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Can Mo probate court order me, the beneficiary, to turn over proceeds of exwife's IRA to Estate based on KS decree?

San Diego, CA |

-Case is in Mo. Probate--IRA funds have not been released to me yet
-Divorced in KS 10 yrs ago. Decree and Prop Sett. Agree. filed in state of KS
-Wife died in Mo. without a will. Did not remarry and no children.
-Prop Settlement Agmt awarded each our own 401k,RolloverIRA accts as sole and separate prop free and clear of any right, title or interest in Husband/Wife. It did not reference beneficiary rights in the Prop Sett Agremt.
- No QDRO done.
-Mutual Release of Marital Rights in Property Settlement Agreement---does not state anything about beneficiary (other than life insurance) Does not list any accounts or referrence retirement beneficiaries. Does not use the word "waive
-Estate saying I waived rights to be beneficiary
-Estate wants MO Probate to order me to turn proceeds over

Attorney Answers 3

Posted

Yes, a court could order this. You have stumbled upon one of the most hotly contested and litigated issues in courts, these days. Each circuit handles these cases differently. Many impose a constructive trust on the former spouse. Under Federal law, you are entitled to payment as the beneficiary. State law may provide that you are not allowed to keep it, however. You need to consult with a probate attorney right away to determine how MO law treats this.

James Frederick

*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.

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Posted

I agree with Attorney Frederick.

Many states have a law where the divorced spouse is considered to have predeceased the IRA owner. You actually have a divorce decree that says you have separated your assets. Still your ex spouse should have changed the beneficiary designation to someone other than you. Ex spouses failed to do that so often many states passed the statute that I mentioned.

Recent court decisions are suggesting that there is unjust enrichment claim where someone like you gets the funds despite the divorce decree clearly stating the parties agreed to a financial parting of the ways. It s not clear though and it is not a slam dunk argument.

Based on the facts that you have described, I do not think there is any reason to think that you were expected to get the death benefit under the IRA. If there is any reason to think your ex spouse really wanted that, then you could have an argument that you are entitled to it.

One thing that I am little curious about is what jurisdiction does the MO court have over you since you apparently are living in San Diego. I am thinking that would have to pursue you in California. I am not sure what the jurisdiction issues are. I do not deal with jurisdiction issues often that cross state lines.

You do not live in Mo. The decedent did though and the IRA was her asset. Maybe they have jurisdiction over who the proper beneficiary is over the IRA asset. They would probably have to get a court order and then pursue you in CA to get reimbursed on it. though. I am curious though, is there any reason to think that you should have been the beneficiary? Did she fail to change it because of inadvertence or she was conflicted and maybe you were the intended beneficiary.

You could go to court in MO now and argue the funds are yours. If you do not, and lose the argument because you never showed up, they will have to transfer the order to CA and then you can argue the jurisdiction issue. However, if you lose it, then I do not believe you can re-argue the substantive issue. You may want to argue that now in MO. In my state, the ex-spouse beneficiary who inherits under an IRA has good arguments.

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10 comments

James P. Frederick

James P. Frederick

Posted

That is a great point, regarding the jurisdiction issue! I would have the cases in both jurisdictions reviewed to determine which one is more favorable to you. I would fight hard to get the case heard, there.

Asker

Posted

Thank you very much! Mo has statute 461.051 which revokes ex spouses beneficiary rights, but ERISA superceeds. My divorce was in KS and decree and Prop Sett Agree written in KS which has no such statute. Also, decree states "this agreement shall be interpreted under the laws of the State of Kansas". Exwife had knowledge for 10 years that I was listed as the beneficiary and did not change it. Ex wife had dissipated marital assets during the marriage which leads to her intent to leave me as beneficiary. Estate is relying on the Kensinger case, which seems to only find that the Estate could sue the exwife under for recovery of the retirement acct proceeds a a contract issue based on enforcing her waiver in the Prop Sett Agree.

James P. Frederick

James P. Frederick

Posted

I am amazed at the number of different cases involving this exact issue. We have had three cases involving similar facts during the past year, and I have had calls on several more cases. There seem to be two general approaches which are diametrically opposed. Since this is very state specific, you need to focus on the law of the state in question, which in your case, appears to be Kansas. ERISA provides that the benefits must be paid to the named beneficiary, unless there is a QDRO. State law then determines whether the waiver in the divorce applies. In our one case, we had intervening claims from the divorce that the ex-spouse had not paid, so we had reasons for the court not to enforce a waiver. I am not familiar with the Kensinger case or with Kansas law, in general. But I would imagine that you will find a great number of cases on this. It sounds like you probably have an attorney, but if you do not, I would highly recommend that you get one. It will cost something, (unless you can get the court to order the estate to pay), but it should help improve your chances of prevailing. Best of luck to you!

Asker

Posted

Thank you! Kensigner was a NJ case that the US Court of Appeals, Third Circuit, ruled on this year, March 2012. It states "The question before us, which is one of first impression in this circuit, is this: after the plan administrator distributes the funds to Adele, can the Estate attempt to recover the funds by bringing suit directly against Adele to enforce her waiver?" It finds that "If, after distribution, her (exwife's) right to these funds is challenged because of her common law waiver, that challenge will be litigated as an ordinary contract dispute. " The Kensinger case finds that the Estate can sue the exwife after the plan distributes the 401k proceeds to her, but does not go further to decide if the "waiver" should be upheld. This would seem to bring in the jurisdictional issue in my case because the divorce decree and Prop Sett Agree were written in Kansas, not Mo, and must be interpreted by KS law. If this becomes a "contract" case, then how can a Mo Probate Court make a finding of interpreting a Kansas agreement?

James P. Frederick

James P. Frederick

Posted

They would be required to follow Kansas law. The clerks would research it and let the judge know. It happens a fair amount of the time. Kensinger did not real DO anything, it sounds like. The Kennedy Case, several years ago said the same thing. I did a LOT of research on this issue, several months ago, when we had our 6th Circuit case. I did not look at Kansas cases, though. Your lawyer should be able to give you a good read on this. There are bound to be LOTS of recent cases. This issue is litigated a LOT. Let me know what you find out! Good luck!

Asker

Posted

Thank you so much. Appreciate your time and comments.

Eliz C A Johnson

Eliz C A Johnson

Posted

Mr. Frederick, you are awesome.

James P. Frederick

James P. Frederick

Posted

Thank you for the kind words Eliz! That is very sweet to say! And to asker, I wish you the best of luck with this!

Asker

Posted

Is there any law that states the Estate should pay for attorney's fees when the Estate contests a beneficiary?

James P. Frederick

James P. Frederick

Posted

That is a really tough question and one best suited for a CA lawyer, such as Ms. Johnson. Ordinary attorney fees are the responsibility of the estate. Arguably, if it is potentially for the benefit of the estate, the estate should cover the expense. Please let us know how this turns out.

Posted

If the assets are in the hands of the administator for her estate then you need to retain counsel right away to contest their designation of the funds as an estate asset.

Legal disclaimer: This answer does not constitute legal advice. I am admitted to practice law in the State of Missouri only, and make no attempt to opine on matters of law that are not relevant to Missouri. This answer is based on general principles of law that may or may not relate to your specific situation, and is for promotional purposes only. You should never rely on this answer alone and nothing in these communications creates an attorney-client relationship. less

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