By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold, NJ Estate Administration and Probate Litigation Attorney

In Part 1 of this series I summarized the facts of this case and the issues raised at the Trial Court level. In this post I discuss how the appellate court resolved the appeal.

STANDARD OF APPELLATE COURT REVIEW

Said the Appellate Court in opening its analysis of the case, a complaint should be dismissed if the factual allegations, taken as true, fail to state a claim upon which relief can be granted.  A Court’s determination that a complaint fails to state a claim upon which relief can be granted is a conclusion of law that an Appellate Court reviews for correctness.

GENERAL PRINCIPALS OF DISCUSSION

A transfer on death (TOD), designation listed on a beneficiary designation form, is a contract between the owner and the registering entity.   A provision in a contract allowing for a non-probate transfer upon death which is set forth in a brokerage account (or for that matter any financial agreement, i.e. life insurance, savings account, CD, etc) is a non-testamentary and binding contract.   Non-testamentary transfers are not required to be executed in compliance with the formalities of a will and are not subject to probate.  Valid non-testamentary transfers are unaffected by testamentary documents such as a Last Will or a Trust and are intended effectuate a lawful transfer of ownership outside of the probate estate to the designated beneficiary(ies).   To stop or vary payment under an account’s (TOD) terms, the account owner must provide the financial institution with a signed, written notice during his or her lifetime of an intended change. Upon the death of the sole owner, ownership of financial assets (i.e., securities registered in beneficiary form) pass to the designated beneficiaries.

Here the TOD designations in decedent’s Ameriprise accounts created an enforceable non-testamentary contract.  Decedent failed to vary the terms of the Ameriprise accounts because he did not provide Ameriprise with a signed, written notice during his lifetime.   Upon decedent’s death, Ameriprise appropriately transferred the proceeds in the accounts to decedent’s selected beneficiaries.

The Trustee of the trust claimed that the TOD beneficiaries were unjustly enriched and that equity required the proceeds from the Ameriprise accounts to be placed in this constructive trust.

The Appellate Court then began its analysis of a Constructive Trust which I will address in my next post.

To discuss your NJ Estate Administration and Probate Litigation matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing consultations if you are unable to come to our office.