Account changes by a loved one are often done in secret, and direct evidence of undue influence is rarely available. In cases where manipulation has led to changes in a beneficiary designation that have caused you harm, the claim typically hinges on whether there was a confidential relationship between the person making the changes and the beneficiary. While beneficiary designations on joint, payable-on-death (POD), transfer-on-death (TOD) or in-trust-for accounts are generally presumed valid, this presumption can be contested if there is evidence of undue influence. Once a confidential relationship is established, the burden shifts to the beneficiary to prove that the changes were made freely and independently.
Facts supporting the finding of a confidential relationship and undue influence include:
- Trust and confidence between the individuals involved.
- An imbalance in their dealings.
- One person’s superior knowledge of the situation due to a trusted role.
- A dominant influence exerted by one person over the other.
- The vulnerability or dependency of the person making the changes.
- The person’s advanced age or physical and mental health issues.
- The person's reliance on the beneficiary for financial or medical decisions.
- Isolation of the person from trusted advisors or family members.
- Unexplained changes to account beneficiaries.
- Sudden involvement of the beneficiary in the person’s financial matters.
- Discrepancies between previous intentions and the final beneficiary designation.
- The beneficiary receiving a disproportionately large share of assets compared to others.
When these factors are present, they may create a presumption or inference of undue influence. However, the specific rules of evidence in each jurisdiction will determine whether this presumption is sufficient to challenge the beneficiary designation.
If you have questions or would like to discuss your situation, please reach out to Ron Colicchio at Ronald.Colichhio@saul.com or (212) 980-7200.
