In the February 3, 2021 decision in Kagan v. Ameriprise, the New York Appellate Division, Second Department considered a case granting summary judgment in a dispute over the beneficiary designation of a decedent’s retirement accounts.
The Facts of Kagan v. Ameriprise
This case was relatively straightforward. On January 9, 2017, Decedent changed the beneficiary designations on several accounts that he held with Ameriprise Financial and RiverSource Life Insurance Company. Decedent changed the beneficiary on his retirement accounts from his wife, Valarie, to his sister, the plaintiff.
A couple of days after changing the beneficiary designations on his retirement accounts, the Decedent committed suicide.
Decedent’s sister initiated an action in the New York trial court for declaratory judgment, seeking a determination that she was the sole beneficiary of decedent’s retirement accounts. She then moved for summary judgment declaring that she was the sole beneficiary of the decedent’s retirement accounts. Ameriprise took no position, but moved for an award of attorney’s fees.
The New York Supreme Court granted plaintiff’s motion for summary judgment, and denied an award of fees to Ameriprise. Decedent’s wife appealed the decision declaring decedent’s sister the beneficiary of the accounts, and Ameriprise appealed the denial of attorney’s fees.
Beneficiary Designations Under New York Law
New York EPTL Article 13 Part 4 allows for transfer-on-death beneficiary designations on securities, which may include bank accounts other than Totten bank accounts.
New York EPTL 13-4.1 includes the following key definitions:
“Beneficiary form” means a registration of a security which indicates the present owner of the security and the intention of the owner regarding the person who will become the owner of the security upon the death of the owner.
“Security” means a share, participation or other interest in property, in a business or in an obligation of an enterprise or other issuer, and includes a certificated security, an uncertificated security and a security account.
“Security account” means (i) a reinvestment account associated with a security, a securities account with a broker or banking institution, as defined in paragraph (b) of subdivision three of section nine-f of the banking law, a cash balance in a brokerage account or securities account, cash, interest, earnings, or dividends earned or declared on a security in an account, a reinvestment account or a brokerage account, whether or not credited to the account before the owner’s death, or (ii) a cash balance or other property held for or due to the owner of a security as a replacement for or product of an account security, whether or not credited to the account before the owner’s death.
New York EPTL 13-4.6 provides that beneficiary registration has no effect on ownership until the owner’s death. The designation may be changed or revoked at any time by the sole owner or all then surviving owners without the consent of the beneficiary.
Can You Challenge A Beneficiary Designation In New York?
Yes. Here, Decedent’s wife argued that summary judgment could not be granted because Decedent lacked capacity to change the beneficiary designation, and also that Decedent’s sister exerted undue influence over Decedent. However, Decedent’s wife failed to raise a triable issue of fact as to lack of capacity or undue influence, only offering conclusory and unsubstantiated assertions. Mere speculation is not enough to defeat a motion for summary judgment under New York law. Read our article on will contest basics in another New York summary judgment case.
In contrast, Decedent’s sister established her prima facie entitlement to judgment as a matter of law by demonstrating that the decedent executed a change of beneficiary form designating her as the sole beneficiary of the accounts, and that the decedent was “lucid” and “explicit” regarding his wishes to leave nothing to his wife, who had commenced an action for a divorce against him.
The Court stated:
Accordingly, the Supreme Court properly granted the plaintiff’s motion for summary judgment declaring that she is the sole beneficiary of the accounts.
Furthermore, the Supreme Court improvidently exercised its discretion in denying that branch of the Ameriprise defendants’ cross motion which was for an award of an attorney’s fee, since the Ameriprise defendants are neutral stakeholders forced to participate in the dispute over the contested funds (see CPLR 1006[f]; Citibank, N.A. v Park, 174 AD3d 778, 780; Sun Life Ins. & Annuity Co. of N.Y. v Braslow, 38 AD3d 529, 530). Accordingly, we remit the matter to the Supreme Court, Dutchess County, for a hearing to determine the amount of the attorney’s fee to be awarded and, since this is a declaratory judgment action, for the entry of a judgment, inter alia, declaring that the plaintiff is the sole beneficiary of the subject retirement accounts (see Lanza v Wagner, 11 NY2d 317, 334).