New Jersey: Beneficiary Disputes and Interpleader Under New Jersey Law

One statute, two outcomes

N.J.S.A. 3B:3-14 is titled “Revocation of probate and non-probate transfers by divorce or annulment; revival by remarriage to former spouse.” As quoted by the District of New Jersey, it provides: “Except as provided by the express terms of a governing instrument, a court order, or a contract relating to the division of the marital estate made between the divorced individuals before or after the marriage, divorce or annulment, a divorce or annulment: (1) revokes any revocable: (a) dispositions or appointment of property made by a divorced individual to his former spouse in a governing instrument . . . .”¹

That opening exception decides many New Jersey cases. Two federal decisions read side by side show how.

	Gonnella (3d Cir. 2020)	Aromando (D.N.J. 2017)
Divorce agreement said	Policies in the wife’s name were her sole property, and the husband “waives any interest therein”	The husband would make the former wife the owner of his existing policy, which satisfied his insurance obligation
Effect	The waiver and the statute pointed the same way	The agreement fell within the statute’s exception
Winner	The insured’s daughter (contingent beneficiary)	The former wife (primary beneficiary)

In Gonnella, the Third Circuit held that the marital settlement agreement’s waiver controlled, and added that “New Jersey law governing the revocation of probate and non-probate transfers by divorce produces the same result.”² The former husband also claimed the insured had orally agreed to keep him as beneficiary. The court rejected that claim, noting that in New Jersey “a mere verbal expression of intent to change a beneficiary designation is ineffective.”³

In Aromando, the court held: “Accordingly, this divorce agreement constitutes a valid exception to N.J.S.A. 3B:3-14 for a ‘court order, or a contract relating to the division of the marital estate.’”⁴ It ordered the insurer to pay the former wife the remaining balance.

See divorce and beneficiary designations.

An interpleader that should not have been filed

Aromando is also a fee case. Because the statute plainly did not apply, there were no genuine competing claims, and the court denied the insurer interpleader relief altogether: “As Defendant’s interpleader was not properly brought, the Court, in its discretion, denies Defendant’s motion for attorneys’ fees and related costs related to seeking interpleader relief.”⁵ An insurer that interpleads over a settled question risks bearing its own costs. See attorney’s fees in interpleader.

Slayer provisions and a plea from another state

As quoted in Quadrel, N.J.S.A. 3B:7-1.1 provides that one who intentionally kills the decedent “forfeits all benefits . . . with respect to the decedent’s estate, including an intestate share”. Under N.J.S.A. 3B:7-6, “A final judgment of conviction establishing responsibility for the intentional killing of the decedent is conclusive for purposes of this chapter.” And “[i]n the absence of such a conviction the court may determine by a preponderance of evidence whether the individual was responsible for the intentional killing of the decedent for purposes of this chapter.”⁶

The insured, a New Jersey domiciliary, had named his three adult children as equal beneficiaries of group coverage. The insurer paid two of them and interpleaded the third share after the third child was charged in the death. That child later pleaded guilty in Pennsylvania to third-degree murder. The court treated the out-of-state plea as not conclusive under New Jersey’s intentional-killing standard. It nonetheless found from the undisputed record that no reasonable trier of fact could find the killing unintentional, and divided the remaining share between the other two children.⁷ See the slayer rule.

Fees between claimants

Earlier in Quadrel, the two other children asked for attorney’s fees from their sibling. After quoting the federal interpleader statute, the magistrate judge’s report concluded: “The above language does not authorize an award of attorney’s fees.”⁸ It recommended denying the motion. Whether the district judge adopted the recommendation was not confirmed for this page, so it is presented as a recommendation.

Decisions

Related guides

• State law differences
• Divorce and beneficiary designations
• Slayer rule
• Attorney’s fees in interpleader

Footnotes

1. Aromando v. State Farm Life Ins. Co., No. 17-02418 (SRC), slip op. at 5 (D.N.J. Nov. 15, 2017) (quoting N.J.S.A. 3B:3-14(a)). GovInfo. ↩

2. Guardian Life Ins. Co. of Am. v. Gonnella, No. 19-2208, slip op. at 5 (3d Cir. Mar. 12, 2020) (not precedential). GovInfo. ↩

3. Gonnella, slip op. at 7 n.5. ↩

4. Aromando, slip op. at 6. ↩

5. Aromando, slip op. at 7. ↩

6. Prudential Ins. Co. of Am. v. Quadrel, No. 19-12235 (SDW), slip op. at 3 (D.N.J. Dec. 8, 2023) (amended opinion) (quoting N.J.S.A. 3B:7-1.1, 3B:7-6). GovInfo. ↩

7. Quadrel, slip op. at 3–4 (D.N.J. Dec. 8, 2023). ↩

8. Quadrel, No. 19-12235, slip op. at 7 (D.N.J. July 13, 2020) (report and recommendation). GovInfo. ↩