## Facts

- Donald T. Grubbs transferred an individual retirement account (IRA) to Raymond James & Associates, Inc. in 2003 and designated Chrissey (Jannie Christine) Nunnenman as beneficiary.
- In May 2005, Grubbs was hospitalized; he executed a formal will on June 3, 2005, leaving his entire probate estate to his mother, Shervena Grubbs, and naming her executrix.
- The June 3 will did not mention the IRA.
- Grubbs died on June 9, 2005.
- Months after Grubbs’s death, Shervena asserted she found a dated handwritten note in his Bible that purported to leave the IRA to her.
- Shervena sued to freeze and recover the IRA proceeds; the trial court accepted the handwritten note as effecting a beneficiary change and awarded the IRA to Shervena.
- Nunnenman appealed, challenging the finding that the handwritten note validly changed the IRA beneficiary designation.

## Issues

1. Whether a handwritten note, discovered after death, can validly change an IRA beneficiary designation governed by the IRA custodial agreement.
2. Whether the handwritten note could operate as a testamentary instrument affecting the IRA, and, if so, whether it was revoked by the later formal will.
3. Whether the evidence supported a finding that Grubbs substantially complied or took all reasonable steps to change the IRA beneficiary.

## Decision

- The Arkansas Court of Appeals reversed and remanded.
- The court held the handwritten note did not effect a valid change of beneficiary for the IRA.
- The court concluded the trial court clearly erred in awarding the IRA proceeds to Shervena rather than to Nunnenman, the named beneficiary on the IRA account.

## Legal Principles

- An IRA is a contract between the account holder and the custodian; beneficiary rights and changes are governed by the IRA agreement’s terms.
- When a contract prescribes a specific method for changing beneficiaries, an informal writing not submitted and accepted under that method is ineffective to change the designation.
- Testamentary intent must be taken from the language of the instrument itself, not from unexpressed intent.
- A later, properly executed will containing an express revocation clause revokes prior inconsistent testamentary writings, including a purported holographic writing, to the extent applicable.
- A substantial-compliance theory requires proof the decedent took reasonable steps toward meeting the contractual change procedure; executing a formal will while failing to pursue the required IRA change process supports a finding of noncompliance.

## Conclusion

The court held that the IRA beneficiary designation could be changed only in the manner required by the IRA contract, and the post-death handwritten note neither satisfied that procedure nor overcame the effect of the later formal will; Nunnenman therefore remained the valid IRA beneficiary.


Nunnenman v. Est. of Grubbs, 2010 Ark. App. 75, 374 S.W.3d 75 (Ark. Ct. App. 2010)