Imagine being married for more than three decades — and the day your spouse dies, you learn they’d given your entire retirement savings to someone you don’t know.
That’s what happened to Chesterfield resident Patti McFarland,
“I guess I have to discuss it in order to explain why it needs to be fixed,” she says. “It’s just an archaic rule that nobody’s corrected.”
Patti reached out to VPM News to find out how this is legal in Virginia and how others can protect themselves.
Patti married her late husband William McFarland — Mc (pronounced mack), as most people called him — in 1986.
“I came up to visit him because we’d known each other in Miami. I came up to visit and basically stayed,” she says. “Six years later, we had one son and a year after that we had another son. By then, he was with the city of Richmond Fire Department and I was boarding horses and hauling horses and working for attorneys.”
Patti and Mc agreed to use Patti’s income to cover daily expenses while Mc contributed his income to the couple’s only retirement account.
“I paid a bunch of bills and he saved the money,” she says. “He paid big bills. He paid the mortgage and the car insurance. But I paid [for] the groceries and the daycare and upkeep of the house and that sort of thing.”
Patti describes the health of her marriage as “average.”
“There were some really good times,” she says. “But it didn’t last 36 years.”
It reached a point where there were more lows than highs: “At the end, people said, ‘How could you marry somebody like that?’ And I said, ‘He’s not who I married. He’s a different person.’”
Patti never set up her own retirement account. She was always listed as her husband’s primary beneficiary — meaning she would receive the money in his account when he died.
When Mc retired in 2019, he did something many people do: He moved his employer-based 401(k) into an individual retirement account. It’s a common move because IRAs can be easier to manage and offer more flexibility and investment options.
Patti remained Mc’s primary beneficiary.
In April 2020, Mc was diagnosed with prostate cancer and underwent hormone and radiation therapies.
“That’s when things went crazy,” she says.
Patti noticed a radical change in his behavior. He began drinking and making big purchases — including a brand-new Mazda Miata that was delivered to their home.
He was also spending a lot of time at a local strip club, where he became close with one of the dancers at the beginning of the COVID-19 pandemic. Court documents allege they were sharing explicit texts and photos.
“He told me that the girls in the bars, because they closed the bars down, didn’t have work,” Patti says. “So he was giving them money to pay their rent and buy their groceries and give their dogs shots and that sort of thing.”
Then in August 2021, Mc was diagnosed with kidney cancer. Documents indicate that the dancer knew Mc was sick.
“Mc had all his affairs in his computer and wouldn’t give me the passwords,” Patti says. “So a lot of bills and things he did online and I had no way to keep them up, to find out even what they were.”
Mail started piling up after Mc was hospitalized in December 2021. Patti opened some of the letters, including several from the company that managed his IRA. She called the number listed.
“The man that answered the phone was his financial advisor but he couldn’t talk to me,” she says.
The financial advisor told Patti he needed to see the power of attorney document proving she had permission to handle Mc’s finances. She tried faxing and mailing the document to him, but it was the holidays and he didn’t get it in time.
Mc died on New Year’s Day 2022. He had a do-not-resuscitate order. Patti says she couldn’t bear to watch him suffer.
“As I told the doctor, if he had been a horse, he would have been put down three days ago,” she says. “There’s no hope for this man.”
That day Patti spoke with Mc’s financial advisor again. She let him know Mc had died.
That’s when he told her she was no longer her husband’s IRA beneficiary.
“It all hits you at once,” she says. “There’s no retirement. I have a huge mortgage. I have this vehicle in the yard that I can’t drive that I have to pay for. There’s credit card bills that are outstanding.”
She learned soon after that conversation that the account was signed over to the dancer from the strip club.
“I have trouble being honest and politically correct, but my first thought was ‘I should have left that son of a bitch living long enough to get this power of attorney to the financial guy,’” she says. “That was the first thought, which is awful.”
Patti reached out to 17 attorneys, but none would take the case. The 18th attorney finally agreed to help get her money back.
What’s the deal with IRAs?
IRAs are, in some ways, the Wild West of retirement accounts.
Anyone with an income can open one with a bank or a brokerage firm — unlike 401(k) plans, which are offered only through employers.
Another key difference is that employer-based accounts require a married account holder to get written consent from their spouse in order to change the beneficiary.
But as Lauren Zangardi Haynes, a certified financial planner with Spark Financial explains, in most cases, IRAs do not require spousal consent.
And there’s no federal regulatory body currently overseeing them.
Zangardi Haynes says it’s up to individual states to pass laws governing IRAs. For instance, if an account holder lives in what’s called a “community property state,” they’re required to get permission from their spouse to make changes to the account.
“Functionally in a community property state, when you are married, all property belongs to both spouses,” Zangardi Haynes says.
There are nine community property states, mostly in the Southwest. Virginia is not one of them. In Virginia, Zangardi Haynes says, “Certain assets, if you keep them separate, can remain separate even if you’re married.”
That means that in the commonwealth — and most states east of the Mississippi River — a person can essentially disinherit their spouse without the spouse ever knowing.
“You can do it online,” Zangardi Haynes says. “You can just log into your brokerage account and you can just do it. There’s nobody stopping you from doing it, or calling a call center.”
“It does happen,” says attorney Van Smith. “We do get calls on this each month.”
Smith practices family law, estate planning, and estate and fiduciary litigation in Henrico County.
He says in most cases, there are legal options for a spouse who has been cut out of an IRA. They could present in court evidence that the deceased spouse was mentally incapacitated or the victim of fraud.
“If you’re not claiming someone was taken advantage of, and in fact the deceased spouse simply made a choice — they were in their right mind when they made it — even though it’s frustrating and tragic, they’re going to have to interact with the courts with a skilled lawyer.”
In some cases, Virginia law allows disinherited spouses to file a claim for a percentage of what they expected from the IRA. But the amount they’d receive would be discounted or offset by any other assets they acquired in the marriage, like property or a large investment.
The other option, Smith says, is to do what Patti did: sue to claw back the money.
But why not avoid this hassle altogether and require spouses to consent to — or at least be notified of — changes to IRA accounts as with 401(k) plans?
“It’s a very good point, and at some level I could see a very strong argument for a policy in favor of that outcome,” Smith says.
But there might be pushback.
“Some people may consider that an intrusion,” he says. “Forcing the written modification notice could intrude on the married person’s right to simply give their money to who they wish.”
There might be other downsides. State Sen. Glen Sturtevant is interested in finding out what they are. He’s also an attorney, and is familiar with Patti’s case.
“It’s obviously a situation where it was an unfair and unjust situation for her personally,” he says. “So I’d like to get a legislative fix. We also just have to do our due diligence to make sure we’re not creating other problems for other people in the process.”
Sturtevant asked the Virginia bar to weigh in on the issue. And he wants to find out why other non-community property states aren’t changing the law around IRAs.
“It obviously makes good sense so that you don’t have situations like this, but when I see that it’s not done anywhere else, that requires some additional research,” he says.
And on the federal level, the U.S. House and Senate both introduced versions of a bill called the Women’s Retirement Protection Act in 2023 to address the issue.
An unfavorable outcome
“Coming up, I knew several girls that danced, and by golly, I admire them,’ Patti says. “They’re out there working their butts off — literally.”
At one point in the legal fight, she offered the dancer the interest accrued over the course of the short relationship she had with Mc — about six months’ worth, she says.
But the dancer didn’t accept the offer.
After all the legal maneuvering, they settled out of court. Patti got a fraction of the more than $300,000 in Mc’s IRA.
Patti took her horses to Florida last fall and is caring for her aging father there. Her mother died in 2023 and left her enough money for the move.
“I’m in my 60s,” she says. “It’s not like I’m going out and getting a new job and starting a new career. Where do you go? I don’t know how some people would have gotten around this.”
This story was produced with the help of Andrea Melendez as part of the VPM News series Curious Commonwealth.
