The comprehensive guide to probate, trusts, estate planning, and inheritance litigation.

Standing To Challenge Account Beneficiary Designations in North Dakota

For a plaintiff to have standing to challenge a change in a beneficiary designation in North Dakota, the party must have suffered some injury and must assert their own legal rights and interests.  In the May 2020 decision of Albrecht v. Albrecht, the North Dakota Supreme Court determined that a son lacked standing to bring an action concerning a change in a beneficiary designation made by his deceased mother, because he was asserting the rights and interest of a third party.

Albrecht v. Albrecht

Alan Albrecht sued his brother Mark Albrecht for contempt of court and unjust enrichment.  This action was part of lengthy litigation involving the Albrecht family, including the divorce between Alan and Mark’s parents and litigation concerning the estate of their mother, Sharleen.  In suing Mark, Alan alleged that while their parents’ divorce was pending, and restraining provisions were in effect, their late-mother Sharleen changed the beneficiary designation on one of her investment accounts, removing Alan as a beneficiary and leaving Mark as the transfer on death beneficiary.

Alan also alleged that Sharleen liquidated the account and that the proceeds were transferred to Mark after Sharleen’s death.  As a result, Alan argued that his deceased mother was in contempt of court and that Mark was unjustly enriched by receiving the proceeds of the account.

Mark moved to dismiss Alan’s complaint, in part because Alan lacked standing.  The court dismissed the complaint.

On appeal, Alan argues that Sharleen was prohibited from changing the beneficiary on the investment account under the restraining provisions of the summons and order in the divorce proceeding, and that the court erred in concluding that Alan did not have standing to bring the lawsuit.

Who Has Standing To Litigate In North Dakota?

Standing is a threshold inquiry in any case.  To have standing to litigate an issue, a party must have suffered some injury from the putatively illegal action and must assert the party’s own legal rights and interests.

As summarized by the North Dakota Supreme Court:

Standing involves a two-prong inquiry:

First, the plaintiff must have suffered some threatened or actual injury resulting from the putatively illegal action.

Secondly, the asserted harm must not be a generalized grievance shared by all or a large class of citizens; the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights and interests of third parties.

 

When Does An Account Beneficiary Have Standing To Sue In North Dakota?

There are some circumstances when a plaintiff has standing to sue when beneficiary designations on pay-on-death accounts have been changed due to allegations of constructive fraud, undue influence or lack of testamentary capacity.

For example, if a plaintiff was a beneficiary of a pay-on-death account, and then discovers that the beneficiary designation was changed as a result of undue influence, the beneficiary would have standing to challenge the change to the pay-on-death beneficiary designation after the owner’s death.

In this case, the district court concluded that Alan lacked standing to seek redress based on the violation of the summons or interim order in the divorce action between his parents.  The court held that Alan never had a vested interest in the investment account and the summons and interim order were not entered for Alan’s protection.  The court held that Alan’s claim failed under North Dakota Century Code § 30.1-31-08.

NDCC section 30.1-31-08 addresses ownership of accounts during lifetime and states, in pertinent part:

A beneficiary in an account having a P.O.D. designation has no right to sums on deposit during the lifetime of any party.

Under NDCC section 30.1-31-08, Alan Albrecht had no vested interest to the sums in the investment account at the time of alleged beneficiary change and subsequent account liquidation, therefore, under these facts and circumstances, he lacks standing.

Here, Alan’s action appeared to be an attempt to vindicate his father’s (the surviving spouse) interests in the divorce action with his mother.  Even if Alan suffered some threatened or actual injury from the action, Alan was not asserting his own legal rights and interests, but rather the rights and interests of a third party (his father) in the divorce action.

Sign up with Probate Stars to receive the latest probate news and information about lawyer sign ups.