Asked in Estate Planning for Arkansas

Q: If a bank account has a beneficiary, does that override a will?

My father left one account with his child as beneficiary when he passed. It was only in his name. His wife emptied it. She is named as the executor of his estate in his will.

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2 Lawyer Answers
Dustin A. Duke
Dustin A. Duke
PREMIUM
Answered
  • Estate Planning Lawyer
  • Little Rock, AR
  • Licensed in Arkansas

A: Generally, yes a valid beneficiary listed on a bank account (also sometimes known as a transfer on death TOD or pay on death POD designation) should remove that property from the account holder's probate estate and therefore the property is not transferable via Will. If the bank allowed your step-mom to remove funds from the bank account because she is the estate's executor, without looking at or following your father's TOD/POD designation, the bank may be liable. Also, your step-mom has a duty to return the funds. In order to obtain the funds from the bank account, your step-mother generally would have had to file a probate proceeding or an affidavit for collection of small estate (depending on the size of your father's estate). If she filed a full probate proceeding, depending on when this all occurred, the funds from the account may still be held by your father's estate (i.e. an account set up by your step-mom to hold funds belonging to your father's estate). Please note, I am an Arkansas attorney and any information provided specifically relates to Arkansas law.

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Paul Dumas
Paul Dumas
Answered
  • Estate Planning Lawyer
  • Morrilton, AR
  • Licensed in Arkansas

A: Assuming your father’s account was with a financial institution and was a non-retirement account, if he designated his child as the beneficiary of the account by naming the child as his Payable On Death (POD) Beneficiary, the account would be immediately vested in the child’s name upon the father’s death. This type of automatic, immediate conveyance is sometimes referred to as a transfer “by operation of law.” These types of automatic conveyances in which the owner of the asset causes the conveyance to be triggered to a beneficiary through the language of a document are made possible simply because they are contractual agreements that I refer to as “creatures of contract.” Like life insurance, these assets pass automatically to the named beneficiary and are not included in an individuals probate estate. Assuming the preceding was correct, and assuming the financial institution erroneously tendered all funds in the account to his wife, they may be liable to the POD beneficiary for the amount held in the account as of the date of death of your father. In turn, there may be additional liability on the part of his wife for erroneously withdrawing these account funds without legal authority. The main problem being that since the account is not part of the decedent’s probate estate, it is irrelevant that she was the named executrix in your father’s will. I would advise beginning your investigation with the financial institution and obtain a copy of the documentation executed by your father to establish this account and confirm the POD beneficiary designation. Additionally, you should immediately file a Demand for Notice of Proceedings with the probate clerk of the county where your father resided at the time of his death, as well as any county that might have jurisdiction to probate his estate. This pleading mandates that anyone opening a probate estate for your father is required to provide you with notice of all pleadings filed and/or hearings set in the probate case. Of course if a probate estate has already been opened you will want to enter an appearance in that case to protect your rights and/or the rights of the POD beneficiary. I would strongly advise you consult with an attorney experienced in probate and estate matters. The Arkansas Probate Code is extensive and often complex. As an Attorney licensed in Arkansas, I have handled these types of cases for over two decades.

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