Legal Question in Wills and Trusts in Virginia
Will enforcement
My brother by a legally prepared will, left all of his property, tangibles, and intangibles to his church and myself. However, his savings plan with Dominion Power,they are insistant on following a beneficiary he designated(his parents), in 1982. The will was dated 30 July 2004. It was his intent that his will be followed. His relationship with his parents was such, that during the year and a half of his illness, his father did not visit or speak to him the entire time. My brother and I were extremely close and I wish for his wishes to be followed. The savings plan is a defined contribution ''employee pension benefit plan'', according to Dominion Power is subject to ERISA. I do not understand this, only that my brother's will is apparently meaningless.
Can this disbursement be blocked? Does his recorded will have any power to affect the ultimate outcome?
The local attorney said,''he just wasn't sure in a case like this, normally the will in the Commonwealth of Virginia is the guideing force''. He promptly turned me over to his assistant who stated,''we'll have the funds in the estate account in 30 days''!(90days ago). Now they have ''blown me off'', and said it is nothing they can do. This, without any explanation why? Thanks
2 Answers from Attorneys
Re: Will enforcement
The beneficiary designation in the retirement account is the last word, even though the will was later. I can think of at least two reasons for this result:
First, a pension type arrangement enjoys special tax free privileges under with the IRS. In order to maintain that status, the pension plan must make payments only to members or their designees. If a plan administrator makes any distribution to other than a member or their designee (with one exception - a distribution under a court order for a former spouse) the entire plan could lose its tax exempt status.
Second, who is to say your brother was not aware of his beneficiary designation, and intended that his parents receive the funds, even though they may have been on the outs at the time of his death? Neither the plan administrator nor the IRS wants the plan to be involved in the sort of fact-based litigation that would be necessary if it were possible to challenge a beneficiary designation because the member-beneficiary relationship had changed.
Re: Will enforcement
A will covers the money owned by the decedent
at his death, but does not cover other items
or property with special designations.
For example, life insurance is money that is
not owned by the decedent at their death, because
it does not exist until they die. Also, it is
a contract to pay the beneficiary, and it is
governed by the terms of the contract.
A retirement savings plan is (probably) similar,
in that the money was only available upon
retirement, or payable to the designated
beneficiary on death.
Now, I say probably. One would have to look at
the documents creating the savings plan and
exactly what it says to be sure. For example,
if your brother had the right to withdraw the
money without waiting until a later retirement
age, then perhaps it is money that should be
included in his estate. You may have to get a
court ruling on whether or not it should be
included in his will and his estate.
This is one of many reasons why there is more
to preparing a will than simply getting a form.
I know that your brother apparently had legal
advice, and this is one of the topics that should
have been raised by the attorney in preparing
the will.