the father’s own theory rested on the insured’s intent to provide for her. The court appointed a guardian ad litem, explaining that “the GAL should be at the table to represent [the child] during the parties’ settlement negotiations,” with the guardian’s fee to come from the registry if approved.2

The child’s side is opposed to a parent or stepparent. In Primerica v. Donley (N.D. Ala.), the court appointed a guardian ad litem for minor contingent beneficiaries who opposed payment to the primary beneficiary under Alabama’s slayer statute, and the final judgment paid the guardian’s fee from the fund.7 See the slayer rule.

When courts do not require a guardian ad litem

A parent whose interests are aligned. In American General Life Ins. Co. v. Wilson (N.D. Fla.), the children’s father, already a defendant, intervened on their behalf; the court found their interests “adequately represented by their father.” When the parties settled, the father stood to receive a share himself. The court held that this fact alone did not create a conflict, because the children’s allocation matched “their best case scenario” without risk of loss. Appointing a guardian “would serve to needlessly deplete the minors’ ultimate recovery,” the court said, and it approved the settlement.5

A disinterested next friend. In a pair of Florida federal cases against two insurers, the insured’s former wife was the named primary beneficiary, and both insurers denied her claim because of the divorce. Three minor children, the contingent beneficiaries, sued through a next friend: a close friend of their late father and their godparent, who had no interest in the money. The court noted that their mother, as natural guardian, had “a clear conflict of interest with them in this suit because she has a competing claim to the Funds.” Florida law requires a guardian ad litem before a court approves a settlement of $50,000 or more,8 but the court treated the question as procedural under Rule 17. Finding the next friend qualified and without conflict, it held that a guardian “would be redundant, unnecessary, and would serve only to deplete the children’s ultimate recovery,” and that the next friend’s sworn declaration meant he had “functionally served the role of guardian ad litem.”9

Where a child’s money goes

Approval usually turns on where the child’s share will be held, not only on its size.

  • Trusts created by the judgment. The Nebergall consent judgment, entered after the guardian ad litem joined the talks, created a trust for the child, declared to be a spendthrift trust, to provide for her “health, education, maintenance, welfare and support … until she attains the age of 25 years.”2
  • An unpaid trustee. In the Florida cases, the children’s share went into a trust with the next friend serving as trustee without compensation.9
  • A parent as trustee. In Wilson, the minors’ shares were paid through the father’s counsel for the father as trustee of the minors’ trust.5
  • Equal shares, two through a conservator. In State Farm v. Luna (S.D. Miss.), the insurer had already paid most of the benefit to one adult claimant. Claims to the rest were made on behalf of three minor children, and the insurer interpleaded and deposited the remainder in the court’s registry. The parties agreed that each child would receive an equal share. The agreed judgment paid one child’s share to his guardian and directed that the other two children’s shares be held for them and paid to a conservator appointed for them. It then discharged the insurer, enjoined further claims against it and dismissed the case with prejudice.10 See Mississippi.
  • Questions before judgment. In Everlake v. Taylor (W.D. Okla.), a case decided by default, the court set a hearing on the entity that would hold the children’s trust funds and related questions before entering judgment. See divorce, which also covers the court-approved settlement for two children in MetLife v. Lawless (D.N.J.).

When the adverse claimant does not answer

A child’s claim can also be resolved by default. In the second of the Florida cases, the former wife was served and defaulted. The court approved the children’s settlement with the insurer without a guardian ad litem, entered default judgment against the former wife, and dismissed the case.9 In Wilson, the court entered default judgment against non-answering claimants, including a funeral home, before approving the children’s settlement, explaining that “an interpleader defendant who fails to answer forfeits any claim of entitlement to the subject of the interpleader action.”5

Time

Court review adds steps. In ReliaStar v. Wiemer (E.D. Tex.), four months passed while a guardian ad litem reviewed an agreement in principle for the minor children. In Nebergall, the court refused a settlement about seven weeks after interpleader and approved a revised one about two months later. See how long an interpleader takes.

Practical points

  • If a child is a beneficiary or contingent beneficiary, expect the court to ask who represents the child and whether that person has a conflict.
  • A parent who is also a claimant may still represent a child if the parent’s interests line up with the child’s; a parent with a competing claim usually cannot.
  • Settlement papers should explain how the child’s share will be held, and who will manage it.
  • A guardian ad litem’s fee is commonly paid from the fund, which reduces what everyone receives.

Footnotes

  1. K.S.A. 38-102. Kansas Office of Revisor of Statutes. ↩

  2. Hartford Life & Accident Ins. Co. v. Nebergall, No. 6:21-cv-01184-JAR-JPO (D. Kan.): interpleader order, ECF No. 11 (Oct. 19, 2021); order, ECF No. 20 (Nov. 15, 2021); memorandum and order denying approval of settlement and appointing guardian ad litem, ECF No. 25 (Dec. 6, 2021), court order (PDF); consent judgment, ECF No. 29 (Feb. 9, 2022), court judgment (PDF). ↩ ↩2 ↩3

  3. Fla. Stat. § 744.387(3)(a). Florida Legislature. ↩

  4. Fed. R. Civ. P. 17(c)(2). Cornell LII. ↩

  5. American General Life Ins. Co. v. Wilson, No. 1:22-cv-00213-MW-ZCB (N.D. Fla.): order granting intervention, ECF No. 11 (Oct. 25, 2022); order granting default judgment, ECF No. 27 (Mar. 3, 2023), at 6–8, court order (PDF); order approving settlement and entering final judgment, ECF No. 31 (Mar. 6, 2023), at 1–3, court order (PDF); judgment, ECF No. 32 (Mar. 6, 2023), court judgment (PDF). ↩ ↩2 ↩3 ↩4

  6. Mays v. Prudential Ins. Co. of America, No. 1:19-cv-00831-CMA-KMT (D. Colo.): courtroom minutes, ECF No. 37 (Sept. 4, 2019); courtroom minutes, ECF No. 39 (Sept. 13, 2019); order appointing guardian ad litem, ECF No. 46 (Sept. 25, 2019) (cited by docket number); order for interpleader relief, ECF No. 68 (Feb. 19, 2020); order approving the minor’s settlement, ECF No. 71 (May 12, 2020) (cited by docket number). ↩

  7. Primerica Life Ins. Co. v. Donley, No. 3:18-cv-00995-AKK (N.D. Ala.): final judgment, ECF No. 40 (Oct. 30, 2019), at 1–3, court judgment (PDF); order granting discharge and fees, ECF No. 38 (Oct. 22, 2019), court order (PDF); order appointing guardian ad litem, ECF No. 21 (Feb. 4, 2019); order granting deposit, ECF No. 6 (July 16, 2018). ↩

  8. Fla. Stat. § 744.3025(1)(b), (e). Florida Legislature. ↩

  9. Minor children’s suit against Principal Life Ins. Co., No. 3:23-cv-24636-MCR-HTC (N.D. Fla.) (captioned by the children’s initials): order granting deposit, discharge and dismissal of the insurer, ECF No. 15 (Mar. 5, 2024); order staying the case, ECF No. 17 (Mar. 14, 2024); order, ECF No. 21 (Apr. 11, 2024); order approving settlement, ECF No. 23 (May 1, 2024), at 1–9, court order (PDF); judgment, ECF No. 24 (May 1, 2024), court judgment (PDF). Minor children’s suit against USAA Life Ins. Co., No. 3:24-cv-00577-MCR-HTC (N.D. Fla.): clerk’s default, ECF No. 15 (Mar. 31, 2025); order approving settlement, ECF No. 19 (Dec. 22, 2025), court order (PDF). ↩ ↩2 ↩3

  10. State Farm Life Ins. Co. v. Luna, No. 3:19-cv-00638-HTW-LRA (S.D. Miss.), agreed judgment of dismissal with prejudice, ECF No. 42 (Sept. 21, 2020), court order (PDF). A mailing address is redacted in the copy. ↩