Family Law - I've been curious for 3 years

testate and intestate
People prepare for the distribution of their property upon death through testate and intestate transfers.

When husbands and wives buy homes together and share accounts, they usually do so in joint tenancy with right of survivorship. At the moment a spouse dies, whatever interest the deceased spouse had in the property automatically passes to the surviving spouse. This is an intestate transfer -- meaning the property is NOT included in the decedent's estate and is not subject to probate.

Similarly, when people establish a IRA, they usually designate a beneficiary to whom the IRA assets will be distributed upon death. Again, this is usually an intestate transfer.

Even if a decedent leaves a will, if all of the decedent's property has been distributed via intestate transfers, then there is nothing left to be distributed through a will.

One-fifth of nothing is nothing.

I guess my question was, could this have been challenged if it could be established that it clearly was my father's intent that the IRA be split (yes, I know the best place to make this intent clear is on the designation form, but isn't it at least plausible that people sometimes are unaware of the legal weight that these forms have and are not signing them with much forethought? e.g. thinking... my will says to split this up, so I only need to put the executor here). Before any of this, I thought a person's express intent as written in their will trumped everything. As a hypothetical... what if in this scenario the will actually said "I want the IRA to be split amongst the children" but the designation form only had one listed?

Could this have been challenged? Yes. However, I don't know what your chances of success would have been without a detailed review of all documents and state law involved.

Your argument is the half-brother was the executor of the will -- and that you father named your half-brother as the beneficiary of the IRA in his capacity as the executor of the will -- and that your father thought that the assets of the IRA would be part of his estate to be distributed through the will. Your father might have thought that your half-brother would act as the "constructive trustee" of assets of the IRA that remained after his death for the benefit of all of his children.

However, your argument does not square with the beneficiary designation contained in the IRA itself. Courts will look at the four-corners of the document, in this case, the beneficiary designation in the IRA document, to ascertain the intent of the grantor. Courts will not look at extrinsic evidence of the grantor's intent unless the document is ambiguous. You could have argued that the document contained a latent ambiguity (one that is not apparent from the face of the document). If a court accepted your "latent ambiguity" argument, you might have been able to present extrinsic evidence (e.g., the will, testimony of your father's friends, neighbors, etc.) to argue that your father's intent was otherwise.

It's not really a court's job to try and second-guess what the decedent's intentions might have been if only he had been smarter or more sophisticated. People are assumed to have read the documents and understand what they are signing before they sign them. A court would most likely assume that your father read the designation of beneficiary on the IRA account and knew that by designating your half-brother as beneficiary, that your half-brother would be given whatever assets remained in the IRA upon his death.

What is done is done. He who sleeps on his rights loses them. Even if you could have challenged the beneficiary designation in the IRA and had the designation set aside in order to include the assets of the IRA into the decedent's estate for distribution through the will -- your opportunity to do occurred three years ago. But, if you want to agonize over the what-ifs, you can conduct a google search using the some of the following terms and phrases: intent, testator, "four corners," "latent ambiguity," "extrinsic evidence," "intestate transfer," "decedent's estate," "contructive trustee," etc.

If you read dozens of articles and cases concerning the issue, you might get a better feel for what might have been the outcome if you had challenged your father's designation of your half-brother as the beneficiary of the IRA (the intestate transfer) in order to include the IRA assets in the decedent's estate to be distributed in accordance with the will.

Thank you for your insight, Debra_Law. I did search years ago on google, but found nothing like what you are saying here. Perhaps things would have been different if I had... or if I would have found a lawyer that would have at least told me about these options.

But as you said, "what's done is done". And I repeat, my interest at this point is purely as a case-study in the legal system... if I'm agonizing about anything, it is understanding the seeming antagonism between the drive to systematize everything, rendering everything in black-and-white processes for efficiency's sake, and the drive to bring justice to each scenario, in sloppy and system-breaking ways.

Perhaps too philosophical of a question here. But your answer to the scenario helps affirm what I was thinking in that you first answered, essentially, "this is the way it is, no other options", and then, after further probing sounded more like you were saying I did indeed have some options (successful or no) to at least have my argument heard.

I guess it's a question of how big the buckets are that we place every scenario in. It's efficient/easier but more rigid if they are big and few while more difficult but applicable if they are small and many. It seems our legal system handles this tension by first attempting (strongly) to place everything in big buckets and then allowing some measure of resistence (good lawyers?) to stand up for your right to have your own bucket/hearing.

Intent
Beneficiary designations can be challenged, but the challenge will usually fail if the designation is clear and unambiguous. Look at this example:

Hubbard v. Shankle, 138 S.W.3d 474 (Tex. App.—Fort Worth 2004, pet. filed).

Insured removed his ex-wife as the beneficiary of his life insurance policy replacing her with Beneficiary, a woman whom he had been dating for about three months after meeting her on the Internet. Insured told Beneficiary that he wanted her to have the money and that he wanted her take care of his toddler’s college expenses in the future. Insured died during sexual activities with Beneficiary. The insurance company paid the proceeds of the life insurance policy to Beneficiary. Administratrix of Insured’s estate sued Beneficiary to recover the proceeds. The trial court determined that Insured voluntarily named Beneficiary as the recipient of his life insurance proceeds and that Beneficiary had no legal obligation to use any of the proceeds for the toddler’s future college expenses. Administratrix appealed.

The appellate court affirmed. The court examined the facts and determined that there was no evidence to support any of Administratrix’s claims which included breach of contract, promissory estoppel, actual fraud, constructive fraud, express trust, resulting trust, constructive trust, money had and received, unjust enrichment, and quasi-contract.

With regard to Administratrix’s argument that Insured created an express trust for the toddler, the court noted that Insured’s conduct was inconsistent with having trust intent. For example, Insured did not clearly place the proceeds in trust. When he changed the beneficiary designation on the policy, he did not include any type of trust designation. Rather, Beneficiary was named individually.

Although not actually stated so by the court, all that really existed was a daughter, (Administratrix), who was very upset because her father (Insured) removed his ex-wife (Administratrix’s mother) as the beneficiary a policy with a face value of over $100,000 naming a woman as the beneficiary with whom he had a very short-term relationship and whom “triggered” his death via sexual activity.

Thanks for your thoughtful replies, Debra. I appreciate them.