Read the full stored bill text
S3602
SENATE, No. 3602
STATE OF NEW JERSEY
222nd LEGISLATURE
�
INTRODUCED FEBRUARY 19, 2026
Sponsored by:
Senator� ANTHONY M. BUCCO
District 25 (Morris and Passaic)
SYNOPSIS
���� Provides for establishment of child support lien
against life insurance proceeds; requires insurers perform child support
judgment search.
CURRENT VERSION OF TEXT
���� As introduced.
��
An Act
concerning child support and amending P.L.2000,
c.81, N.J.S.17B:24-6, N.J.S.17B:24-7, and N.J.S.17B:24-9.
����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:
���� 1.��� Section 1 of P.L.2000,
c.81 (C.2A:17-56.23b) is amended to read as follows:
���� 1.��� a.
(1)� Lien against
net proceeds; civil judgment, arbitration award, inheritance or worker�s
compensation.
� A judgment for child support entered pursuant to P.L.1988,
c.111 (C.2A:17-56.23a) and docketed with the Clerk of the Superior Court shall
be a lien against the net proceeds of any settlement negotiated prior or
subsequent to the filing of a lawsuit, civil judgment, civil arbitration award,
inheritance or workers' compensation award
whenever the net proceeds exceed
a threshold of $2,000.� A lien created under this section shall apply to any
net proceeds payable to the prevailing party or beneficiary
.� The lien
shall have priority over all other levies and garnishments against the net
proceeds of any settlement negotiated prior or subsequent to the filing of a
lawsuit, civil judgment, civil arbitration award, inheritance or workers'
compensation award unless otherwise provided by the Superior Court, Chancery
Division, Family Part.� The lien shall not have priority over levies to recover
unpaid income taxes owed to the State.� The lien shall stay the distribution of
the net proceeds to the prevailing party or beneficiary until the child support
judgment is satisfied.
���� As used in this act "net
proceeds" means any amount of money
[
, in
excess of $2,000,
]
payable to the prevailing
party or beneficiary after attorney fees, witness fees, court costs, fees for
health care providers,
reasonable funeral expenses,
payments to the
Medicaid program under section 6 of P.L.1979, c.365 (C.30:4D-7.1),
reimbursement to the
[
Division
of Employment Security
]
Division of Income Security
in the Department of Labor
and Workforce
Development
, the employer or employer's insurance carrier for temporary
disability benefits that may have been paid pending the outcome of a workers'
compensation claim as provided by section 1 of P.L.1950, c.174 (C.34:15-57.1),
reimbursement to an employer or the employer's workers' compensation insurance
carrier as provided in R.S.34:15-40, and other costs related to the lawsuit,
inheritance or settlement are deducted from the award, proceeds or estate;
"prevailing party" or "beneficiary" shall not include a
partnership, corporation, limited liability partnership, financial institution,
government entity or minor child
under the age of 16
; and
"agent" means an authorized representative of the prevailing party or
beneficiary, a union representative, an executor or administrator of a
decedent's estate, an arbitrator or any other person or entity if such person
or entity is responsible for the distribution of net proceeds to a prevailing
party or beneficiary.
����
(2)� Lien against proceeds
of annuity contract or policy of individual or group life insurance.� ������ A
judgment for child support entered pursuant to P.L.1988, c.111 (C.2A:17-56.23a)
and docketed with the Clerk of the Superior Court against a person who has
affected an annuity contract or a policy of individual or group life insurance
on his own life or who is the beneficiary of a life insurance policy shall be a
lien against the proceeds of the annuity contract or life insurance policy at
the time the proceeds become available for the use of the insured's estate or
beneficiary including the cash surrender value of a life insurance policy,
annuity, or a loan against the cash value or surrender value of an insurance
policy or annuity, excluding loans for premium payments.� The lien shall stay
the distribution of the proceeds of the annuity contract or life insurance
policy to the insured's estate or beneficiary until the child support judgment
is satisfied.
����
The provisions of this act
shall also apply in the case of an assignment or sale of a viatical settlement
contract or life settlement but shall not apply to funeral insurance policies,
credit life insurance policies or to the payment of reasonable funeral
expenses.
���� �b.�� Before distributing any
net proceeds of a settlement, judgment, inheritance or award to the prevailing
party or beneficiary
and before distributing the proceeds of an annuity
contract or a life insurance policy in any amount to the insured's estate or
beneficiary, the following actions shall be taken
:
���� (1)�� the prevailing party
[
or
]
,
beneficiary
or insured's estate or beneficiary
shall provide the
attorney, insurance company or agent responsible for the final distribution of
such funds
or, in the case of the distribution of the proceeds of an annuity
contract or a life insurance policy, the insurance company responsible for
issuing the annuity contract or insurance policy
with a certification that
includes the prevailing party's
[
or
]
,
beneficiary's
or insured's and his
beneficiary's
full name, mailing address, date of birth and Social Security
number; and
���� (2)�� the attorney
representing the prevailing party or beneficiary
or, in the case of the
distribution of the proceeds of an annuity contract or a life insurance policy,
the insurance company responsible for issuing the annuity contract or insurance
policy
shall initiate a search of child support judgments, through a
private judgment search company that maintains information on child support
judgments, to determine if the prevailing party
[
or
]
,
beneficiary
or insured and his
beneficiary
is a child support judgment debtor.�
The judgment search
required under this section shall not be required if a prevailing party or
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 a life insurance policy.
���� If the prevailing party or
beneficiary is not represented by an attorney, the judgment search shall be
initiated by the opposing attorney, insurance company or agent before the
proceeds are distributed to the prevailing party or beneficiary.
[
n
]
In
the case
of a workers' compensation action, the Administrative Office of the Courts
shall, at least once every 60 days, transmit information on child support
judgment debtors to the Division of Workers' Compensation in the Department of
Labor
and Workforce Development
.� The information shall include the
debtor's name, Social Security number, the amount of the child support
judgment, the Probation Division case number and the Probation Division office
to which the judgment is payable.� The Division of Workers' Compensation shall
match the data received on child support judgment debtors against the
information it maintains for individuals who have filed workers' compensation
claims with the division.� When a match is identified, the Division of Workers'
Compensation shall notify the appropriate judge of compensation of the child
support judgment before the decision, award, determination, judgment or order
approving the settlement is rendered.� The judge of compensation shall
incorporate in the decision, award, determination, judgment or order approving
the settlement, an order requiring the employer or the employer's insurance
carrier to contact the Probation Division to satisfy the child support judgment
out of the net proceeds of the workers' compensation award, order or settlement
before any such monies are paid to the employee.� The Division of Workers'
Compensation shall be immune from any civil liability that may arise from any
information provided by the division or any order issued by a judge of
compensation relating to a child support judgment, in accordance with this
section.� In the case of judgments or settlements resulting from a labor
arbitration involving employees of a school board or school district, a
judgment search shall be initiated by the school board or district prior to the
release of any net proceeds to the employees and only if there is an income
withholding for child support active against the employee in the records of the
school board or district.� In the case of an inheritance, the executor or
administrator of the decedent's estate shall initiate the judgment search.� The
judgment search company shall provide a certification to the attorney,
insurance company, agent or party initiating the lawsuit
, or in the case of
the distribution of the proceeds of an annuity contract or a life insurance
policy, the insurance company responsible for issuing the annuity contract or
insurance policy
identifying whether or not the prevailing party
[
or
]
,
beneficiary
or insured or his beneficiary
is a child support judgment
debtor.
���� In the case of net proceeds
that are to be paid through a structured settlement or other payment plan, the
attorney, insurance company or agent shall be required to conduct the child
support judgment search only at the time of settlement or prior to the distribution
of the first payment under the plan.� If a child support judgment is
identified, the attorney, insurance company or agent shall provide the
Probation Division with a copy of the structured settlement or payment plan
within 30 days of identifying the child support judgment.
���� If there are no attorneys
representing either party in a civil lawsuit, the party bringing the lawsuit
shall initiate the judgment search and shall be required to file the
certification with the court at least 10 working days prior to the trial or
with the stipulation that the certification shall be filed at the time of the
settlement or dismissal of the lawsuit.
���� For monies deposited with the
court, no distribution of funds shall be made until the attorney, prevailing
party or beneficiary provides the Clerk of the Superior Court with a copy of
the certification showing that the prevailing party or beneficiary is not a
child support judgment debtor.
���� The fee for a judgment search
which is required by this section shall not exceed $10 for each name of a child
support judgment debtor that is searched.� The fee for a judgment search is
chargeable against the net proceeds
or proceeds of an annuity contract or a
life insurance policy
as a cost of the settlement, judgment, inheritance or
award
, or as a cost of distributing the proceeds of the annuity contract or
insurance policy
.
���� c.���� If the certification
shows that the prevailing party
[
or
]
,
beneficiary
or insured or his beneficiary
is not a child support judgment debtor, the net proceeds
or proceeds of the
annuity contract or life insurance policy
may be paid to the prevailing
party
[
or
]
,
beneficiary
or insured's estate or beneficiary
immediately.� If the
certification shows that the prevailing party
[
or
]
,
beneficiary
or insured or his beneficiary
is a child support judgment debtor,
in a case monitored by the Probation
Division of the Superior Court,
the attorney, insurance company or agent
that initiated the search shall contact the Probation Division of the Superior
Court to arrange for the satisfaction of the child support judgment
from the
net proceeds or proceeds of the annuity contract or life insurance policy
.�
The attorney, insurance company or agent shall notify the prevailing party
[
or
]
,
beneficiary
or insured's estate or beneficiary
of the intent to satisfy the child
support judgment prior to the disbursement of any funds to the prevailing party
[
or
]
,
beneficiary
or insured's estate or beneficiary
.� Upon receipt of a
warrant of satisfaction for the child support judgment, the attorney, insurance
company or agent shall pay the balance of the settlement, judgment, award
[
or
]
,
inheritance
or proceeds of the annuity contract or life insurance policy
to the
prevailing party
[
or
]
,
beneficiary
or insured's estate or beneficiary
.� If the net proceeds
or
proceeds of the annuity contract or life insurance policy
are less than the
amount of the child support judgment, the
[
entire
amount of the
]
net proceeds
or proceeds of
the annuity contract or insurance policy
shall be paid to the Probation
Division as partial satisfaction of the judgment.�
If the beneficiary of the
annuity contract or life insurance policy is the person to whom the child
support is owed under a judgment or is the subject child of the underlying
child support order, this subsection shall have no effect relative to the distribution
of proceeds from an annuity contract or a life insurance policy to the
beneficiary.
���� If there are no attorneys
representing either party in a civil lawsuit and the certification filed with
the court shows that the prevailing party or beneficiary is a child support
judgment debtor, the court shall order that the opposing party pay the amount
of the child support judgment to the Probation Division before any funds are
paid to the prevailing party or beneficiary.� The court shall also insure that
any judgment related to the lawsuit docketed with the Clerk of the Superior
Court reflect the Probation Division's superior claim to such funds.
���� d.��� An attorney, insurance
company or agent shall not be liable for distributing net proceeds to the
prevailing party or beneficiary
or, in the case of the distribution of the
proceeds of an annuity contract or a life insurance policy, the insured's
estate or beneficiary
based on the results of a judgment certification
showing the prevailing party
[
or
]
,
beneficiary
or insured or his beneficiary
is not the debtor of a child support judgment, if it is later shown that the
prevailing party
[
or
]
,
beneficiary
or insured's estate or beneficiary
provided inaccurate
personal information on the initial certification to the attorney, the insurer
or agent.
���� e.���� An attorney, insurance
company or agent who, in accordance with this act, satisfies a child support
judgment from the net proceeds of a settlement, judgment, inheritance
[
or
]
,
award
or the proceeds of an annuity contract or a life insurance policy
, shall
not be liable for payments which otherwise would have been made pursuant to
subsection a. of this section which were not so identified to the attorney,
insurance company or agent at the time of satisfaction.
���� f.���� An attorney, insurance
company or agent who, in accordance with this act, satisfies a child support
judgment from the net proceeds of a settlement, judgment, inheritance
[
or
]
,
award
or the proceeds of an annuity contract or a life insurance policy
,
shall not be liable to the prevailing party
[
or
]
,
beneficiary
or insured's estate or
beneficiary
or to that party's
or insured's
creditors.
���� g.��� An attorney shall not be
required to challenge a child support judgment unless retained by the
prevailing party
[
or
]
,
beneficiary
or insured's estate
to do so.
���� h.��� A private judgment
search company is prohibited from using any information provided by an
attorney, insurance company or agent in accordance with this act for any
purpose other than: (1) determining if the prevailing party
[
or
]
,
beneficiary
or the insured or his beneficiary
is the debtor of a child
support judgment; and (2) preparing a certification as required pursuant to
subsection b. of this section.
���� i.���� To the extent feasible
and permitted by the Rules of Court, the Administrative Office of the Courts
may share information on a child support judgment debtor with an insurance
carrier for the sole purpose of complying with the provisions of P.L.2000, c.81
(C.2A:17-56.23b et al.).
(cf: P.L.2000, c.81, s.1)
���� 2.��� N.J.S.17B:24-6 is
amended to read as follows:
���� 17B:24-6.�� a. If a policy of
insurance, whether heretofore or hereafter issued, is affected by any person on
his own life, or on another life, in favor of a person other than himself, or,
except in cases of transfer with intent to defraud creditors, if a policy of life
insurance is assigned or in any way made payable to any such person, then the
lawful beneficiary, assignee or payee of such policy, shall be entitled to its
proceeds and avails against the creditors and representatives of the insured
and of the person effecting the same, whether or not the right to change the
beneficiary is reserved or permitted, or the policy is made payable to the
person whose life is insured or to the executors or administrators of such
person if the beneficiary shall predecease such person.
���� Except however the foregoing
shall not be applicable if the lawful beneficiary, assignee or payee of such
policy is any of the following:
���� (1)�� The insured,
���� (2)�� The person so effecting
such insurance, or
���� (3)�� The executors or
administrators of such insured or the person so effecting such insurance.
���� �b.��
[
Such
]
Except as
provided in subsection d., such
proceeds and avails shall be exempt from
any liability for any debt of the beneficiary existing at the time the proceeds
and avails become available for his use; provided that, subject to the statute
of limitations, the amount of any premiums for such insurance paid with intent
to defraud creditors, with interest thereon, shall inure to their benefit from
the proceeds of the policy; but the insurer issuing the policy shall be
discharged of all liability thereon by payment of its proceeds in accordance with
its terms, unless, before such payment, the insurer shall have received written
notice at its home office, by or in behalf of a creditor, of a claim to recover
for transfer made or premiums paid with intent to defraud creditors setting
forth such facts as will enable the insurer to ascertain the particular�
policy.
���� �c.��� For the purposes of
subsections a. and b. above, a policy shall also be deemed to be payable to a
person other than the insured if and to the extent that a facility-of-payment
clause or similar clause in the policy permits the insurer to discharge its obligation
after the death of the individual insured by paying the death benefits to a
person as permitted by such clause.
���� �
d.�� Nothing in this
section shall apply to exempt the proceeds of a life insurance policy from a
lien against the proceeds established pursuant to paragraph (2) of subsection
a. of section 1 of P.L.2000, c.81 (C.2A:17-56.23b.) to satisfy a judgment for
child support entered against the insured or the beneficiary.
(cf: P.L.1971, c.144, s.17B:24-6)
���� 3.��� N.J.S.17B:24-7 is
amended to read as follows:
����
17B:24-7.
�� a.�� The
benefits, rights, privileges, powers and options which under any annuity
contract heretofore or hereafter issued are due or prospectively due the
annuitant, shall not be subject to execution, garnishment, attachment,
sequestration or other legal process nor shall the annuitant be compelled to
exercise any such rights, privileges, powers, or options, nor shall creditors
be allowed to interfere with or terminate the contract, except:
���� (1)�� As to amounts paid, with
intent to defraud creditors, for or as consideration for any such annuity, with
interest thereon, and of which the creditor has given the insurer written
notice at its home office prior to the making of the payments to the annuitant
out of which the creditor seeks to recover.� Any such notice shall set forth
such facts as will enable the insurer to ascertain the particular annuity
contract.
���� (2)�� The total exemption of
benefits presently due and payable to any annuitant periodically or at stated
times under all annuity contracts under which he is an annuitant, shall not at
any time exceed $500.00 per month for the length of time represented by such
installments, and such periodic payments in excess of $500.00 per month shall
be subject to garnishee execution to the same extent as are wages and salaries.
���� (3)�� If the total benefits
presently due and payable to any annuitant under all annuity contracts under
which he is an annuitant, shall at any time exceed payment at the rate of
$500.00 per month, then the court may order such annuitant to pay to a judgment
creditor or apply on the judgment, in installments, such portion of such excess
benefits as to the court may appear just and proper, after due regard for the
reasonable requirements of the judgment debtor and his family, if dependent
upon him as well as any prior court orders.
����
(4)�� Notwithstanding any
other provision of this section, benefits due and payable to an annuitant in
any amount shall be subject to a lien established pursuant to paragraph (2) of
subsection a. of section
1 of P.L.2000, c.81
(C.2A:17-56.23b.) to satisfy a judgment for child support entered against the
annuitant.
���� �b.�� If the contract so
provides, the benefits, rights, privileges, powers or options accruing under
such contract to a beneficiary or assignee shall not be transferable nor
subject to commutation, and if the benefits are payable periodically or at
stated times, the same exemptions and exceptions contained herein for the
annuitant, shall apply with respect to such beneficiary or assignee.
(cf: P.L.1971, c.144, s.17B:24-7)
���� 4.��� N.J.S.17B:24-9 is
amended to read as follows:
����
17B:24-9.
�� a.�
[
A
]
�
Except as
provided in subsection c., a
policy of group life insurance or group health
insurance or the proceeds thereof payable to the individual insured or to the
beneficiary thereunder, shall not be liable, either before or after payment, to
be applied by any legal or equitable process to pay any debt or liability of
such insured individual or his beneficiary or of any other person having a
right under the policy.� The proceeds thereof, when not made payable to a named
beneficiary or to a third person pursuant to a facility-of-payment clause,
shall not constitute a part of the estate of the individual insured for the
payment of his debts.� Nothing herein contained shall apply to any income
disability benefit in any action to recover for necessaries contracted for
after the commencement of the disability covered by the disability clause or
contract allowing such income benefit.
���� b.��� This section shall not
apply to group insurance covering the debtors of a creditor, to the extent that
such proceeds are applied to payment of the obligation for the purpose of which
the insurance was so issued.
����
c.���� Nothing in this
section shall apply to exempt the proceeds of a policy of group life insurance
from a lien against the proceeds established pursuant to paragraph (2) of
subsection a. of section 1 of P.L.2000, c.81 (C.2A:17-56.23b.) to satisfy a
judgment for child support entered against the insured or the beneficiary.
(cf: P.L.1971, c.144, s.17B:24-9)
���� 5.��� The Commissioner of
Banking and Insurance shall, pursuant to the "Administrative Procedure
Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt such rules and
regulations as are necessary to effectuate the purposes of this act.
���� 6.��� This act shall take
effect immediately.
STATEMENT
���� 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.