There is something about a death in the family that can bring out the worst in people. It’s not uncommon for family resentments to boil over in the wake of grief, which often leads to hurt feelings and arguments after the death of a loved one.

However, greed is an even uglier common reaction to death. There are those who take advantage of a death in the family to line their own pockets, against the wishes of the deceased.

You might assume that your will or estate plan ensures that your money will go to your intended heirs — but inheritance theft is an insidious and underreported problem that can cost families dearly. And since inheritance thieves are usually family members, the fallout often is not only about money, but also family ties.

Here is what you need to know about the problem of inheritance theft, and how you can protect yourself and your heirs from inheritance thieves.

What Is Inheritance Theft?

When we think of inheritance theft, we tend to think of doddering old millionaires marrying their 20-something nurses and leaving everything to the new spouse, rather than to their adult children. This may be the classic example of inheritance theft, but there are multiple ways that an inheritance thief or hijacker can get their hands on money not intended for them. According to attorney Robert C. Adamski, there are several common methods that inheritance hijackers use to divert an inheritance to themselves:

  1. Undocumented loans. Family members who borrow money from an elderly relative may insist that such loans were gifts after the relative’s death. If there is no loan document — which there often isn’t in the case of a family loan — the heirs have no recourse to get the money back.
  2. Denigration of fellow heirs. An heir might lie about the other heirs, claiming that one sibling can’t be trusted with money, while another has more than he needs. This kind of denigration can persuade an elderly parent to change her will in favor of the lying heir.
  3. Forging or destroying documents. In some cases, a family member or advisor might prepare a fake will or a fake amendment to a real will, giving the forger a bigger slice of the inheritance pie. For instance, imagine a parent who leaves most of his estate to a disabled child who cannot take care of herself. If the older sibling of the disabled child were to destroy the will, then the parent would be considered to have died intestate, and the money would be distributed equally between the siblings.
  4. Embezzling. The individual entrusted with handling the estate accounts could easily move assets to their own accounts. While this is illegal, it often goes unreported and unchallenged because the heir has to use his own funds to pay the legal fees to prove malfeasance.

How to Protect Your Heirs

The best method of protecting your wishes is through a well-written estate plan. Such a plan includes a detailed will, a power of attorney, and trusts for your assets. For each of these documents, you will need to consult a well-vetted estate attorney to make sure your wishes are legally binding.

Here are the particular concerns you will need to consider for each of these documents.

Your Will

This is the center of your estate plan, and you can make your will as detailed as you like, so that the distribution of your property can follow your exact wishes. You can also change your will anytime you like, and it’s prudent to review it every few years to make sure that everything is still up-to-date.

One of the important choices you will have to make when drawing up your will is who will act as your executor. This is the person who will handle the logistical details of your estate after your death. Since this person will be managing your assets until they are distributed to your heirs, you must choose someone whom you trust to follow your wishes. An untrustworthy executor is in a position where he could embezzle funds after your death.

Most people name their spouse, a close friend, or family member as their executor. However, it’s possible to hire an executor who will be paid from your estate, and, in fact, lawyers will often perform executor services. If you have an already-contentious family situation, hiring an executor can ensure an unbiased third party is handling your estate after your death.

Financial Power of Attorney

If you were to become mentally or physically incapacitated, you would need someone to act as your power of attorney to make financial decisions on your behalf. As with choosing an executor, you need to trust that this individual will follow your wishes, since a power of attorney has control over your assets.

Without a power of attorney in place, the courts will step in to appoint what’s known as a conservator should you become incapacitated. This process is lengthy and expensive, and you have no choice in whom the court appoints as your conservator, which is why choosing your power of attorney is so important.

Trusts

In the simplest terms, a trust is a financial agreement among three parties: the grantor, who creates and funds the trust; the beneficiary, who receives the assets from the trust; and the trustee, who has a fiduciary duty to responsibly manage the assets in the trust.

Creating a trust for your assets can be an excellent way to make sure that money is available for beneficiaries unable to handle money on their own — such as minor children. In addition, certain types of trusts can provide a surviving spouse with income during his or her lifetime, while leaving the assets themselves to additional beneficiaries, such as adult children, after the death of the surviving spouse.

It is vital that you choose a trustee whom you know will respect her fiduciary duty, since the trustee has control over the assets in your trust. Requiring two co-trustees and asking for dual signatures on all financial paperwork can help ensure that no one abuses their power as a trustee.

SEE ALSO: Everything You’ve Ever Wanted to Know About Trusts

Other Protections for Your Heirs

In addition to the well-written estate plan and the careful choice of anyone who will be in control of your assets, there are several other actions you can take to protect your heirs from inheritance theft:

  1. Appoint two executors to your estate. Make one of your two executors a non-family professional, such as a trust company, a financial planner, or an attorney. This lowers the likelihood that your executor will take advantage of his position.
  2. Discuss your estate plan with the entire family. Telling the whole clan — ideally at the same time — what your plans are will make it more difficult for any one family member to try to circumvent your wishes later.
  3. Put a disclosure requirement in your will. If your will requires your executor to disclose all details about estate expenses, assets, and financial transfers, it will be more difficult for an untrustworthy executor to hide misappropriation or theft.

Protect Yourself From Inheritance Theft

What if you are an heir who fears your inheritance has been stolen or is in danger of being hijacked by someone else? This is a very difficult situation, since it can be both expensive to fight an inheritance thief in the courts and difficult to prove that your inheritance has been hijacked.

According to Valerie Rind, author of the book Gold Diggers and Deadbeat Dads, the first thing you need to do is “consult a lawyer who specializes in trusts and estate work. The attorney who handled your brother’s DUI probably isn’t the best choice.” That’s because an estate attorney will know the specifics to look for in proving your case, and will have plenty of experience in dealing with inheritance shenanigans.

It’s also important to know your rights, says Rind. While the laws vary from state to state, there are certain rights that you can count on as an heir or beneficiary. In particular, as an heir, you have the right to receive information about the will and the estate, if you request it from the executor. If the executor is trying to keep you in the dark, that is a major red flag.

In addition, you also have the right to an accounting of the estate or the trust. The accounting is a detailed report of income, expenses, and distributions from the estate or trust, explains Rind. The accounting should be in writing, and should provide supporting papers such as receipts or cancelled checks. These supporting papers should match the information on the accounting that the executor or trustee provides.

Be Prepared to Spend Money on Legal Fees

Once you do consult with an attorney, recognize that you may have to pay some hefty legal fees. According to attorney Mary Randolph, “a lawyer who does nothing but estate planning and probate will likely charge a higher hourly rate than a general practitioner.” Estate attorneys will be more efficient with their (billable) time, since they have plenty of experience in that area of law — but it does mean that the average heir may experience sticker shock when hearing their estate attorney’s hourly rate.

When a trust is involved, Rind also cautions beleaguered heirs that trusts can cause increased financial headaches, because “the trust itself is a separate ‘person’ and might need its own attorney. The legal fees get paid out of the trust’s assets, so you could wind up spending the money you are fighting over.”

This is why it’s important to determine ahead of time if the fight over your loved one’s money or property will be worth the time, energy, and legal fees you will have to pour into it. Legal fees have decimated plenty of estates when heirs fight long court battles over what belongs to whom.

Rest in Peace of Mind

Fighting against an inheritance thief is both exhausting and expensive, and it will not necessarily bring back the money that was taken. This is why the best defense against inheritance theft is a good offense: Prepare a well-written estate plan, appoint multiple individuals as executors, trustees, and powers of attorney as a safeguard against untrustworthy behavior, and be open with your entire family about your wishes.

If you do all of these things, you can feel much more secure in the knowledge that your wishes will be carried out after you are gone.

READ MORE: What You Need to Know About Identity Theft and Fraud

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