There are many assets that can pass from one person directly to another after they pass away – by making use of beneficiary designations. The owner of an account can list a beneficiary, who obtains ownership of the account without it having to pass through probate.
This seems straightforward, right? However, there are some cases where a beneficiary designation could be disputed.
When could families challenge designations?
The situations in which families can dispute a beneficiary designation are very similar to those in which they can challenge a will under California law. Family members or individuals with a stake in the estate can challenge a will if they have evidence of:
- Undue influence or fraud
- The will creator’s lack of sound mind
- Errors in the will
For example, say someone pressured a loved one with late-stage dementia to change their will. The changed will may not be valid, due to both undue influence and a lack of capacity.
The same could potentially go for a suddenly revised beneficiary designation. If your loved one was not of sound mind when they made this change, it is possible that families could challenge the designation. Put simply, you must have grounds to dispute it.
Beware: Failing to change designations can cause issues
Family disputes in probate are unfortunately common. However, there are ways to mitigate them.
When you experience any changes in your life, it is a good idea to change your estate plan to match. That includes reviewing and adjusting any beneficiary designations. That way you can avoid potential disputes over your wishes and assets even if these assets do not pass through probate.
When would this be necessary? One of the most common cases is after a divorce. When you are married, you may list your spouse as the beneficiary on various assets, including but not limited to:
- Bank and savings accounts
- Life insurance policies
- Retirement accounts
During or after a divorce, it is critical to change designations that list your ex-spouse, so they do not inherit anything you do not want them to.
Using beneficiary designations allows assets to pass directly from one person to another. So, it is important to make sure they are correct to avoid the eruption of conflicts and disagreements between family members.