In re Estate of Abernethy, 390 S.W.3d 431 (Tex. App.—El Paso 2012, no pet.).



Beneficiary Designations on Non-Probate Assets 


Decedent and Beneficiary were very close personal friends.  In addition, Beneficiary was a certified public accountant who prepared tax returns for Decedent.  Decedent named Beneficiary as the beneficiary of an IRA and as the party with survivorship rights on various bank accounts.  After Decedent died and Beneficiary collected approximately $1.2 million from these accounts, Independent Executor asserted that Decedent and Beneficiary were in a fiduciary relationship and that Beneficiary breached her duties by allowing herself to be named as the beneficiary of these accounts.  The trial court rejected Independent Executor’s claim and granted summary judgment in favor of Beneficiary.


The appellate court affirmed.  The court began its analysis by recognizing “[t]here are two types of fiduciary relationships: formal fiduciary relationships that arise as a matter of law, such as attorney-client, partnership, trustee, and principal-agent relationships and informal fiduciary relationships or ‘confidential relationships’ that may arise from moral, social, domestic, or personal relationships.”  Id. at 437.  The court recognized that whether an informal relationship gives rise to fiduciary duties depends on “the actualities of the relationship between the persons” and that duties will not be “lightly created.”  Id. at 438.  The court also explained that merely “trusting” someone does not mean that a fiduciary relationship has been created.


The court then examined the evidence.  Although the evidence showed that Decedent and Beneficiary had a long-standing close personal relationship, there was no evidence of a fiduciary relationship.  The court explained that there was no competent evidence that Decedent was “accustomed to being guided by the judgment or advice” of Beneficiary.  Id. at 438.  Accordingly, there were no fiduciary duties that Beneficiary could have breached when she was named as the beneficiary of the IRA and bank accounts.


Moral:  A person attempting to set aside a beneficiary designation needs to present solid evidence of a legitimate reason other than being unhappy with the designation such as breach of a genuine fiduciary duty, undue influence, fraud, or lack of capacity.