A POD designation can be invalidated for undue influence and recipient of the funds ordered to return the funds.
Many Estate plans involve what are commonly referred to as “pay-on-death” or “POD” accounts. These accounts are commonly created as a will substitute to allow the distribution of assets directly to the beneficiary after the death of the decedent in order to avoid probate. As is the case with a Will or a Trust, POD accounts are subject to invalidation based on undue influence. Florida courts have also recently held that the individuals in receipt of the POD funds can be ordered to return those funds in the event the POD designation is found to be invalid. Pennie L. Keul v Hodges Blvd. Presbyterian Church, 40 Fla. L. Weekly D2619c (Fla. 1st DCA November 24, 2015).
A POD designation is a will “substitute” that does not transfer ownership of funds until the death of the account holder See, Blechman v Estate of Blechman, 160 So. 3d 152, 157 (Fla. 4th DCA 2015). They are generally considered inter-vivos transfers (transfer or gift made during one’s lifetime), although they also have attributes of testamentary transfers (gift transferred upon death) because they have no effect until the death of the owner. These POD accounts are subject to challenge on grounds such as undue influence, fraud, duress and overreaching under Florida Law. Cripe v. Atl. First Nat’l Bank of Daytona Beach, 422 So. 2d. 820, 823 (Fla. 1982). Florida courts have held that a POD designation can be invalidated for undue influence because Florida has a legitimate public policy interest in preventing abuse of fiduciary or confidential relationships, and has codified this interest and protected it through case law.
Therefore, the elements and application of the undue influence doctrine, as defined in Carpenter, id. is not simply a concept that addresses such wrongdoing directed toward the manipulation of wills and trusts, but also extends to POD accounts that transfer assets upon death. An individual who would otherwise have been the recipient of the assets in the POD account prior to the designation of the pay-on-death beneficiary has recourse in attacking the validity of such an account as they would in attacking a will or trust as a result of undue influence.