by John Darer CLU ChFC MSSC CeFT RSP CLTC
A mother whose daughter committed suicide on St. Patrick's Day is contesting the naming of her own mother (the decedent's grandmother) as beneficiary in
2016, 5 years prior to her daughter's death. More than $3.6M in future periodic payments appear to remain following Brittany's death, including $1,387,500 in lump sums and thousands of dollars in monthly payments that increase each year by 4%.
The Back Story
The structured settlement that is subject of the contest was established in 1997 pursuant to a Compromise for Minor's Settlement of a medical malpractice lawsuit against a Pennsylvania doctor. The Pennsylvania Cat Fund funded the structured settlement and its periodic payment obligation was assigned to Allstate Settlement Corporation (ASC), which in turn purchased an annuity from Allstate Life Insurance Company.
The annuity application listed the Estate of Brittany Zellner as beneficiary. The annuity contract stated that "unless changed by ASC, the beneficiary is as named in the application. If there is no beneficiary named or living, the beneficiary is the Measuring Life's estate".
The Bullet Points ( Sourced from publicly filed pleadings, citation below)
Brittany Zellner's father predeceased her
- Brittany Zellner's parents, who brought the medical malpractice suit received a copy of the annuity from Carole Strickland, Claims Manager for the Pennsylvania CT Fund on or around June 30, 2006, in response to Tara Erb's June 27, 2006 letter. The Strickland letter asked to contact her if there were any questions.
- On June 13, 2016, Brittany sent a notarized letter and requested a changed of beneficiary to her grandmother V. Ann Kichline
- On June 23, 2016 an Allstate Life change of beneficiary form was completed and submitted to Allstate naming V. Ann Kichline as beneficiary of 100% of the proceeds in the event of Brittany Zellner's death. The Allstate form was also notarized as required by Allstate.
- Brittany Zellner and her grandmother resided at the same address.
- On June 28, 2016, Allstate sent Brittany Zellner a letter confirming the beneficiary change.
- On March 17, 2021, Brittany Zellner tragically took her own life.
- On April 2, 2021, Ms. Kichline contacted Allstate to notify them of Brittany Zellner's death.
- On April 16, 2021 , Tara Erb, Brittany's mother claimed " at the time the annuity settlement was approved by the court, Brittany's father and I were the named beneficiaries to the account". This was not substantiated by the plain reading of a copy of the annuity policy or the Court Order.
- In the same email Tara Erb reported by email to Allstate Settlement Corporation that Decedent “suffered from severe mental health issues” and asserted that Ms. Kichline pressured Decedent to change the beneficiary designation under the Annuity, knowing that Brittany was suicidal for several years. Erb asserted in the letter that "her mother stated that she wanted to make sure that when Brittany did this she would be financially set"". Erb alleges in the email that Kichline "had a confidential relationship and would benefit from Brittany's death, alleging she knew about the suicide plan, she knew when she wanted to do it, she knew about the knives and razor blades all over the house and the urn Brittany purchased with her own name on it that was in her closet for weeks prior to the event and yet no intervention to have her evaluated and/or committed"
- On April 22, 2021 Kichline, the named beneficiary submitted a claim for the annuity proceeds to Allstate
- On April Kichline was appointed as the Executor of the Estate by the Court of Common Pleas, Lehigh County, Pennsylvania.
- In response to Erb's letter of April 16, 2021, on May 7, 2021, Allstate wrote to Ms. Erb requesting that she provide
documentation by June 6, 2021 supporting a legal basis for contesting the validity of the June 23,
2016 beneficiary change request. On May 7, 2021, Allstate also wrote to Ms. Kichline advising of the beneficiary
- Because the file did not reflect a response from Ms. Erb, on June 7, 2021, Allstate
processed Ms. Kichline’s claim and she received monthly payments of $5,624.32 each, due April
8, 2021 through and including June 8, 2021.
- On or about June 24, 2021, Allstate received a letter from counsel for Ms. Erb dated June 15, 2021, asserting that she contested any beneficiary payment to Ms. Kichline. He indicated that it was his understanding that the parents were named beneficiary of the annuity and requested copies of all beneficiary designations.
Allstate Files Interpleader Action
The claims of Ms. Erb, a potential beneficiary of the Estate, led Allstate to suspend monthly payments and the due lump sum payments from the structured settlement and to file an interpleader action
Citation: ALLSTATE LIFE INSURANCE COMPANY and ALLSTATE SETTLEMENT CORPORATION, Plaintiffs v V. ANN KICHLINE, individually and as Executor of the Estate of Brittany Zellner, and TARA ERB, Defendants, Eastern District of Pennsylvania Case 2:21-cv-03342 Complaint and Exhibits
Allstate seeks a determination regarding the proper beneficiary of the remaining structured settlement payments due under an annuity issued for the benefit of Zellner. Their interpleader should be granted. Counsel have not yet appeared for the defendants.
- Tara Erb maintains in her email of April 16, 2021 that "when the annuity settlement was approved by the court, she and her late husband were named beneficiaries on the account"
- The Court Order is silent on the beneficiary of the annuity.
- An annuity is an insurance contract not an account.
- The Court Order refers to an up front lump sum of $35,086.80 (to be deposited into an interest bearing account in which the payees were Ms. Erb and her late husband, as parents and natural guardians of Brittany Zellner (i.e. in their representative capacity). Perhaps therein lies confusion. Ms. Erb's lawyer indicated in his communication to Allstate that it was his understanding that the parents were named beneficiary of the annuity.
- The Settlement Agreement refers to beneficiaries in the description of payments but nobody is actually named.
- The Qualified Assignment refers to the Annuity Application for the Payee and only on the annuity application is the beneficiary named and it is the Estate of Brittany Zellner. (Ibid. pp 23 and 28 of 65). The Allstate application states if no beneficiary is named the proceeds will be paid to the Estate.
- Brittany would not have been able to change here beneficiary until she was of majority age.
- Brittany exercised a change of beneficiary at age 21, after the age of majority and 5 years prior to her death.
- Why did it take 9 years for Tara Erb to get a copy of the annuity contract from the Pennsylvania Cat Fund?
A selection of posts about Structured Settlement Beneficiaries
Structured Settlement Beneficiary Designations March 24, 2021