Who May Change a Beneficiary Designation?

Beneficiary Designation

In Minnesota, an owner of a bank account, retirement account, or other investment account can designate payable on death (POD) or transfer on death (TOD) beneficiaries, directing the relevant financial institutions to transfer the fund assets to the listed beneficiaries upon the owner’s death.  Making such beneficiary designations can and should be part of an effective estate plan.  However, making or changing such beneficiary designations can only occur if the owner is living and has “contractual capacity,” which is a higher level of capacity than it takes to make a will.

Can someone other than the owner change a beneficiary designation?

If the owner of such accounts becomes incapacitated, making or changing beneficiary designations may become difficult or impossible.  When someone other than the owner designates or changes a beneficiary, significant concerns and difficulties may arise.

Conservators:  A conservator may only change a ward’s beneficiary designations after notice to all affected parties, a court hearing, and upon express authorization of the court.

Attorney-in-Fact:  Courts have not yet determined if an agent (attorney-in-fact) appointed pursuant to a Minnesota Short-Form Power of Attorney has the power to designate or change beneficiaries on the principal’s accounts.  Because of this uncertainty, many financial institutions operate under a policy that beneficiary designations may not be changed by an attorney-in-fact.  Additionally, an attorney-in-fact owes fiduciary duties to the principal, so such actions may raise questions and cause future controversies.

It is important to update your estate plan

Being prohibited from changing your beneficiaries can prevent your wishes from being carried out upon your death.  An estate planning attorney can help ensure that your beneficiary designations work in tandem with your estate planning documents. This is one more reason why reviewing and updating your estate plan every 3-5 years, or after any major life event, is critical.

If you would like to schedule a planning session with an experienced Minnesota estate planning attorney, contact Melchert Hubert Sjodin today.