Challenging the Transfer of Non-Probate Assets

Suppose a party seeks to challenge a decedent’s last will and testament based upon claims of competency or the improper assertion of undue influence. In that case, this contestant may also seek to challenge the transfer of certain non-probate assets that could comprise either the majority or a substantial percentage of the decedent’s assets. The grounds for challenging such transfers may be identical to those pursued in a challenge to a last will and testament, however, may be subject to applicable statutes and different standards of proof that govern a challenge to a particular class of asset.

In general, non-probate assets are assets of the decedent which pass outside of the decedent’s last will and testament. These assets might be joint bank accounts, real property, insurance policies, retirement accounts, other financial accounts, or gift transactions that occurred before the decedent’s death. Similar to the claims that can be asserted during a will contest, a party can challenge each one of these transfers based upon allegations of lack of the capacity of the decedent to undertake the transaction or the unlawful assertion of undue influence by the person who received the benefit of the transfer from the decedent. For these reasons, it is common during a will contest that the transfer of certain non-probate assets is challenged as well. Legally, this is required in the interests of judicial economy. It often involves the same set of facts and circumstances relevant in determining whether the decedent’s will is valid.

In general, a challenge to the transfer of real property or a beneficiary designation with regard to an investment account or insurance policy can be invalidated under essentially the same legal standard involved in challenging a last will and testament. On the other hand, challenging a joint account designation involves a specific statute that requires proof of a certain nature. Moreover, this statute involves legal presumptions which the contestant must rebut. This topic is discussed in a previous blog under the multi-party joint deposit account act. Finally, challenges as to lifetime gifts involve similar facts to a will contest; however, the burden of proof is typically more substantial for the party contesting the transaction. As such, when a party is seeking to challenge the transfer of non-probate assets, they must consider the nature of the transaction and the proof that may be required.