Opinion ID: 2356141
Heading Depth: 1
Heading Rank: 2

Heading: Beneficiary Designation

Text: An IRA constitutes a contract between the person who establishes the IRA for his or her retirement and the financial institution that acts as the custodian for the IRA. Smith v. Smith, 919 So.2d 525 (Fla.Dist.Ct.App.2006). An IRA includes designation of beneficiaries to receive the residue in the event of the retiree's death. Id. The question presented in this case is who or what entity, if any, is identified on the beneficiary designation form by the references to Fund E, Trust, a social security number, and Fred's birth date. We are called upon to interpret the contract. In Coleman v. Regions Bank, 364 Ark. 59, 65, 216 S.W.3d 569, 574 (2005), we stated: The first rule of interpretation of a contract is to give to the language employed the meaning that the parties intended. See First Nat'l Bank of Crossett v. Griffin, 310 Ark. 164, 832 S.W.2d 816 (1992); Valmac Indus., Inc. v. Chauffeurs, Teamsters & Helpers Local Union No. 878, 261 Ark. 253, 547 S.W.2d 80 (1977). In construing any contract, we must consider the sense and meaning of the words used by the parties as they are taken and understood in their plain and ordinary meaning. Id. The best construction is that which is made by viewing the subject of the contract, as the mass of mankind would view it, as it may be safely assumed that such was the aspect in which the parties themselves viewed it. Missouri Pac. R.R. Co. v. Strohacker, 202 Ark. 645, 152 S.W.2d 557 (1941). It is also a well-settled rule in construing a contract that the intention of the parties is to be gathered, not from particular words and phrases, but from the whole context of the agreement. First Nat'l Bank of Crossett, 310 Ark. 164, 832 S.W.2d 816. The IRA Beneficiary Designation form at issue provides: In the event of my death, pay the full value of my SolomonSmithBarney, Inc. Individual Retirement Account (in equal proportions in the case of multiple beneficiaries unless otherwise indicated) to the Primary Beneficiary(ies) listed below. I understand that if a primary beneficiary predeceases me, his or her share will be divided equally among all surviving primary beneficiaries. You may add the notation per stirpes (or by rights of representation) or per capita next to each name if you wish the children of a beneficiary that predeceases you to receive a share of this account. Percent of Name of Primary Beneficiary Relationship Date of Birth Social Security No. benefits Kelsey McEwen Alexander Daughter xx-xx-xxxx xxx xx xxxx 67% Fund E of the Anne Stodder Trust xx-xx-xxxx xxx xx xxxx 33% McEwen Trust for Frederick John McEwen From this form, it is clear that Anne wished that two beneficiaries receive the residue of her account upon her death. It is clear that Kelsey was to directly receive 67%. What is to happen to the remaining 33% is the issue. Had Anne not executed the Sixth Amendment to her trust, Fund E would have been easily identified as Fund E of the Anne Stodder McEwen Trust for Frederick John McEwen. However, Fund E was revoked by the Sixth Amendment. Kelsey argues that upon revocation, Fund E predeceased her under the terms of the IRA Beneficiary Designation form, leaving her as the only beneficiary. Predecease means to die before another. Black's Law Dictionary 1216 (8th ed.2004). Thus, Kelsey argues that the fund died. The IRA Beneficiary Designation form was obviously drafted under the assumption that the beneficiaries would be natural persons. A natural person is a human being. Black's Law Dictionary 1178 (8th ed.2004). This court has recognized the difference between natural and artificial persons. See Standard Pipe Line Co. v. Burnett, 188 Ark. 491, 66 S.W.2d 637 (1933). We reject the argument that revocation of a trust term equates to predecease. The terms of the beneficiary designation indicate that 33% is to be distributed to the Anne Stodder McEwen Trust for John Frederick McEwen. The Sixth Amendment simply substituted new trust terms providing for Fred, in lieu of, which is defined as in the place of or instead of. Gramling v. Baltz, 253 Ark. 352, 253 Ark. 361, 362, 485 S.W.2d 183, 189 (1972). Thus, there was and there remains an Anne Stodder McEwen Trust, and that trust contains terms providing for distribution to John Frederick McEwen. Additionally, we note that the beneficiary designation of Fund E also includes a reference to a social security number and birth date. The parties agreed that the birth date was Fred's. The social security number was not identified, but the parties assert that it is either Fred's or the tax identification number for Anne's trust. In either case, the presence of the social security number, as well as the birth date, further support the conclusion that Fred is to receive 33% through Anne's trust. The IRA beneficiary designation made it clear that Anne intended Fred to receive one-third of the residue in trust. However, as of the date of Anne's death, the IRA beneficiary designation form indicated that the third was to be paid to Fund E of Anne's trust, which benefited Fred. The Sixth Amendment revoked Fund E. As of the date of Anne's death, the beneficiary designation was uncertain. As the circuit court noted in its August 25, 2006, letter, attorney Pat Moore informed Anne by a letter of January 27, 2003, that the Sixth Amendment to the trust was basically a restatement of the plan you already had, setting it in one document and making the additions you requested. The Sixth Amendment specifically stated that the additions to benefit Fred were in lieu of the revoked fund. Thus, the circuit court implicitly found an ambiguity and correctly applied parol evidence to resolve the uncertainty. Where there is uncertainty of meaning in a written instrument, an ambiguity is present. Black's Law Dictionary 88 (8th ed.2004). Where an ambiguity is found within the contract, parol evidence may be admitted. Ultracuts Ltd. v. Wal-Mart Stores, Inc., 343 Ark. 224, 33 S.W.3d 128 (2000). It may not be admitted to alter, vary, or contradict the written contract, but it may be admitted to prove an independent, collateral fact about which the written contract was silent. Id. The circuit court properly considered the letter, which supports the conclusion that Anne intended for Fred to receive in trust one-third of the remainder of her trust. We find no error in the decision that the beneficiary designation form directs that 33% of the residue in the IRA be paid into the Anne Stodder McEwen Trust for the benefit of Fred. Kelsey also argues that the circuit court erred in basing its decision on unjust enrichment. Because we hold that the circuit court correctly awarded the funds to Fred based on the contract, whether the circuit court erred in asserting an alternative basis for its decision becomes moot. We do not address moot issues. Davis v. Williamson, 359 Ark. 33, 194 S.W.3d 197 (2004).