Challenging POD Accounts
The following article will appear in the Arizona Republic regarding how one might challenge a pay on death (POD) bank account. It is based on a question posed to me by a reader:
Q: My husband was diagnosed with dementia and resided in a senior living facility. He made frequent trips to the bank and kept changing the beneficiary of a CD account worth $100,000. The bank informed me that they were not going to allow him any more banking privileges because of his condition. He died a few weeks ago and I have discovered that he made one final beneficiary change, naming another dementia patient at the facility. What are my rights to claim this money? Audrey, Tempe.
A: As I’ve mentioned in previous articles, Payable on Death (POD) bank accounts are bullet proof in terms of trying to show intent: that is, the decedent didn’t intend for the money to go to just the named beneficiary. This argument often arises when the account owner names one of several children as beneficiary. The non-beneficiary children often argue that the parent left the money to the beneficiary for convenience to pay bills and then split with the others. This argument fails as the courts will not look at the underlying intention in naming a beneficiary.
However, Audrey, your case is different. A beneficiary designation may be attacked on the basis that the account holder did not have legal capacity. This means that due to mental illness or deficiency he lacked sufficient understanding or capacity to make or communicate responsible decisions concerning his person and property.
It appears that your husband was incapacitated when he made the beneficiary designation. My suggestion is that you immediately file with the Court to be named as the personal representative of your late husband’s estate. This will give you authority to contact the bank and report that you are contesting the beneficiary designation. The bank will likely agree to freeze the account to allow you to obtain a Court order with a finding that your husband was incapacitated and that the funds should be paid to his estate.
If the bank won’t agree, you’ll need to seek an immediate court order to freeze the account.
