Contesting Beneficiary Designations in Michigan: What You Need to Know

When a loved one passes away, their assets often get passed down according to their wishes—usually through a will or beneficiary designations on accounts like life insurance or retirement funds. Sometimes, the plan on paper just doesn’t feel right.

Perhaps a family member was left out, or there’s concern that the person who passed away wasn’t thinking clearly when they made their decisions.  Moments like these capture why people start asking whether a beneficiary designation can be contested.

At Bassett Murray Law Group, PLLC, we’ve spent decades helping Michigan families through the ups and downs of estate planning and beneficiary disputes.

Our goal is to provide peace of mind during difficult times, which is why we’re Invested in Improving Lives. Let’s take a closer look at how contesting a beneficiary designation works in Michigan and what you need to consider.

Beneficiary Designations in Michigan

Let’s quickly go over what a beneficiary designation is and why it’s so important to keep it updated., A beneficiary designation is simply the name you assign to someone who will receive specific assets when you pass away.

You’ve probably seen these on life insurance policies, retirement accounts or payable-on-death (POD) bank accounts.

The person you name as a beneficiary gets the money or assets without those funds going through probate, which is one of the reasons why these designations are popular. Probate is basically the court process of sorting out someone’s stuff when they pass away. By naming a beneficiary, you skip that hassle.

One key point is that beneficiary designations override wills. This means even if your will says that all your assets should go to your children, but your life insurance lists your cousin as the beneficiary, your cousin gets that payout. It’s essential to keep these designations updated, especially after major life changes like marriage, divorce, or the birth of a child.

If you’re wondering how beneficiary designations help avoid probate, it’s because these assets pass directly to the named person—cutting out the lengthy court process that other assets might go through. However, the simplicity of avoiding probate can also make contesting a designation time-sensitive.

Who Can Contest a Beneficiary Designation in Michigan?

Not just anyone can contest a beneficiary designation. In Michigan, the law limits the ability to challenge a designation to people who have what’s called “legal standing.” In other words, only certain people—those directly affected—have the right to contest it.

Who Has Standing?

Typically, the following people can contest a beneficiary designation:

• Heirs: If a person passes away without a will or with an out-of-date beneficiary designation, heirs (like children or spouses) might be able to contest under Michigan’s intestate succession laws.
• Previously Named Beneficiaries: If you were named in an earlier version of a beneficiary designation but were later removed, you may have standing to contest.
• Fiduciaries: A trustee or personal representative acting on behalf of the estate might also contest if they believe something is wrong with the designation.

Say, for example, your parent had always planned to divide their retirement savings equally between their kids. But suddenly, only one child is listed as the beneficiary. In cases like this, the other children could have the right to challenge that decision.

Grounds for Contesting a Beneficiary Designation

Just because someone has standing doesn’t mean they’ll automatically win their case. They need to prove there are valid reasons, or grounds, for the contest. Let’s break down the most common grounds for contesting a beneficiary designation in Michigan:

1. Lack of Capacity

This happens when the person making the beneficiary designation isn’t mentally capable of understanding what they are doing. If someone was dealing with serious cognitive issues like dementia, for example, it’s possible they didn’t fully grasp the consequences of their actions when they named the beneficiary.

2. Undue Influence

If someone is pressured or manipulated into changing their beneficiary designations, this can be contested. For instance, if a caregiver convinces a vulnerable person to make them the sole beneficiary, other family members may argue the designation was made under undue influence.

3. Fraud

Fraud occurs when the person is tricked into signing the beneficiary designation, perhaps by being told they were signing something else entirely.

4. Forgery

In some cases, the signature on the designation might not even belong to the person who passed away. Forged documents are obviously invalid, but proving a forgery can require substantial evidence.

5. Improper Execution

Sometimes, a beneficiary designation is filled out incorrectly or doesn’t meet legal standards. For example, if the form wasn’t signed or witnessed properly, it could be invalid.

6. Mistake

If a person makes a genuine error, such as naming the wrong person by accident, the designation might be challenged.

It’s not uncommon for families to face more than one of these issues. Each ground for contesting brings its own challenges, which is why it’s important to gather solid evidence when disputing a beneficiary designation.

The Process of Contesting a Beneficiary Designation

Contesting a beneficiary designation isn’t easy, and there are several steps involved. The first hurdle is timing. Michigan law sets strict deadlines for filing contests, so it’s important to act quickly if you believe something is wrong.

Evidence Needed

Gathering the right evidence is key. Things like medical records, witness statements, and financial documents can really help build your case:

• Medical records that show a lack of mental capacity.
• Testimony from witnesses who saw the pressure or influence happening.
• Financial records suggest something was off.

Gathering this evidence can be a complex process, but here’s some good news—many of these disputes can be settled through mediation, which is often faster and less stressful than going through a drawn-out court battle.

One key point to remember is that the burden of proof is on the person contesting the designation. That means you’ll need to provide compelling evidence to back up your claim.

Protecting Your Beneficiary Designations

To avoid future disputes, it’s wise to be proactive when naming your beneficiaries. Here are a few steps you can take to make sure your wishes are followed:

• Use Clear Language: Make sure your beneficiary designations are straightforward and leave no room for doubt.
• Review Regularly: Life changes—make sure your designations do, too. After a major life event, review your beneficiary designations and update them if necessary.
• Keep Records: Document any changes you make to your designations. This helps protect your wishes and provides clarity for your loved ones.
• Consult an Attorney: While you can name beneficiaries on your own, having an attorney review your designations can prevent future disputes. They can also add “no contest” clauses, though keep in mind these are not foolproof in Michigan.

Facing a Beneficiary Dispute in Michigan?

Contesting or defending a beneficiary designation can be emotionally charged and legally complex. At Bassett Murray Law Group, PLLC, we’re here to help you navigate these challenges. Whether you’re looking to contest a designation or protect your loved one’s wishes, our team offers the experience and support you need.

Contact us today at (734)-930-9200 for a consultation and let us help you secure peace of mind for the future. We are Invested in Improving Lives, and we’re ready to stand by your side.