A significant distinction must always be recognized between assets of a decedent that are disposed of through estate administration and assets that pass to beneficiaries by operation of law. Estate administration assets are generally governed by the terms of a decedent's Last Will or the laws of intestacy where no Will exists. Executors or Administrators control these dispositions.
Assets that pass by operation of law include property held in the form of joint tenancy or in the name of the decedent along with a named beneficiary such as a "totten trust" bank account. Designated beneficiaries that are named in life insurance policies, retirement plans or Individual Retirement Accounts also receive a decedent's assets automatically after death. In these operation of law or automatic pay out situations it is imperative that careful attention be paid to the beneficiary designations. These designations should be carefully made so that a person's estate plan is accurately and properly established. Additionally, incomplete, confusing or ambiguous beneficiary designations can result in costly and lengthy estate litigation the result of which may be that beneficiaries do not receive their intended gift.
The recent case of Li-Shan Wang v. Primerica Life Insurance Co., 09-CV-5522, which was before Judge Lawrence M. McKenna, Federal District Court, Southern District of New York, and reported in the New York Law Journal on November 17, 2010, is a perfect example of the complexities and convoluted issues that can be created by an unclear beneficiary designation. In a decision dated November 5, 2010 Judge McKenna was presented with procedural motions to dismiss and to amend the plaintiff's complaint. As explained by the Court, the decedent, Salih Neftci, had obtained a life insurance policy with Primerica. This lawsuit was commenced by the plaintiff, Li-Shan Wang, the girlfriend of the decedent who claimed that the decedent intended to name her as the policy beneficiary. Opposing this assertion were the decedent's children who claimed that the insurance proceeds were to be paid to them. Intermixed with these contentions was the affect of various letters sent by the decedent to the insurance company requesting changes to the beneficiary designation as well as the interpretation and legal meaning of certain language utilized by decedent. There was also the issue of the decedent's capacity to make or change his beneficiary designation due to his illness.
In its decision the Court denied the children's motion to dismiss the complaint and allowed the plaintiff to amend her complaint. Therefore, it appears that the lawsuit will continue until settled or ultimately disposed of by the Court.
This case illustrates how the lack of attention to detail and clarity when preparing estate planning documents, such as beneficiary designation forms, can transform a simple matter of the payment of life insurance proceeds into a complex estate contest which results in unnecessary expense and distress for the intended beneficiaries. A New York Probate Attorney can help avoid these problems and can also provide representation in Court to enforce the rights of beneficiaries where the payment of proceeds is contested.
New York Probate Attorney Jules Martin Haas, Esq. has been representing clients in New York in Trusts and Estates matters and Surrogate's Court proceedings throughout the past 30 years. If you or someone you know is involved with or has questions about a New York estate or beneficiary designation, please contact me at (212) 355-2575 or email: firstname.lastname@example.org, for an initial consultation.