Dear Moneyist,
My sister recently passed away, unexpectedly. She was never married and had no children, but there are 4 living siblings. She had 7 retirement accounts. The beneficiary was changed on 6 accounts to her friend back in 2013. The 7th, which has the most money, was changed to this same friend a year ago.
In looking at her living conditions it was obvious that she was facing some challenges, both mentally and physically. She has a home and a car. The car is paid off, but not the home. This friend said that the home and car should be handled by the family.
Is there a possibility that we — as next of kin — can possibly contest the friend as beneficiary since there was no will? Also, can take possession of the car?
Sister
Dear Sister,
Your sister obviously had a good friend. Without a spouse or children, she or he obviously meant enough to her to be included on all 7 retirement accounts. If your sister was not of sound mind when she changed that final account, you may have a case. However, the fact that the same person was listed on all previous accounts as far back as 2013 suggests that this friendship was real, as was her wish to leave all 7 to her friend. That trail of documents would, I suspect, make a challenge extremely difficult. Given your sister’s physical and mental health, drawing a line between her living conditions and this friendship seems like an equally arduous task.
The reasons for contesting a beneficiary are difficult to prove, but not impossible. They are similar to those for challenging a will: mistakes, omissions, forgery, outright fraud or undue influence. The latter would typically involve a sudden change of plan, unusually active involvement of your sister’s friend or secrecy, or even a deteriorating physical or mental condition, according to Albert Goodwin, a New York-based estate lawyer. “Fraud can either mean that the beneficiary designation was slipped to the decedent under the guise of a different document, or the decedent signed the beneficiary form relying on lies told to him by the people benefitting,” he writes.
Don’t miss: Can I deduct the life-insurance premiums that I pay as alimony?
You would have to prove your sister was not of sound mind or “non compos mentis.” According to DiVernieri, DiVernieri and Cotter law firm in Staten Island, N.Y., “The idea of someone being non compos mentis is usually not brought up until after they have passed away. In most cases, doctors will let family members know when someone is not of sound mind anymore so the family can make the proper arrangement.” Sometimes, there are clear cases that something is amiss, as with this case of a man who left his $1 million estate to strangers and dead people. In that case, the estate attorney — strangely — advised the letter writer not to pursue a case.
This just gives you a taste of what might lie ahead. But you letter raises other questions too. What reasons do you have for contesting the beneficiary of your sister’s will? Do you believe your sister’s friend should have taken better care of her? It’s not a quid pro quo. A judge may argue that, while it was no one’s express responsibility to address her living conditions, her family would have been better placed to fill that role. There are often no winners when one party claims the moral high ground. Your sister took great trouble to list her friend as a beneficiary in 7 separate documents over a number of years.
Failing any allegations of misconduct by her lawyer or doctor, let it be.
Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used).
Would you like to sign up to an email alert when a new Moneyist column has been published? If so, click on this link.
Get a daily roundup of the top reads in personal finance delivered to your inbox. Subscribe to MarketWatch's free Personal Finance Daily newsletter. Sign up here.