Alkhafaji v. TIAA-CREF Individual & Institutional Services, LLC
620 Pa. 530
| Pa. | 2013Background
- Court evenly divided; Superior Court order affirmed; former justice did not participate.
- Decedent Abbass Alkhafaji owned six TIAA-CREF retirement annuities; marital settlement named three children as beneficiaries.
- In July 2007, while hospitalized, decedent dictated a will changing beneficiaries to include all biological children and current wife.
- After death, executor sent will (and marital settlement) to TIAA-CREF; company refused to honor will and interpleaded funds; trial court held will could constitute notice; Superior Court reversed.
- Question: whether a will can validly change a contract beneficiary when the annuity contracts require written notice to the insurer; doctrine of substantial compliance; statutory provision 20 Pa.C.S. §6108 governs non-testamentary designation of beneficiaries.
- Decedent’s will was sent posthumously; contracts allowed notice to take effect even after death; 6108 clarifies beneficiary designations are not testamentary.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a will change annuity beneficiaries despite notice provisions? | Alkhafaji argues will validly changes beneficiaries. | TIAA-CREF argues notice requirements preclude will-based changes. | No; per curiam affirmance required substantial compliance with policy terms. |
| Is substantial compliance sufficient to effect a post-death beneficiary change via will? | Substantial compliance should allow changes by will. | Strict, not generalized, compliance required by policy terms. | Depends on contract language; majority view requires substantial compliance unless policy prohibits. |
| Does Carruthers control whether a will can change beneficiaries? | Carruthers should not bar a will from changing beneficiaries. | Carruthers supports no will-based change. | Disapproved Carruthers to the extent it barred will-based changes. |
| What is the effect of 20 Pa.C.S. §6108 on this issue? | 6108 supports non-testamentary designation of beneficiaries. | 6108 does not authorize posthumous changes via will if policy requires notice. | Section 6108 does not override contract-based notice requirements. |
Key Cases Cited
- Sproat v. Travelers’ Ins. Co., 289 Pa. 351 (Pa. 1927) (mode prescribed by policy must be followed; substantial compliance possible)
- Riley v. Wirth, 313 Pa. 362 (Pa. 1933) (waiver via insurer interpleader when notice is waived for beneficiary change)
- Breckline v. Metropolitan Life Ins. Co., 406 Pa. 573 (Pa. 1962) (substantial compliance allows post-death effective changes if every reasonable effort made)
- Carruthers v. $21,000, 290 Pa.Super. 54 (Pa.Super. 1981) (will cannot operate to change beneficiary under Carruthers; substantial compliance issue)
- Estate of Ravdin, 484 Pa. 562 (Pa. 1978) (contracts vs. probate; interpret insurance contracts by mutual intent; notice provisions matter)