Can a Trust Override a Beneficiary in an IRA Bank Account?

A trust is a legal device by which property is distributed to beneficiaries named in the trust. Although property held in a trust usually does not require probate, trusts are not the only way in which probate can be bypassed. Many assets, including IRA accounts, allow the holder to name a beneficiary that automatically receives the property upon the death of the property owner. Generally, a beneficiary designation will override the trust provisions. There are situations, however, in which the beneficiary designation will fail and the proceeds of the account will pass under the terms of the trust.

The Requirement of Mental Capacity

A person who makes a legal decision must have the mental capacity to understand the result of that action. The distinct circumstances of the action make a difference, however. For example, if a person was an alcoholic but was not under the influence of alcohol when he acted, alcoholism would likely have little bearing on whether he had mental capacity. Designating a beneficiary of an IRA account is a legal decision. If the person who designated the beneficiary lacked the mental capacity to make that decision at the time the decision was made, a court would likely invalidate that designation. Assuming that the person had mental capacity at the time of signing a trust, the trust provisions would then override that beneficiary designation.


Fraud can result not only in civil liability, but also in criminal liability. Fraud occurs when a person intentionally misrepresents important facts, and that misrepresentation causes a person to do something, or not to do something. For example, suppose that a son tells his mother that she needs to sign some paperwork for her doctor, and that the mother signs the document. If the document instead changed the beneficiary designation on the mother’s IRA account, and if the son intentionally misrepresented the nature of the document to his mother, that beneficiary designation could be void. If the mother had a trust, the trust provisions would likely govern, rather than the fraudulently executed IRA account beneficiary designation.

Undue Influence

If a person names a person as a beneficiary of an IRA account while subject to undue influence, that beneficiary designation is probably void. Undue influence is difficult to define, but is generally regarded as "substituted intent," meaning that one person’s intent is followed rather than another person’s. Assume from the above example that the son had instead told his mother that she was signing a document that changes the beneficiary of the IRA account to him. If the son pressured his mother into naming him rather than another, and if the mother does decide to name her son as the beneficiary, an argument could be made that the son exercised undue influence over his mother. If the argument is successful, a court could void the beneficiary designation of the IRA account and the proceeds from the account would pass under the terms of her trust.


Duress is an extreme form of undue influence. Duress occurs when a person performs, or threatens to perform, some wrongful act that causes a person to do something that she would not have otherwise done. The important component of duress is that the person is threatening a wrongful act. For example, if a senior citizen’s caretaker threatened to telephone the senior’s children and tell them that their mother died unless the senior signs an IRA beneficiary designation form naming the caretaker as the beneficiary, the beneficiary designation would most likely fail and the trust provisions would govern.

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