Thank you for using Just Answer. I look forward to assisting you. My condolences on your loss.
Unfortunately, your sister is legally correct regarding the pension plan. Wills and trusts control assets that are not otherwise controlled by operation of law. Bascially, a beneficiary designation, whether it is payable on death with a bank, or life insurance, retirement plans, annuities, etc. trumps any provision in a will or trust. In other words, if an account, insurance policy, etc. names someone as a beneficiary, that will control, regardless of what her trust says.
Perhaps your sister got some bad advice about this, or didn't realize this at the time, but if she wanted the trust to control distribution of the pension plan, then the trust should have been made the designated beneficiary. Because your sister was left as the only beneficiary, she is entitled to the full proceeds.
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