[This opinion has been published in Ohio Official Reports at
83 Ohio St.3d 150.]
KINKLE ET AL., CO-EXECUTORS, APPELLEES, v. KINKLE, APPELLANT.
[Cite as Kinkle v. Kinkle, 1998-Ohio-119.]
Contracts—Antenuptial agreement waiving spouse’s interest in individual
retirement account controls over beneficiary designation clause of an
individual retirement account contract entered into prior to the antenuptial
agreement.
An antenuptial agreement waiving a spouse’s interest in an individual retirement
account controls over the beneficiary designation clause of an individual
retirement account contract entered into prior to the antenuptial agreement.
(No. 97-61—Submitted April 22, 1998 at the Seneca County Session—Decided
September 23, 1998.)
APPEAL from the Court of Appeals for Allen County, No. 1-96-40.
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{¶ 1} In June 1992, decedent, Harold Kinkle (“Harold”), opened an
individual retirement account (“IRA”) with Fidelity Investments Southwest
Company (“Fidelity”). On the IRA application, Harold did not designate a
beneficiary. The application states that if no beneficiary is designated, the
beneficiary will be the surviving spouse or, if the applicant has no surviving spouse,
the decedent’s estate. At the time he opened the IRA account, Harold was a
widower with two adult children, appellees herein.
{¶ 2} In December 1994, decedent married appellant, Mary E. Kinkle
(“Mary”). Shortly before their marriage, the couple entered into an antenuptial
agreement whereby each released all rights to the other’s property. Both parties
agreed that they would “waive and release all rights, claims, titles, and interests *
… which he or she might, by reason of his or her marriage to the other, acquire in
his or her property or estate … .” Harold expressly included the Fidelity IRA as
SUPREME COURT OF OHIO
an individual asset in the inventory attached as an exhibit to the antenuptial
agreement.
{¶ 3} Three months later, Harold passed away. On September 8, 1995,
Fidelity made payment of the IRA funds in the amount of $36,234.65 to Mary. In
October 1995, Harold’s children brought this action on behalf of his estate in the
Allen County Common Pleas Court to recover the IRA funds paid to Mary. The
trial court granted appellees’ motion for summary judgment, finding that the IRA
funds were property of the estate and should be paid over to the appellees. The
Third District Court of Appeals affirmed the trial court’s decision.
{¶ 4} The cause is now before this court upon the allowance of a
discretionary appeal.
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Brad C. Roush, for appellees.
James F. Blair and Derek A. Younkman, for appellant.
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PFEIFER, J.
{¶ 5} We hold that an antenuptial agreement waiving a spouse’s interest in
an IRA controls over the beneficiary designation clause of an IRA contract entered
into prior to the antenuptial agreement.
{¶ 6} Appellant argues that the IRA contract, and its Massachusetts choice
of law provision, should determine the disbursement of the IRA funds. Appellant
argues that under Massachusetts law the beneficiary designation clause is
controlling and effective according to its terms. The relevant portion of the “IRA
Beneficiary Designation” clause reads as follows:
“I understand that if I choose not to designate my beneficiary(ies) my
beneficiary will be my surviving spouse, or if I do not have a surviving spouse, my
estate. I am aware that this form becomes effective when delivered to Fidelity and
will remain in effect until I deliver to Fidelity another form with a later date.”
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January Term, 1998
{¶ 7} Pursuant to statute and case law in Massachusetts, testamentary
disposition of retirement funds does not override the beneficiary designation made
in the account contract. The relevant statute reads:
“Any designation of any beneficiary in connection with and as provided by
an instrument intended to establish a pension, profit-sharing, or other deferred
compensation or retirement plan … shall be effective according to its terms,
notwithstanding any purported testamentary disposition allowed by statute, by
operation of law or otherwise to the contrary … .” M.G.L.A., Ch. 167D, Section
30.
{¶ 8} Thus, in Massachusetts, one cannot defeat the beneficiary designation
on a retirement fund contract by noting in a will that one is changing the beneficiary.
The change must be made within the retirement fund contract itself. In Fitzpatrick
v. Small (1991), 29 Mass App. 704, 564 N.E.2d 1035, the court ruled that the
decedent’s statement in his will that the proceeds of his IRAs should be divided
equally between his brother and sister had no effect, since the beneficiary
designation in the account contract listed only his brother.
{¶ 9} Even if Massachusetts law were controlling, the statute and case cited
by appellant would be inapplicable. They concern testamentary disposition, which
involves a unilateral decision by the holder of the retirement fund to change the
beneficiary in a separate document outside the IRA contract. However, there is no
testamentary disposition at issue in this case. Here, the beneficiary herself denied
any interest in the funds at issue. She did so pursuant to an antenuptial agreement
of unquestioned validity, a contract evidencing a meeting of the minds of her and
her soon-to-be husband.
{¶ 10} Thus, there are two contracts involved in this case. The first, the
contract between Fidelity and Harold, was performed according to its terms. Since
Harold did not designate a specific beneficiary, the beneficiary became his wife
through the language of the IRA contract. Fidelity performed under the contract.
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SUPREME COURT OF OHIO
At that point, the second contract, the antenuptial agreement governed by Ohio law,
came into play. The question is whether through an antenuptial agreement a spouse
may waive her right to be a beneficiary under an IRA contract. We find that she
may certainly do so.
{¶ 11} This court has long held that prenuptial agreements controlling the
distribution of assets upon the death of a spouse are enforceable. Juhasz v. Juhasz
(1938), 134 Ohio St. 257,
12 O.O. 57,
16 N.E.2d 328. In fact, this court has held,
“In Ohio, there is no public policy, statute or case law which prevents parties to
antenuptial agreements from cutting one another off entirely from any participation
in the estate of the other upon the death of either.” Hook v. Hook (1982),
69 Ohio
St.2d 234, 235,
23 O.O.3d 239, 239-240,
431 N.E.2d 667, 668. Appellant disputes
neither those holdings nor the validity of her antenuptial agreement. She would
have us simply ignore the existence of the antenuptial agreement as far as the IRA
at issue is concerned. However, the contract that she entered into with Harold
Kinkle determines her rights to Harold’s property and estate, not the contract
Harold entered into with Fidelity.
{¶ 12} The language of the prenuptial agreement is bluntly straightforward:
“Except as herein provided, Harold Kinkle and Mary E. Downey do hereby
covenant and agree with each other that they will neither during the lifetime of each
other nor after his or her death take, claim demand, or receive, and do hereby waive
and release all rights, claims, titles, and interests, actual, inchoate, or contingent,
in law and equity which he or she might, by reason of his or her marriage to the
other, acquire in his or her property or estate … .” (Emphasis added.)
{¶ 13} Mary Kinkle expressly waived and released all rights and interests,
including contingent interests, that she might acquire in Harold’s property or estate
by virtue of her marriage to him. Mary’s interest in the IRA account was contingent
on Harold’s death, and arose only by virtue of her marriage to him — she was never
listed specifically as a beneficiary under the IRA contract.
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January Term, 1998
{¶ 14} At the time Harold entered into the contract, Mary was not his wife.
Only because she became a “surviving spouse,” i.e., by reason of her marriage to
Harold, did Mary’s interest arise. Mary waived any interest of that kind in the
antenuptial agreement. The Fidelity IRA specifically was listed as Harold’s
property in Exhibit B to the antenuptial agreement. Mary, the would-be rightful
beneficiary of the IRA funds under the IRA contract, therefore specifically waived
an interest in them under the terms of the antenuptial agreement.
{¶ 15} We therefore affirm the judgment of the court of appeals.
Judgment affirmed.
MOYER, C.J., DOUGLAS, RESNICK, F.E. SWEENEY, COOK and LUNDBERG
STRATTON, JJ., concur.
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