In November of 2023, I did a post on this blog titled The Intersection of Family Law, Estate Law and Federal Law, regarding the reported Appellate Division case In the Matter of Michael D. Jones, Deceased.
That case dealt with certain Series EE savings bonds that were not listed in the parties’ divorce agreement and which were payable to the wife on the husband’s death. The husband died post divorce and litigation ensued regarding the ownership of the bonds.
The Appellate Division determined that the belonged to the wife. In doing so, there was a long discussion of both statutory and federal case law, including a US Supreme Court case. The Appellate Division noted that, “A savings bond is a contract between the United States and the bond owner, and Treasury regulations are incorporated into the bond contract.” The court further noted that the United States Supreme Court extended the preemption holding to bonds held in the beneficiary form. Further, the Court noted that the Supreme Court held that “survivorship provisions of the federal regulations must control, preempting, if necessary, inconsistent state law which interferes with the legitimate exercise of the Federal Government’s power to borrow money.” As such, the Supreme Court held that “[u]nder the federal regulations, [the brother was] entitled to the bonds unless [the decedent] committed fraud or breach of trust tantamount to fraud” in designating him as beneficiary.
The Appellate Division further noted that if the divorce agreement had listed the bonds as the decedent’s property, that would have been sufficient to override the prior payable on debt designation. Since that did not exist in the parties’ divorce agreement, the Appellate Division found that the wife was entitled to the bonds – not as an offset against the equitable distribution owed to her.
The case went up to the New Jersey Supreme Court who decided it on January 27, 2025. The Supreme Court affirmed the Appellate Division, but for slightly different reasons.
The Supreme Court discussed NJSA 3B:3-14, which deals with the revocation of probate and non-probate transfers by divorce and agreed with both parties that the statute does not conflict with and thus, was not pre-empted by federal law regarding savings bonds. In doing so, the Supreme Court held:
Because N.J.S.A. 3B:3-14(a) does not supersede the terms of a governing instrument, and because the terms of the bonds at issue here prevent the automatic revocation of a pay-on-death provision following a divorce, no such automatic revocation occurred under the exception set forth in Section 3- 14(a). As the New Jersey statute incorporates and follows the relevant federal regulations, we agree with the parties that preemption does not apply here.
The Court then turned to the estate’s argument that wife’s interest in the bonds was revoked by the parties’ divorce settlement agreement. The Supreme Court disagreed.
In doing so, the court held that:
Michael purchased the disputed bonds during his marriage to Jeanine and named Jeanine as the pay-on-death beneficiary. Thus, absent a valid transfer or removal of Jeanine’s status as beneficiary, Jeanine became, from the moment of Michael’s death, the sole owner of the bonds under 31 C.F.R. § 353.70(c)(1).
The Department of the Treasury permits the reissuance of bonds when a divorce decree ratifies or confirms “a property settlement agreement disposing of bonds or that otherwise settles the interests of the parties in a bond.” 31 C.F.R. § 353.22(a). A party can establish the validity of the judicial proceedings by submitting certified copies of the final judgment, decree, or court order. Id. at .23(a).
The DSA in this case, however, is completely silent regarding the bonds. Indeed, the Estate’s own argument, to which we turn next, that the catchall provision in Section 1 of the DSA is the only place in which the savings bonds are contemplated, essentially concedes that the bonds are absent from the agreement. And the record contains no suggestion that Michael took any steps to have the bonds reissued in only his name or to provide evidence of the DSA to the Department of the Treasury as required by the regulations. See id. at .22(a), .23(a).
The Court went on to note that:
… The Estate is correct that the U.S. savings bonds, which were marital assets not listed in the DSA, belonged to Michael at the time the DSA was executed and during his life. The moment Michael passed away, however, Jeanine became the sole owner of the bonds as the pay-on-death beneficiary per 31 C.F.R. § 353.70(c)(1).
The Department of the Treasury will not recognize “a judicial determination that impairs the rights of survivorship conferred by [the] regulations upon a coowner or beneficiary.” Id. at .20(a). The trial court’s holding here — which assumed that Michael sought to divest Jeanine of the savings bonds by virtue of their divorce — is exactly the type of judicial determination the federal regulations do not allow. The trial court’s ruling impaired Jeanine’s right of survivorship as beneficiary of the bonds based on
nothing more than its assumption that Michael likely intended to do so. The trial court did so even though the terms of the parties’ DSA — which did not impair Jeanine’s right — should govern under both state law contract principles, see County of Atlantic, 230 N.J. at 254, and the federal regulations that require clear expression in a divorce decree and further steps, like reissuance and proof of valid judicial proceedings, see 31 C.F.R. § 353.22(a),.23(a). In essence, the trial court’s decision accomplished what N.J.S.A. 3B:3-14(a) declines to do through its deference to governing instruments: the decision created an automatic transfer of the bonds notwithstanding state and federal statutes and regulations preventing such a transfer. Thus, although we disagree that Section 3-14(a) is preempted by federal law, the Appellate Division correctly reversed the trial court’s judgment.
As noted when I blogged on this case after the Appellate Division decision, The takeaway here is that had the divorce agreement included all assets, including the bonds, then the result is different. Put another way, more precision in a divorce agreement regarding which assets each party is to get is almost always the better practice which clearly was an expensive lesson here.

Eric Solotoff is the editor of the New Jersey Family Legal Blog and the Co-Chair of the Family Law Department of Fox Rothschild LLP. Certified by the Supreme Court of New Jersey as a Matrimonial Lawyer and a Fellow of the American Academy of Matrimonial Attorneys, Eric is resident in Fox Rothschild’s Morristown, New Jersey office though he practices throughout New Jersey. You can reach Eric at (973) 994-7501, or esolotoff@foxrothschild.com.