However, the survivor was told that no beneficiary designation had ever been filed for the deceased person's retirement plan. Therefore, plan benefits would be paid to a relative, and not according to the will or trust. The mistake may yet be fixed, but could have been avoided entirely with proper planning.
The February 1994 appellate case of Willis v. California discusses a similar problem: conflicts between an "estate plan" and related "beneficiary designations" that were never updated.
In 1981, Mr. Willis signed a form naming his daughter to receive certain employment benefits if he died. Mr. Willis re-married in 1982. His employment income thereafter was "community property," so that Mrs. Willis owned part of his benefits.
Mr. Willis died in 1990, with several payments owed to him. Because he had never updated the form to name his wife, the money was paid to his daughter. Mrs. Willis then sued the state (Mr. Willis' employer), claiming that it should have paid half of the money to her, because it was "community property."
The California Court of Appeal reviewed the applicable statutes governing community property and payments to survivors, and found that the law authorizing the state's payment to a named designee (Government Code section 1249) overruled all other applicable laws.
The Court of Appeal also ruled that the payment did not eliminate Mrs. Willis' community property rights, so Mrs. Willis could seek her share of the money from Mr. Willis' daughter.
You should always recognize that your will, trust, and other estate planning documents will not override a beneficiary designation for your employee benefits, retirement accounts, or life insurance.
Even if you believe that you only need a simple will, you must review your beneficiary designations to make sure they match your intended estate plan. If you have a variety of benefit packages, retirement plans, and insurance policies, you must be careful to confirm that each beneficiary designation is correct.
Go to Table of Contents for Mark J. Welch's Booklet, "Estate Planning for California Residents"
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