New Hampshire: Beneficiary Disputes and Interpleader Under New Hampshire Law

No automatic revocation for insurance or IRAs

Many states revoke a former spouse’s designation on divorce. New Hampshire, as applied by the federal court in Brescia, does not. The court explained that “New Hampshire follows the common-law rule that ‘divorce alone does not revoke an individual’s status as a contractually designated beneficiary.’”¹

New Hampshire does have a divorce-revocation statute, but it is narrow. As quoted in Brescia, RSA 551:13, III provides that a “divorce or annulment revokes any disposition of property made by [a] trust to the former spouse” of a grantor who kept the power to revoke the trust. The decedent’s IRAs “were not held in a trust for Glen’s benefit, so this statute does not apply.”¹

A general release is not enough

The estate in Brescia relied on the divorce stipulation and a release agreement. The court applied Dubois v. Smith, 135 N.H. 50 (1991), under which “a divorce decree or stipulation which merely releases all claims of one party to the property of the other does not, in the insurance policy context, destroy the beneficiary status of the first party, because the beneficiary status is not a vested property right.”² The New Hampshire Supreme Court later applied the same rule to an IRA in Estate of Tremaine, 146 N.H. 674 (2001).

The court also refused to reform the agreement based on a later document the decedent had drafted. It acknowledged the possible unfairness but held: “This court, sitting in diversity, is bound to apply that rule as fashioned by the New Hampshire Supreme Court, regardless of the strength of the reasons behind it or, for that matter, the arguably unjust result it might produce in any particular case.”³ The IRAs went to the former husband.

To remove a former spouse in New Hampshire, the divorce papers need to address the specific policy or account, or the owner needs to file a new designation. See divorce and beneficiary designations and retirement accounts.

Insurable interest belongs to the insurer

In Santy, the insured’s brother and business partner was the primary beneficiary but died first. The contingent beneficiary was the brother’s former wife. The insured’s widow, acting for his estate, argued that the former sister-in-law had no insurable interest. The court rejected the argument: “New Hampshire embraces the majority rule that only the insurer can raise the object[ion] of want of insurable interest.”⁴ The court concluded, “Accordingly, Menard is entitled to the proceeds from Robert’s life insurance policies.”⁵ The contingent beneficiary had also invoked the incontestability statute, RSA 408:10. The case was decided by a magistrate judge with the parties’ consent.

ERISA plans

Allard ended unusually. The former wife named in the plan records abandoned her claim, which was dismissed for failure to prosecute. The court treated her as “disqualified” under the plan terms and, standing in the administrator’s shoes, awarded the benefit to the insured’s surviving spouse. It had earlier denied the insurer’s request for fees and costs.

Decisions

Related guides

• State law differences
• Divorce and beneficiary designations
• Retirement accounts
• Federal programs

Footnotes

1. UBS Fin. Servs., Inc. v. Brescia, No. 13-cv-4-JL, 2014 DNH 031, slip op. at 15 & n.5 (D.N.H. Feb. 12, 2014) (quoting Estate of Tremaine, 146 N.H. at 675, and RSA 551:13, III). GovInfo. Statute: RSA 551:13. ↩ ↩²

2. Brescia, slip op. at 2 (quoting Dubois v. Smith, 135 N.H. 50, 59 (1991)). ↩

3. Brescia, slip op. at 16. ↩

4. Prudential Ins. Co. of Am. v. Santy, No. 14-cv-288-AJ, 2014 DNH 263, slip op. at 4 (D.N.H. Dec. 30, 2014) (amended order). GovInfo. ↩

5. Santy, slip op. at 9. ↩