Bill

Bill > S886


NJ S886

Provides for establishment of child support lien against life insurance proceeds; requires insurers perform child support judgment search.


summary

Introduced
01/09/2024
In Committee
01/09/2024
Crossed Over
Passed
Dead

Introduced Session

2024-2025 Regular Session

Bill Summary

This bill would amend section 1 of P.L.2000, c.81 (C.2A:17-56.23b) to require that if a person who has affected an annuity contract or a policy of individual or group life insurance on himself, or who is the beneficiary of a person's annuity contract or life insurance policy, is found to be a child support judgment debtor, a lien shall be placed on the proceeds of the contract or policy at the time the proceeds become available for the use of the person's estate or beneficiary. The lien would stay the distribution of the proceeds of the annuity contract or life insurance policy to the estate or beneficiary until the child support judgment is satisfied. Proceeds from the assignment or sale of a viatical settlement contract or life settlement are also subject to the provisions of the bill. As provided in the bill, a lien can be placed on any net proceeds of any award, judgment, inheritance or settlement payable to a prevailing party or beneficiary, whenever the net proceeds exceed a threshold of $2,000, if the party is found to be a child support judgment debtor. The bill would provide that reasonable funeral expenses are not included as net proceeds. The $2,000 threshold would not apply to the proceeds of an annuity contract or life insurance policy; the child support lien would attach regardless of the amount of the proceeds. Under the provisions of this bill, prior to the distribution of any of the proceeds of the annuity contract or life insurance policy to the insured's estate or beneficiary, the estate or beneficiary would be required to provide the insurance company responsible for issuing the contract or policy with a certification that includes the insured's and his beneficiary's name, mailing address, date of birth and social security number. The insurance company would then initiate a child support judgment search using a private judgment search company. The search would be used to determine whether the person or the person's beneficiary is a child support judgment debtor. This judgment search would not be required if a prevailing party or a beneficiary is a minor child under the age of 16, except in the case of the distribution of the proceeds of an annuity contract or life insurance policy. A fee of not more than $10 for each name of a child support judgment debtor searched would be permitted. This fee would be chargeable against the proceeds of the annuity contract or life insurance policy. Under the bill, pre-paid funeral policies, credit life insurance policies and payment of reasonable funeral expenses are exempt from the provisions of the bill. The judgment search company would provide a certification to the insurance company responsible for issuing the annuity contract or life insurance policy identifying whether the insured or his beneficiary is a child support judgment debtor. If a child support judgment is not found, the proceeds of the annuity contract or life insurance policy may be distributed to the insured's estate or beneficiary immediately. If a child support judgment against the insured or his beneficiary is found, in a case monitored by the Probation Division of the Superior Court, the insurance company would be required to contact the Probation Division and arrange for the satisfaction of the judgment prior to the disbursement of any funds. The bill would also limit the liability of an insurance company when satisfying a judgment from the proceeds of an annuity contract or a life insurance policy. In addition, the bill prohibits a private judgment search company from using any information provided by an insurance company for purposes other than determining if the insured or his beneficiary is the debtor of a child support judgment. The bill would also amend N.J.S.17B:24-6, N.J.S.17B:24-7, and N.J.S.17B:24-9 to clarify that the proceeds of an annuity contract and of individual and group life insurance are subject to a child support lien. The Commissioner of Banking and Insurance would be required to adopt such rules and regulations as would be necessary to effectuate the purposes of the act.

AI Summary

This bill would amend existing law to require that if a person who has an annuity contract or life insurance policy is found to be a child support judgment debtor, a lien shall be placed on the proceeds of the contract or policy. Prior to distributing the proceeds, the insurance company would be required to perform a child support judgment search. If a judgment is found, the insurance company must contact the Probation Division to arrange for satisfaction of the judgment before disbursing the funds. The bill also provides exemptions for certain types of insurance policies and limits the liability of insurance companies when satisfying child support judgments from these proceeds.

Committee Categories

Business and Industry

Sponsors (1)

Last Action

Introduced in the Senate, Referred to Senate Commerce Committee (on 01/09/2024)

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