Can You Contest a Beneficiary on a Bank Account?
There are many reasons why you might contest a bank account beneficiary. For example, if you believe that the beneficiary on the account is someone other than whom the decedent had intended to name as a beneficiary, you may want to consider pursuing legal action.
Before moving forward with contesting the designated beneficiary on a bank account, it’s important to ensure that you have standing (which we go over in a later section) and a valid reason for disputing the beneficiary designation. Whether the decedent was unduly influenced or there were mistakes within the beneficiary designation form, it’s generally the contesting party’s responsibility to provide proof.
Learn more about valid reasons for contesting a bank account beneficiary from the following sections.
Why Might You Contest a Bank Account Beneficiary?
Perhaps you, your father, and your sister had always been close. Your father had made it clear that he intended to pass all of his assets to you and your sibling. However, years later, after he passed away, you and your sibling discover that he designated a girlfriend who entered his life mere months before he died as the beneficiary on his bank account. You suspect this girlfriend unduly influenced your father to change his original beneficiary designation.
The scenario above is fairly common and is one of the key reasons why you may want to contest a designated beneficiary. If a scenario such as this applies to you, and you choose to contest the beneficiary designation in court, you’d be faced with the challenge of proving that a bad actor interfered with your father’s initial plans.
In many cases, there’s no wrongdoing at all. Something as simple as the phrasing of a document or a typo can cause enough confusion to bring about a dispute.
By understanding the grounds for contesting a designated beneficiary, you’ll be prepared to take legal action in a timely manner.
Lack of Capacity
The grounds for contesting a designated beneficiary don’t always involve wrongdoing. In some cases, the decedent may have simply lacked the capacity to make sound decisions about bank account beneficiaries.
Common reasons why a person may lack capacity include:
- Dementia
- Brain injury
- Old age
- Impairment from drugs or alcohol
If you suspect that your deceased loved one had made changes to their bank account beneficiaries while lacking capacity, it generally will be your responsibility to prove it with evidence. Perhaps there’s a doctor who can attest to the decedent’s lack of capacity or provide documentation to confirm it.
Undue Influence
Undue influence entails someone exerting excessive pressure on a vulnerable person to obtain a particular result. Typically, the end goal of undue influence is to gain the victim’s trust so they will act according to the influencer’s best interests, as opposed to their own. Caregivers, fiduciaries and family members are the most common perpetrators of undue influence.
If you suspect undue influence because the beneficiary on a decedent’s bank account isn’t someone they would have named under normal circ*mstances, then you will need to prove your suspicions with evidence in order for the beneficiary designation to be overturned. Proving undue influence can be challenging, so it is recommended that you seek the assistance of a probate attorney.
Improper Execution or Mistake
Sometimes, if the required steps were not taken by an account holder to designate a beneficiary or they made a mistake on the beneficiary designation form, it’s possible the beneficiary designation can be contested.
Some of the ways mistakes can be or documents can be executed improperlyinclude:
- The beneficiaries’ names are misspelled.
- The document lacks the necessary signatures.
- Critical information, such as the date, is missing from the document.
Fraud
Suppose that a decedent’s adult child intentionally lied to the decedent about how dire their financial situation was in order to be designated as the beneficiary on their bank account. When someone intentionally deceives a person for personal or financial gain, it is considered fraud, and it is a valid reason for contesting a beneficiary designation.
If you have evidence that someone perpetrated fraud in order to be designated as a beneficiary on a decedent’s bank account, then speak with a lawyer as soon as possible to learn how to effectively prove your claim.
Forgery
While forgeries are not common in the context of bank account beneficiary designations, it’s not unheard of for them to occur. For example, an adult child could forge their parent’s signature on a change of beneficiary designation form and mail the documents to the bank, or upload them online, to effectuate a change without their parents’ knowledge or consent.
That said, forgeries can be exceedingly difficult to prove. If you suspect forgery, an experienced attorney can help you gather the evidence you need and litigate your case in court.
Who Can Contest a Bank Account Beneficiary?
To contest a bank account beneficiary, it’s necessary to have standing. Standing means that you have a financial interest in the account. In other words, if you were to successfully contest the beneficiary designation, you should stand to receive some or all of the account. Learn more about the parties who generally have standing to contest a bank account beneficiary from the sections below.
Interested Parties
Anyone with a financial interest in the bank account is considered an interested party. This may include the decedent’s heirs-at-law and beneficiaries of their estate or trust who would stand to inherit a portion of the account if the beneficiary designation were to be invalidated.
If the decedent previously designated a beneficiary on their bank account who they later disinherited, the disinherited beneficiary also may be considered an interested party. With this scenario, if the newest beneficiary designation were overturned, the previous beneficiary designation may be reinstated.
If you’re somebody who stands to inherit assets from a decedent, then it’s likely you qualify as an interested party.
Estate or Trust Representatives
The executor/administrator of the decedent’s estate or the trustee of their trust also generally can contest the designated beneficiary on their bank account, since they are fiduciaries who are responsible for representing the beneficiaries’ best interests.
If a bank account beneficiary is invalidated, the account generally will pass to the decedent’s estate (unless the decedent’s primary estate planning document is a trust), where it will be distributed to beneficiaries by the executor/administrator in accordance with the terms of the decedent’s will or the laws of intestate succession.
How to Contest a Beneficiary Designation on a Bank Account
If you’re confident that you have standing and a valid reason for bringing a contest, the first step for contesting a bank account beneficiary is to consult with a beneficiary attorney to determine what the best strategy would be for moving forward.
It’s important to note that contesting a beneficiary generally isn’t a streamlined process — it may involve gathering evidence and litigating in court.
The following sections delve deeper into the steps of this process.
Work With a Beneficiary Attorney
Unless you have substantial legal experience and ample time, you’ll want to hire an attorney to help you contest a bank account beneficiary.
From evaluating your claims and preparing petitions, to procuring the evidence you’ll need to litigate, the help of an attorney will make contesting a bank account beneficiary an easier experience. While some legal processes are simple enough for the average person to manage, contesting a beneficiary is not one of them.
Find Out Whether the Bank Account Has Been Paid Out
Can you contest a beneficiary on a bank account if the account has already been depleted by a wrongful beneficiary? The answer is that it depends. It’s possible you could recover the funds from the wrongful beneficiary with the help of a skilled attorney, but doing so may be difficult.
In this type of situation, it is always ideal to take legal action immediately following the death of the decedent to reduce the likelihood of the asset already having been claimed.
If the asset has already been claimed, a qualified probate attorney can send the bank a letter demanding that the bank freeze the account until the dispute is resolved. Once the account is frozen, an attorney can help you file a petition to confirm ownership of the disputed funds.
File Petition With the Court
Once you have an experienced beneficiary attorney on your side, it’s time to file a petition that details your reasons for contesting the bank account beneficiary in question. Once your petition has been filed with the court, the court will set a date for the initial hearing, where your lawyer will be able to make oral arguments in support of your claim.
Note that some cases may be resolved at mediation outside of court. At mediation, a neutral third party assists the parties involved in a dispute with reaching a resolution. Mediation can save parties a significant amount of time and money.
Gather Evidence
Whether you’re trying to prove undue influence, fraud, or a decedent’s lack of capacity, you’re going to need to find evidence. Only by proving wrongdoing or lack of capacity can you secure a favorable outcome in court.
More than likely, finding the evidence you need will be a cumbersome process, as it may involve conducting extensive discovery, which can include sending subpoenas and written discovery, and taking depositions of critical witnesses. The good news is that an attorney can help you streamline the discovery process to make it as efficient as possible.
Resolve the Case via Settlement or Trial
Once the petition has been filed and you’ve conducted the necessary discovery, a qualified attorney can use the information and documents you’ve gathered as leverage to negotiate a favorable settlement. Most settlements occur at a private mediation, as noted above.
If the case does not resolve by way of settlement, a qualified attorney can help you bring your case to trial, where documentary evidence and witness testimony will be introduced before the court and, ultimately, a judge or jury will decide whether you’ve presented enough evidence to win your case.
