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.
