Joint And POD Accounts: Weapon of Choice Of Transferees When Exerting Undue Influence?
by James F. McDonough, Jr. on October 1, 2013
Will contests alleging undue influence are not uncommon. A will was, for many years, the only means of transmitting property from a decedent to an heir. New forms of ownership were created as the result of the public’s disdain for will contests and delays in transferring property though probate. The result was new forms of ownership that were designed to provide the survivor with immediate access to the bank or brokerage account. Transfer on Death (TOD), Payable on Death (POD) and joint tenancy with the right of survivorship (JTROS) accounts pass property by operation of law outside of the probate estate. Life insurance and retirement benefits are similar in that property passes in accordance with the beneficiary designation contained in form that may be filed by mail or on-line.
A person exerting undue influence will find it easier to be named as a beneficiary of a POD, TOD or JTWROS account rather than by will. When a charge of undue influence is leveled, the courts use a similar analysis to that in a will contest. Typically, when the moving party is able to demonstrate that certain factors are present, a presumption in favor of undue influence arises which must then be rebutted. Undue influence is presumed when a person having a confidential relationship actively secures or procures the instrument of transfer and is a beneficiary of such a transfer. The person is able to prevail upon the donor because of the donor’s ill health, frailty, lack of capacity.
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