A Strong Offense
A Stronger Defense
With research and drafting assistance from Washington University extern, Kelsey Delong.
In Williams v. Hubbard, et. al., the Missouri Court of Appeals addressed the issue of whether a beneficiary of a decedent’s estate would be entitled to funds from the decedent’s account if the payable on death (“POD”) beneficiary or joint owner of the account was found to have procured the beneficiary or ownership interests through undue influence. In this case, the court found that the beneficiary could have rights to some of the decedent’s multiple accounts, but not all of them.
In this case, Betty Margaret Reynolds (“Betty”) hired Respondent Kenneth Nelson to draft several of her estate planning documents, including a beneficiary deed, a 2000 Will, and a 2006 Will. The beneficiary deed named Appellant Eric Williams as the sole beneficiary of certain real estate owned by Betty. The 2000 Will drafted named Norma Lamp and Erma Baughman as equal beneficiaries. The 2006 Will named Respondent Sandra Nelson and Appellant Eric Williams as equal beneficiaries.
Before the documents were drafted, Betty filled out a questionnaire detailing her assets and disclosed that she had seven accounts, including four bank accounts and three brokerage accounts. These accounts were designated either POD or jointly owned. Eric was not designated as a beneficiary or joint owner of any of the accounts. Before Betty’s death, she closed four of these accounts and opened new accounts.
Upon Betty’s death in 2010, she had eight accounts, all of which passed to Sandra outside of probate either through a POD designation or a joint ownership designation. Eric filed suit against Sandra and Kenneth, alleging that Sandra procured her interests in Betty’s accounts through undue influence and that Kenneth breached fiduciary duties and committed legal malpractice by drafting the 2006 Will, which named Sandra, Kenneth’s wife, as a beneficiary.
Kenneth and Sandra filed motions for summary judgment contending that Eric had no standing to challenge the transfer of assets to Sandra. Their rationale was that Eric would not be entitled to Betty’s assets even upon a finding of undue influence because Eric was not a prior beneficiary or joint owner on any of the accounts. In response, Eric argued that, upon a finding of undue influence, the accounts would revert back to Betty’s estate, and Eric would receive one-half of the assets. Relying on the court’s holding in Crocker v. Crocker*, the circuit court granted the motions for summary judgment in favor of Kenneth and Sandra and found that, because Eric suffered no harm, he lacked standing.
With respect to the various types of accounts, the Court held as follows:
1. When there was no prior beneficiary designation on the account, upon a finding of undue influence, the account would revert to Betty’s estate; therefore, Eric, as beneficiary of the estate, had standing
2. When an account had prior POD designations at the time of the alleged undue influence, the account would revert to the previously named beneficiary, instead of Betty’s estate; therefore Eric, as beneficiary of the Estate, lacked standing
3. When the account had a prior joint owner at the time of the alleged undue influence, the account would revert to the prior joint owner, instead of Betty’s estate; therefore Eric, as beneficiary of the estate, lacked standing
Interestingly, the account for which the Court held Eric had an expectancy had been funded with assets from the four prior accounts that Betty had closed, all of which were jointly owned with either Baughman or Lamp. The Court, however, noted that Eric’s claims of undue influence resulted from the POD placed on the new account, not the closing of the original accounts. Therefore, the beneficiaries of Betty’s estate did in fact have an expectancy in the account because there was a possibility that Betty was not unduly influenced to close the original accounts even if the addition of the POD to Sandra on the new account was the result of undue influence.
* Crocker v. Crocker, 261 S.W.3d 724 (Mo. App. W.D. 2007)