Legal Definitions - favored beneficiary

A favored beneficiary refers to an individual or entity who receives a significantly larger portion of an estate, trust, or other financial arrangement compared to other beneficiaries, or who receives preferential treatment that deviates from what might be considered a natural or expected distribution. The designation of a favored beneficiary often raises legal scrutiny, particularly if there are concerns about the mental capacity of the person making the gift or the possibility of undue influence exerted by the favored individual.

Here are some examples to illustrate this concept:

• Example 1: Last-Minute Will Change

  An elderly woman, Mrs. Henderson, had a will for many years that divided her substantial estate equally among her three children. However, in the final months of her life, after a new live-in caregiver, Mr. Davies, began working for her, Mrs. Henderson executed a new will. This revised will left 90% of her estate to Mr. Davies and only 10% to be split among her children. In this scenario, Mr. Davies would be considered a favored beneficiary because he is receiving a disproportionately large share of the estate, significantly altering the long-standing distribution plan, which could prompt her children to challenge the will based on potential undue influence or Mrs. Henderson's diminished capacity.

• Example 2: Unequal Trust Distribution

  Mr. Chen established a revocable living trust for the benefit of his three grandchildren. The initial trust document stipulated that upon his death, the trust assets would be distributed equally among them. A few years later, after one grandchild, Emily, moved in with Mr. Chen to assist with his daily needs, he amended the trust. The amendment directed that Emily would receive 75% of the trust's principal, while the other two grandchildren would share the remaining 25%. Here, Emily is the favored beneficiary due to the significant increase in her share compared to her siblings, potentially leading to questions about the fairness and validity of the amendment, especially if Mr. Chen's mental acuity was declining at the time.

• Example 3: Life Insurance Policy Change

  For decades, Mr. Rodriguez had a large life insurance policy naming his wife, Maria, as the sole beneficiary. After Maria passed away, Mr. Rodriguez, who was suffering from early-stage dementia, became very close to a new neighbor, Ms. Green, who frequently helped him with errands. Shortly before his own death, Mr. Rodriguez changed the beneficiary of his life insurance policy from his children (who were the contingent beneficiaries) to Ms. Green, leaving her the entire multi-million dollar payout. Ms. Green would be considered a favored beneficiary because she, a relatively new acquaintance, is receiving a substantial asset that was previously designated for his direct heirs, raising concerns about whether Mr. Rodriguez fully understood the implications of his decision or was unduly influenced.