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California: Beneficiary Disputes and Interpleader Under California Law

California's divorce statute does not reach life insurance, its survival rules demand clear and convincing proof, and community property runs through many disputes.

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On this page
  1. When California law decides the dispute
  2. Divorce and ex-spouse beneficiaries
  3. Slayer rule
  4. Simultaneous death
  5. Community property
  6. Interest on life insurance proceeds
  7. Interpleader in California courts
  8. Decisions
  9. Related guides

When California law decides the dispute

California law usually governs an individual policy or account owned by a California resident. Federal law controls ERISA employer plans and federal programs, and the Supreme Court’s decision in Wissner v. Wissner arose from a California community-property claim that federal law defeated.1 See federal programs.

Divorce and ex-spouse beneficiaries

Nonprobate transfers. Probate Code § 5040 provides that a nonprobate transfer to a former spouse fails if, at the transferor’s death, the former spouse is not the surviving spouse because of a dissolution or annulment of the marriage or termination of a registered domestic partnership. It does not apply if the transfer was not subject to revocation by the transferor at the time of death, if there is clear and convincing evidence that the transferor intended to preserve it, or if a court order in effect at death requires it to be maintained for the former spouse. A judgment of legal separation that does not end the marriage is not a dissolution for this purpose.2

Life insurance is excluded

Section 5040(e) states that the section does not apply to "a provision of a life insurance policy." If an ex-spouse is still the named beneficiary of a life policy, California's revocation statute does not remove them. The outcome usually depends on the policy, the divorce judgment and any settlement agreement, and, for employer plans, federal law. See Divorce.

The divorce judgment’s warning. Every California divorce judgment must contain a notice that a dissolution or annulment “does not automatically cancel your spouse’s rights as beneficiary of your life insurance policy,” and that a person who wants a different result must change the relevant documents.3 In Thrivent v. Bloomquist, a federal court in Nevada relied in part on that notice in applying California law, rather than Nevada’s revocation-on-divorce statute, to a couple who divorced in California before the insured moved to Nevada. The former husband remained the beneficiary. The ruling was a default judgment, entered after the court weighed the merits.4 See the decisions library.

Wills. A dissolution or annulment revokes a will’s dispositions to the former spouse, along with powers of appointment and nominations of the former spouse as a fiduciary, unless the will provides otherwise. A legal separation that does not end the marriage is not a dissolution for this purpose.5

Slayer rule

A named beneficiary of a bond, life insurance policy or other contractual arrangement who “feloniously and intentionally kills” the principal obligee or the person on whose life the policy is issued “is not entitled to any benefit under the bond, policy, or other contractual arrangement, and it becomes payable as though the killer had predeceased the decedent.”6

A final judgment of conviction of felonious and intentional killing is conclusive. Without one, the court decides whether the killing was felonious and intentional by a preponderance of the evidence, and the burden is on the party seeking to establish it.7 A related provision applies to certain cases of elder or dependent adult abuse proved by clear and convincing evidence, for property under a will, trust or intestacy.8 See the slayer rule guide.

Simultaneous death

California uses a clear-and-convincing-evidence standard:

  • Life insurance. If it cannot be established by clear and convincing evidence that the beneficiary survived the insured, the proceeds are distributed as if the insured survived the beneficiary. A special rule applies when the policy is community or quasi-community property and the only alternative beneficiary is the insured’s estate.9
  • General rule. If it cannot be established by clear and convincing evidence that one person survived the other, each person’s property is handled as if that person survived.10
  • Intestate heirs. An heir who fails to survive the decedent by 120 hours, proved by clear and convincing evidence, is treated as having predeceased, unless that would cause the estate to escheat to the state.11

See simultaneous death.

Community property

Except as otherwise provided by statute, “all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property.”12 A spouse may claim a community interest in a policy bought with community funds, even if the spouse is not the named beneficiary, which is a common reason an insurer interpleads in California.

Interest on life insurance proceeds

If a life insurance policy is not paid within 30 days after the insured’s death, interest is owed from the date of death at a rate no lower than the insurer’s current rate on proceeds left on deposit. The insurer must tell the beneficiary the rate.13 In a California interpleader, interest on an amount deposited with the court stops accruing after the date of deposit.14

Interpleader in California courts

Code of Civil Procedure § 386 allows a person facing conflicting claims to bring an interpleader action, or to interplead by verified cross-complaint when already sued. The stakeholder may deposit the amount it admits it owes with the clerk without a court order, after which interest on that amount stops. A claimant may file an answer stating its interest, and the court may restrain other proceedings in California courts affecting the claims.14 See interpleader in state court.

In federal court in California. A stakeholder that files in federal court instead follows the federal interpleader rules. In Farmers New World Life Insurance Co. v. Pearce (S.D. Cal. 2025), both claimants to a life insurance death benefit were alleged to be California citizens. The court explained that, on those allegations, statutory interpleader under 28 U.S.C. § 1335 was “facially inapplicable,” so the case could proceed only as a Rule 22 interpleader resting on the insurer’s diversity from the claimants. It allowed the deposit under Rule 67 as a matter of discretion, noting that a deposit is not a jurisdictional requirement in a Rule 22 case.15 See statutory vs. Rule 22 interpleader.

Decisions

Sands v. Midland National Life Ins. Co. (N.D. Cal. 2024), aff'd (9th Cir. 2025)

  • U.S. District Court, N.D. Cal.
  • No. 23-cv-04680-DMR
  • October 28, 2024
  • Undue influence
Issue
A claimant challenged a beneficiary change as the product of undue influence under California's statutory definition (Welf. & Inst. Code § 15610.70).
Holding
The case began in the Southern District of Iowa, which discharged the insurer, dismissed the challenger's cross-claim under California's elder financial abuse statute for lack of particular facts, and transferred the case to the Northern District of California. There the challenge failed because there was no evidence of the alleged influencer's actions. The Ninth Circuit affirmed in an unpublished memorandum, Sands v. Norman, No. 24-7237 (Dec. 15, 2025). One judge dissented: "In my view, there is a genuine issue of material fact over whether Sands exerted this undue influence and whether Baxley's late changes to the beneficiary designations reflected his true intent." In the dissent's words, "[a]t bottom, this is a dispute that turns on the credibility of the various witnesses." The court denied rehearing on January 29, 2026.
Why it matters
Suspicion is not enough. An undue influence claim needs evidence of what the influencer actually did.

Sands v. Midland National Life Ins. Co., No. 4:22-cv-00259 (S.D. Iowa): interpleader and discharge order (Jan. 30, 2023); order dismissing the cross-claim (May 15, 2023), court order (PDF); transfer order (Sept. 11, 2023). No. 4:23-cv-04680-DMR (N.D. Cal.): order granting summary judgment (Oct. 28, 2024, ECF No. 85), court order (PDF) (also on govinfo.gov (PDF)); judgment (ECF No. 86), court judgment (PDF). Sands v. Norman, No. 24-7237 (9th Cir.): memorandum (Dec. 15, 2025), court copy (PDF) (also on the Ninth Circuit site (PDF)); order denying rehearing (Jan. 29, 2026). See also the fuller summary in the decisions library.

Protective Life Ins. Co. v. Tello (C.D. Cal. 2026)

  • U.S. District Court, C.D. Cal.
  • No. 2:25-cv-10327-PA-MAR
  • June 17, 2026
  • Summary judgment
Facts
The insured's divorce judgment, which incorporated a property settlement agreement, awarded the life insurance policy (face amount $200,000 since a 1999 reduction) to his former wife as her separate property and required her to keep paying its monthly premiums. After the divorce he filed a series of beneficiary designations that reduced and then removed her share. The last one, in January 2025, named several of his children, his girlfriend and another former wife. The former wife kept paying premiums, at first by automatic debit and later through amounts the insured withheld from the monthly divorce payments he owed her. He died in 2025. The two insurers interpleaded the proceeds and, by stipulation, deposited them and were discharged. The other claimants crossclaimed against the former wife.
Holding
The crossclaimants did not file the statement of genuine disputes the court's local rules require, so the court treated the former wife's facts as admitted. It also refused to delay the ruling for more discovery, because they offered no declaration, no specific facts and no showing of diligence. The crossclaimants did not dispute that the divorce judgment gave her ownership of the policy. Their argument that she had paid only part of the premiums would at most support a reimbursement claim by the insured's estate, which was not a party, and the only issue before the court was the proper beneficiary. The court granted summary judgment for the former wife and concluded that she is entitled to the entire interpleaded fund. In a later order (July 1, 2026) it entered default judgment against a claimant who had been served but never appeared.
Why it matters
Here a divorce judgment that awarded the policy itself to the former spouse, which no one disputed, decided the case despite the insured's later beneficiary changes. The case also shows that claimants who skip the court's summary-judgment procedures can have the other side's facts treated as undisputed.

Protective Life Ins. Co. v. Tello, No. 2:25-cv-10327-PA-MAR (C.D. Cal.): order granting stipulation for deposit, discharge and dismissal (filed May 12, 2026, ECF No. 56); civil minutes granting motion for summary judgment (June 17, 2026), court order (PDF). The July 1, 2026 default judgment is cited from the court record and not linked.

  • Wissner v. Wissner, 338 U.S. 655 (1950): federal law governing military life insurance defeated a California community-property claim. See Key decisions.

Footnotes

  1. Wissner v. Wissner, 338 U.S. 655 (1950). ↩

  2. Cal. Prob. Code § 5040. California Legislative Information. ↩

  3. Cal. Fam. Code § 2024. California Legislative Information. ↩

  4. Order granting default judgment and discharge, Thrivent Financial for Lutherans v. Bloomquist, No. 2:17-cv-01555-JCM-NJK (D. Nev. July 3, 2018), ECF No. 32. Court order (PDF). ↩

  5. Cal. Prob. Code § 6122. California Legislative Information. ↩

  6. Cal. Prob. Code § 252. California Legislative Information. ↩

  7. Cal. Prob. Code § 254. California Legislative Information. ↩

  8. Cal. Prob. Code § 259. California Legislative Information. ↩

  9. Cal. Prob. Code § 224. California Legislative Information. ↩

  10. Cal. Prob. Code § 220. California Legislative Information. ↩

  11. Cal. Prob. Code § 6403. California Legislative Information. ↩

  12. Cal. Fam. Code § 760. California Legislative Information. ↩

  13. Cal. Ins. Code § 10172.5. California Legislative Information. ↩

  14. Cal. Code Civ. Proc. § 386. California Legislative Information. ↩ ↩2

  15. Farmers New World Life Ins. Co. v. Pearce, No. 3:25-cv-01392-JLS-MSB (S.D. Cal.), order granting renewed motion to deposit interpleader funds, ECF No. 29 (Aug. 22, 2025), at 1, 3–4 (quoting Gelfgren v. Republic Nat’l Life Ins. Co., 680 F.2d 79, 82 (9th Cir. 1982)), court order (PDF) (also on govinfo.gov (PDF)). ↩