To learn how to challenge a pay on death designation or “will substitute” in Florida, you simply need to become familiar with how to challenge a will or trust.
The grounds to challenge a will or trust on the basis of undue influence in Florida is not limited to will contests alone.
Can I Challenge a Pay On Death Designation On The Grounds of Undue Influence?
Yes you can. Trusts, beneficiary designations and any other testamentary instruct can be challenged under the reasoning and logic of the seminal Florida Supreme Court case of Estate of Carpenter. The reasoning in Carpenter, if “a substantial beneficiary under a will occupies a confidential relationship with the testator and is active in procuring the contested will, the presumption of undue influence arises” applies to challenges to pay-on-death designations, testamentary transfers and “will substitutes” as well.
There is a public policy interest in preventing “abuse of fiduciary or confidential relationships” which has been codified through statute and case law. See, e.g., Fla. Stat. § 733.107 (implementing public policy against abuse of fiduciary or confidential relationships).
What Other Grounds Can I Use To Challenge A Pay On Death Designation?
A pay-on-death designation (“POD”), Totten trust, transfer-on-death provision, and other “will substitutes” may be invalidated for undue influence, fraud, duress, and overreaching. For example, a POD designation does not transfer ownership of funds until the death of the account holder. Although a POD designation has similar attributes of a testamentary transfer, Florida law considers a POD designation as an inter vivos transfer or gift.
Any property to which the estate has a claim is subject to a challenge in a probate court, including inter vivos gifts. See Laushway v. Onofrio, 670 So. 2d 1135, 1136 (Fla. 5th DCA 1996). In Laushway, the Fifth District held that the probate court had jurisdiction to entertain a challenge to an inter vivos gift procured by undue influence. Id.
In a 2015 case, the First District affirmed a trial court’s invalidation of a POD designation for undue influence. Keul v. Hodges, 180 So. 3d 1074 (1st DCA 2015). In Keul, the Court relied on the policy enunciated in Fla. Stat. § 733.107 and In re Estate of Carpenter, 253 So. 2d 697, 701 (Fla. 1971), in order to hold that a POD designation may be challenged on grounds such as “undue influence, fraud, duress, and overreaching,” thereby answering the question of how to challenge a pay on death designation in Florida.
Keul string-cites a litany of examples where Florida courts have found that inter vivos transfers are subject to challenges on these grounds:
See, e.g., Cripe v. Atl. First Nat’l Bank of Daytona Beach, 422 So. 2d 820, 823 (Fla. 1982) (finding a joint account invalid as the result of undue influence); Estate of Kester v. Rocco, 117 So. 3d 1196, 1200 (Fla. 1st DCA 2013) (applying undue influence analysis to ownership of POD accounts, among others); Laushway v. Onofrio, 670 So. 2d 1135, 1136 (Fla. 5th DCA 1996) (holding probate court had authority to invalidate inter vivos gifts procured by undue influence); Fogel v. Swann, 523 So. 2d 1227, 1229 (Fla. 3d DCA 1988) (holding that Carpenter applies to inter vivos transfers); Majorana v. Constantine, 318 So. 2d 185, 186 (Fla. 2d DCA 1975) (applying will contest principles to inter vivos gifts); Pate v. Mellen, 275 So. 2d 562, 565 (Fla. 1st DCA 1973) (On Petition for Rehearing) (holding that Carpenter applied to dispute about validity of decedent’s signatures on inter vivos gifts).
Kuehl, at *5-6. In affirming the trial court’s conclusion that the POD designation was procured by undue influence, the First District voided the gift and ordered the return of the funds to the estate.
Florida Probate Court Jurisdiction
In Florida, the probate court has jurisdiction over the estate of the decedent. Section 731.105 of the Florida Probate Code provides that “[p]robate proceedings are in rem proceedings.” To challenge a pay on death designation you need to obtain jurisdiction over the person who has the funds that should be in the estate.
A distributee who improperly received estate assets or funds may be compelled to return the assets or funds to the estate. See Fla. Stat. § 733.812. “Formal notice shall be sufficient to acquire jurisdiction over [the distributee] receiving formal notice to the extent of the person’s interest in the estate.” Fla. Stat. § 731.301(2).
In order confer jurisdiction over that person/distributee’s interest exceeding their interest in the estate, a summons is required and formal notice is insufficient.