Court overturns account beneficiary designation

Life insurance beneficiary designations are not the only beneficiary designations that can be contested. Bank, retirement, 401k, IRA and other designations can also be contested.

In Estate of Minton, the Texarkana Court of Appeals upheld a jury verdict finding a decedent lacked sufficient mental capacity to execute Payable on Death (POD) designations. The dispute involved a checking account and various Certificates of Deposit (CD), owned by the decedent. The total value exceeded $400,000.

The decedent executed the POD designations in March of 2010, eight months before his death. The beneficiary had been a friend of the decedent for about three years. On behalf of decedent’s heirs, his estate administrator filed suit to overturn the designations, claiming alternatively that the decedent lacked sufficient mental capacity or was unduly influenced to make the designations.

The trial judge dismissed the undue influence claim, but allowed the capacity claim to go to the jury. The jury found the decedent lacked the required mental capacity to execute the POD designations. The court of appeals upheld the verdict, citing the following evidence:

  • Decedent stayed at McAllen Nursing Center from January 23 to January 24, 2010. The nurse's notes admitted into evidence indicated that he was alert and able to follow directions, but also that he was uncooperative and confused during his visit;

  • A few days later, he was sent to Legends Transitional Nursing Home (Legends). The nursing home's records indicated that Minton was alert, but forgetful and demanding. An “Elopement Risk Assessment,” signed by the attending physician, indicated that he was cognitively impaired with poor decision making skills, and his “Fall Risk Assessment” indicated that he had “intermittent confusion;”

  • He was admitted to McAllen Nursing Home on February 5, 2010. The admission notes indicated that he was alert but forgetful and confused. According to the nurse's notes, he was discharged on his own request from the nursing home the next day, after being instructed on the risks of leaving;

  • A friend testified that in January 2010, decedent had problems thinking and making decisions, was easily agitated, and would not allow health care workers to assist him. He testified that he often had employees run errands for decedent but that it was difficult to find help because he was rude to anyone who helped him. He was bed-ridden and would stay for hours in his own feces and urine, but would refuse to be cleaned and would request that the police be called to have his healthcare workers removed;

  • the day after he signed the POD designations, he was admitted to the emergency room at McAllen Heart Hospital. The hospital admission documents stated that he was unable to sign the documents. The hospital records also indicated that he had “adjustment disorder.”

The beneficiary of course provided testimony and some evidence that the decedent had capacity to execute the designations. He also argued the the contestants did not have evidence of incapacity on the very day of the designations, only before and after.

The court of appeals found that there was plenty of evidence supporting the jury’s verdict of lack of capacity. The court also cited basic Texas law that evidence of incapacity could come from before and after the execution: “the jury was entitled to infer that evidence of Minton's irrationality and dementia in the months preceding and following the signing of the contract were probative of his capacity to contract on the date the contract was signed .”

If you are involved in a dispute regarding an account beneficiary designation, it is very important to contact a lawyer experienced in evaluating such disputes.