There are many transfers of wealth at the time of death through POD (Pay on Death) and TOD (Transfer on Death) designations on bank accounts. Such distributions are outside of a probate or trust administration. A question often posed to us is “Can I challenge a POD designation made on a bank account by my [*] before [his or her] death?” The answer is yes.
Florida case law allows for the challenge of such designations. In Keul v. Hodges Blvd. Presbyterian Church, the Court invalidated a POD designation based upon undue influence. The Court said,
…a POD account, although not in the strictest sense a testamentary devise and not subject to the formalities required by wills, functions as a will substitute and partakes of many of the same equitable considerations that apply to testamentary transfers. Florida law and policy against abuse of fiduciary relationships apply to contracts, inter vivos transfers, and testamentary transfers, and are properly applied to determine whether a POD designation has been obtained through undue influence.
Such designations can also be challenged by proving that the maker lacked the capacity to make such a designation. Florida contract law requires that the maker have “capacity” (be competent) for such a designation to be effective.
Challenges have also been made where there was a forgery or where a fiduciary (eg. attorney in fact under a power of attorney) wrongfully modified an account. The owner of the account must be the person who executed or authorized the designation.
Achieving a successful outcome in a beneficiary designation case requires extensive investigation and collection of evidence to prove the elements in any of the above challenges. Obtaining evidence from the financial institution, financial consultant/planner, estate planning attorney, doctors, family members, and friends may all be required. Most importantly, finding a law firm familiar with this area of the law is critical.
By Kirk Bauer, Esquire