The New Jersey Supreme Court reversed the Appellate Division’s judgment ordering a supplementary hearing to determine a retiring police officer’s probable intent regarding the disposition of unpaid retirement benefits, ruling that because he had made no explicit beneficiary designation, the benefits must be paid to his estate as required by statute. Isaac v. Board of Trustees, No. 089370 (N.J. July 31, 2025).
Keith Isaac was a police officer in Newark, New Jersey, and a member of the Police and Fireman’s Retirement System (PFRS). In 2013, Keith applied for special retirement benefits, listing his wife, Roxanne, on the application in a section titled Marital/Survivor Information. He was terminated from the City of Newark in July 2014. The application was approved by the Board of Trustees of the PFRS (the Board) on September 12, 2016, but was effective on August 1, 2014, the first day of the month following his termination. At that time, Keith had accumulated unpaid benefits of $208,950.03. He died before they were disbursed. At Keith’s death, he was estranged from Roxanne. His brother was the executor of his estate.
In March 2017, the Division of Pensions and Benefits (the Division) notified Roxanne that she was entitled to all benefits that Keith would have received if he had not died. The Division paid her the $208,950.03 in unpaid benefits and a monthly survivors’ pension of $5,833.33 per month. No notice was provided to Keith’s estate of the payment of unpaid benefits, and in June 2018, the estate asked the Division to reconsider its decision to pay Roxanne the unpaid benefits. The Board responded that Keith had nominated and designated Roxanne as his beneficiary on his application and that the unpaid benefits had been correctly paid to her. Its decision was affirmed by the Office of Administrative Law, but the New Jersey Appellate Division remanded the case for a supplemental hearing to determine Keith’s probable intent regarding the disposition of the unpaid benefits because the record did not provide sufficient evidence that he had designated Roxanne to receive them. The estate petitioned the New Jersey Supreme Court for certification, contending that it was arbitrary, capricious, and unreasonable for the Board to pay Roxanne the unpaid benefits because she was not explicitly designated as the beneficiary as required by statute and that a supplemental hearing would constitute an unprecedented and improper expansion of the probable intent doctrine. The court granted its petition.
The New Jersey Supreme Court determined that under section 43:16A-12.2 of the New Jersey Statutes Annotated, a retiring police officer can, in writing on a form satisfactory to and filed with the retirement system, nominate anyone to receive their unpaid benefits; if no nomination is made, the funds are paid to the retirant’s estate. The retirement application Keith filed did not mention unpaid benefits or provide guidance about nominating a beneficiary for them. In contrast, the Marital/Survivor Information section where Keith had listed Roxanne’s name informed the Division only who should receive the survivors’ pension; Keith was not given the discretion to designate anyone else because the survivors’ pension was an automatic benefit intended to provide financial stability for a surviving spouse and children. Although the court agreed with the Appellate Division that it was arbitrary, capricious, and unreasonable for the Board to determine that the retirement application designated Roxanne as the beneficiary of Keith’s unpaid benefits, it disagreed with its order remanding the case for a supplemental hearing to determine Keith’s probable intent. The court reversed the Appellate Division’s judgment and ordered the unpaid benefits of $208,950.03 to be paid to Keith’s estate as required by the plain language of section 43:16A-12.2.
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