Planning For The ‘What-Ifs’

Judgment For Wrongfully Omitted Heirs In A Precedent Setting “Payable On Death” Case

On Behalf of | May 15, 2011 | Firm News

(Phoenix – May 15, 2011) – Arizona law has long held that beneficiary designations (known as “payable on death” designations; or “POD”) on bank accounts supersede the intent of a Decedent even when such POD designations are inconsistent with the intent of the Decedent. (A.R.S. §14-6212, 6213). This law became at issue in 2006 when the father of three siblings passed away. Upon his passing, the siblings learned that their father had left a Will devising his entire estate to his three children equally. However, the siblings later came to discover that their father had made one of the siblings as the sole beneficiary of his bank accounts and his annuity contracts. Upon learning this, the sibling whom was named as the sole bank account and annuity beneficiary refused to share those proceeds with his other two siblings. Accordingly, the other two siblings sued. The evidence established in the case showed that the father in fact intended for his three siblings to share equally in all the assets that the father merely named one sibling as the sole beneficiary of the bank accounts and annuity contracts for the purpose of having him distribute the accounts to all three children. Even so, the issue remained that in accordance with Arizona law (A.R.S. §14-6212, 6213), the beneficiary designations superseded the Decedent’s intent and the sibling named as sole heir was under no obligation to distribute the accounts to the other two siblings. After an intense three day trial before the Maricopa County Superior Court in and for the State of Arizona, the law firm of Gorman Law Group, PLC obtained judgment on behalf of the two wrongfully omitted siblings. Instead of arguing that the Decedent’s Will governed the distribution of the bank accounts and annuity contracts, Gorman Law Group, PLC argued that equitable law allows a court to impose a constructive trust over the bank account and annuities for the benefit of all three siblings in accordance with the father’s wishes. The Court ruled that the statute (A.R.S. §14-6212, 6213) only applies to financial institutions and not insurance companies. Since annuity contract are insurance products, the Court awarded judgment in favor of the two omitted siblings in an amount equal the annuity proceeds plus statutory interest from the date of their father’s death.