Probate Litigation Attorneys
An IRA custodian waives its change of beneficiary procedures by filing an interpleader action and the clearly expressed intent of the account owner prevails
LaBlanc v. Wells Fargo (2012), 134 Ohio St.3d 250. The decedent originally designated his mother and stepfather as the beneficiaries on his IRAs. When he married, he designated his wife as the sole beneficiary on the IRAs. In contemplation of a divorce, the decedent notified a representative of the custodian of the IRAs that he intended to change the beneficiaries back to his mother and stepfather. Before the change-of-beneficiary forms were mailed to the custodian, the decedent committed suicide.
The former beneficiaries and the wife sought a declaratory judgment as to who was entitled to the proceeds from the IRAs. The custodian of the IRA filed an action in interpleader. When the custodian of an individual retirement account files an interpleader action against the parties claiming to be the beneficiaries of the account, the custodian waives its contractual change-of-beneficiary procedures, and a person who proves that the owner of the account clearly intended to designate him or her as the beneficiary does not also need to prove that the owner substantially complied with the change-of-beneficiary procedures in order to recover. Instead, the account owner's clearly expressed intent controls. The trial court held.
On appeal, the court held that, if an IRA custodian filed an interpleader action, and the account owner's intent to change beneficiaries was clearly communicated to the custodian, the proceeds would be paid to the newly designated beneficiary rather than to the original beneficiary. In such a case, proof of substantial compliance with the custodian's procedures for changing the beneficiary was not required.