Can a Caregiver Be a Beneficiary on a Bank Account or Life Insurance Policy in California?

In California, it’s not uncommon for caregivers to form close relationships with the individuals they care for. Sometimes, this relationship may extend to financial matters—such as being named a beneficiary on a bank account or life insurance policy. But is this legal? And are there any restrictions?

The Short Answer

Yes, it is technically legal in California for a caregiver to be named as a beneficiary on a bank account or life insurance policy. However, this type of arrangement is subject to strict scrutiny under California law—especially when the caregiver is a professional or paid caregiver.

Presumption of Undue Influence

Under California Probate Code Section 21380, if a dependent adult names a caregiver (who is not a family member) as a beneficiary in a will, trust, or other donative transfer, the law presumes that the gift was made through undue influence. This presumption can invalidate the gift unless the caregiver can prove that it was made voluntarily, without coercion, and with full understanding.

While this law primarily applies to donative transfers like wills and trusts, courts may also look closely at similar beneficiary designations—such as on bank accounts or life insurance policies—if there’s any suspicion of undue influence or elder financial abuse.

Are Beneficiary Designations Treated Like Wills or Trusts?

Bank account and life insurance beneficiary designations are considered non-probate transfers. They pass automatically to the named beneficiary upon death and are generally not governed by the terms of a will. However, if there’s a dispute—especially if the decedent was elderly, ill, or cognitively impaired when the designation was made—a court can intervene.

For example:

• If a non-relative, paid caregiver is suddenly named the sole beneficiary of a bank account, and the change was made shortly before the person died, this could raise red flags.

• Family members may challenge the designation in California Probate Court, arguing that the caregiver exercised undue influence or that the individual lacked mental capacity.

Exceptions and Defenses

Caregivers can rebut the presumption of undue influence if:

• They can show the transfer was not the product of coercion.

• They had no confidential or dependent relationship with the individual.

• The gift was reviewed and approved by an independent attorney who counseled the individual on the nature and consequences of the gift.

Best Practices

If you’re a caregiver:

• Avoid accepting gifts or beneficiary designations without legal advice.

• If a client wants to name you as a beneficiary, suggest they consult an independent estate planning attorney.

• Transparency with family members and legal professionals can help avoid future disputes.

If you’re a family member:

• Watch for sudden changes in accounts or policies.

• If you suspect something is wrong, speak to a California probate attorney immediately.

• You may be able to challenge the designation through the probate court process.

Conclusion

While caregivers can legally be named as beneficiaries in California, doing so can trigger legal scrutiny, especially when the caregiver is not a relative. If you’re considering such a designation—or questioning one—it’s essential to understand the legal landscape and seek professional advice. In many cases, it’s better to err on the side of caution to protect both the caregiver and the individual receiving care.

Contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney today to schedule a telephonic consultation. Have questions, call (626) 460-1763 or email LV@MoravecsLaw.com.

Southern California Probate Lawyer Serving all counties in California, including Los Angeles, Riverside, San Bernardino, Sacramento, Santa Cruz & Beyond.