Pennsylvania: Beneficiary Disputes and Interpleader Under Pennsylvania Law

Guardians cannot cash in the policy on their own

McKean arose because the guardian of an incapacitated insured’s estate asked to surrender her life insurance, and the insurer rejected the request. After her death, the executor of her estate and the policy’s named beneficiary made competing demands, and the insurer interpleaded. The executor argued that the insurer was wrong to reject the surrender and that no court order was required.

The Third Circuit read 20 Pa.C.S. § 5536 as dividing power between guardian and court: “So the guardian and the court may both expend income of the estate, but only the court may expend principal.”¹ Paragraph (b) lets the court exercise “all rights and privileges under life insurance policies”. The court held: “Terminating a life insurance policy is among the court’s paragraph (b) powers. 20 Pa. Stat. and Cons. Stat. § 5536(b)(8). There is no indication in the text that the court’s powers may be exercised by a guardian as well.”² The beneficiary took the proceeds.

For families, the result protects the beneficiary designation from a guardian’s unilateral act. A guardian who wants to change or surrender coverage needs a petition to the court. See undue influence and capacity.

Divorce, including a divorce that never finished

Section 6111.2 applies when a Pennsylvania domiciliary names a spouse as beneficiary of a “life insurance policy, annuity contract, pension or profit-sharing plan or other contractual arrangement” and, at death, either is divorced from the spouse or “dies during the course of divorce proceedings, no decree of divorce has been entered pursuant to 23 Pa.C.S. § 3323 (relating to decree of court) and grounds have been established as provided in 23 Pa.C.S. § 3323(g).”³

The designation “shall become ineffective for all purposes and shall be construed as if the spouse or former spouse had predeceased the individual, unless it appears the designation was intended to survive the divorce based on: (1) the wording of the designation; (2) a court order; (3) a written contract between the individual and the spouse or former spouse; or (4) a designation of a former spouse as a beneficiary after the divorce decree has been issued.”³

Two further points matter in interpleader. Unless restrained by court order, an insurer is not liable “for making payments to a spouse or former spouse which would have been proper in the absence of this section,” and a spouse who is paid “shall be answerable to anyone prejudiced by the payment.”³ The second clause is the basis for a later claim against a former spouse who was paid. For employer plans, ERISA usually controls instead; see ERISA post-distribution claims.

The policy can choose another state’s rule

In Jones, a group policy issued in 2006 named the insured’s then-wife and stated that Virginia was the state of contract. It also described Virginia’s rule that a divorce voids a spousal designation. The couple divorced in 2011, and the insurer told the former wife her designation had been revoked. Competing claims followed, and the insurer interpleaded. The court discharged it, dismissed the former wife’s counterclaims against it, and denied it fees: “Accordingly, because it is in the ordinary course of New York Life’s business for it to determine the appropriate recipient of insurance benefits, I will deny its motion as it pertains to attorneys’ fees.”⁴ The opinion did not decide which claimant takes. See attorney’s fees in interpleader.

Slayers and elder abusers

Chapter 88 begins: “No slayer shall in any way acquire any property or receive any benefit as the result of the death of the decedent”. A 2024 amendment added § 8802.1: “An elder abuser may not acquire any property or receive any benefit upon the death of the victim, but such property shall pass as provided in this chapter.”⁵

For insurance, § 8811(a) directs that proceeds payable to the slayer or elder abuser “shall be paid to the estate of the decedent or victim, unless the policy or certificate designates some person not claiming through the slayer or elder abuser as alternative beneficiary to him.” A conviction is admissible in the civil case under § 8814, and § 8814.1 sets a preadjudication escrow rule for estate property when a person has been charged in connection with the death.⁵ See the slayer rule.

Constructive trust: plead it

In Curley, the insured died a Pennsylvania resident with a policy still naming his former wife from a Connecticut marriage. His widow argued that he had substantially complied with the change procedure; the court applied Connecticut law and held that “Appellant’s argument based on substantial compliance must fail.”⁶ Her fallback was a constructive trust under Pennsylvania law. The majority rejected it because she had not properly pleaded unjust enrichment. Judge Sloviter dissented: “The appeal before us starkly presents the difference between law and equity.”⁷

Decisions

Related guides

• State law differences
• Divorce and beneficiary designations
• Slayer rule
• Connecticut

Footnotes

1. Allstate Life Ins. Co. v. McKean, No. 23-1732, slip op. at 3 (3d Cir. Jan. 18, 2024) (not precedential). GovInfo. ↩

2. McKean, slip op. at 3–4 (quoting 20 Pa.C.S. § 5536(b)(8)). ↩

3. 20 Pa.C.S. § 6111.2(a)–(c). Pennsylvania General Assembly. ↩ ↩² ↩³

4. New York Life Ins. Co. v. Jones, No. 24-5430, slip op. at 10 (E.D. Pa. Aug. 19, 2025). GovInfo. ↩

5. 20 Pa.C.S. §§ 8802, 8802.1, 8811(a), 8814, 8814.1. Pennsylvania General Assembly. ↩ ↩²

6. Massachusetts Mut. Life Ins. Co. v. Curley, No. 10-3996, slip op. at 13 (3d Cir. Jan. 25, 2012) (not precedential). GovInfo. ↩

7. Curley, slip op. at 16 (Sloviter, J., dissenting). ↩