Ramsey County District Court File No. 62CV126581
Daniel M. Duffek, Peterson, Fram & Bergman, P.A., St. Paul, Minnesota (for plaintiff)
Joseph F. Schmidt, Law Offices of Joseph F. Schmidt, Minneapolis, Minnesota (for appellant)
Alan I. Silver, Tiffany M. Quick, Bassford Remele, P.A., Minneapolis, Minnesota (for respondent)
Considered and decided by Stoneburner, Presiding Judge; Rodenberg, Judge; and Hooten, Judge.
When the custodian of an individual retirement account (IRA) brings an interpleader action allowing the district court to determine a controversy between parties who each claim to be the rightful beneficiary of the IRA, the district court, acting in equity, may determine that the named beneficiary is not the rightful beneficiary if the evidence establishes that the IRA owner has substantially complied with the IRA custodian's procedures for changing the IRA beneficiary or has done all that the owner reasonably believed was required by the custodian to change the IRA beneficiary.
In this interpleader action to determine the beneficiary of an IRA, appellant, who asserts that he is the intended beneficiary, challenges the district court's grant of summary judgment in favor of respondent, the named beneficiary. Appellant argues that the district court erred by failing to consider evidence of (1) the intent of decedent IRA owner to change the IRA beneficiary and (2) decedent's reasonable belief that she had, in fact, effectively changed the IRA beneficiary before her death.
The district court declined to consider any evidence of decedent's intent or conduct and held that decedent's failure to comply strictly with the IRA custodian's stated procedure for changing an IRA beneficiary was conclusive. Because we conclude that the district court erred by implicitly holding that it was without authority to consider decedent's intent and actions taken to change the IRA beneficiary, we reverse and remand.
In March 2009, when Helen King (decedent) first established an IRA account with General Mills Federal Credit Union (GMFCU), she already held several accounts with GMFCU, including a savings account and three certificates of deposit, all with payable-on-death designations (POD accounts). Until November 2009, all of decedent's accounts, including the IRA, designated respondent Colin Callahan as the sole beneficiary. Decedent's accounts, including the IRA, were listed separately on statements that were regularly sent to decedent. But the accounts did not have separate identifying numbers; rather, all were referenced under decedent's GMFCU member number.
The only evidence in the record of a GMFCU written policy about how to change an IRA beneficiary is a copy of GMFCU's "Traditional IRA Disclosure Statement" (disclosure statement), which consists of seven, three-column pages in small type. A provision in the last paragraph in the middle column of page six states:
You can change your beneficiaries in the future by completing a Beneficiary Change From. It is important to complete a new Beneficiary Change Form each time that something occurs that causes you to want your IRA to go to different beneficiaries.
Appellant, Jesse L. Lofgren, is decedent's grandson. According to Lofgren, decedent became dissatisfied with Callahan's work in the fall of 2009 and decided to make Lofgren the primary beneficiary of all of her GMFCU accounts. Lofgren attests that he was present when decedent called GMFCU and requested the forms to effectuate this intent, and that he knows what forms GMFCU provided to decedent.
In November 2009, decedent submitted an "Account Change Form" to GMFCU. The completed form that decedent returned to GMFCU has her member number at the top, a check mark in a box specifying "add/change payable on death (P.O.D.) account, " and a handwritten note at the top specifying "[t]o apply to all accounts with [GMFCU]." The form designates Lofgren as the primary beneficiary and Callahan as the secondary beneficiary. Decedent wrote at the bottom of the form ...