The Expert Podcast

Inheritance theft is the fastest growing form of fraud that we see in our agency every single day. So, what is inheritance theft? Inheritance theft is sometimes referred to as probate fraud, death fraud, or family fraud. What happens is somebody in a family dies, usually one of the older relatives, a grandfather or great-grandfather. That person dies, and there are certain assets owned by that person. It could be their house, bank accounts, vehicles, or any type of asset that the person owns. These assets go through a process of being distributed to the family.

Whether that distribution goes through a formal will that the person had or through probate, which distributes it properly, many times in that process, certain relatives look to grab more of the assets than they're entitled to. They may take money out of the bank account, transfer vehicles, or deed property over to themselves. Sometimes they try to hide the fact that these assets were owned by the deceased person in the first place, so other relatives may not know. If a relative is out of town or lives far away, the people who live close by may try to hide assets and say, "No, Grandpa Joe didn't have that old car in the barn," or, "There wasn't this bank account or insurance policy," and they try to abscond with assets that rightfully belong to other family members. Sometimes, it's one family member who grabs the asset before the person dies or even before it goes to probate.

So, how do you investigate probate fraud or inheritance theft? The first step is to perform a very thorough asset search and asset forensics that goes back in time a little bit to make sure you're catching any transfers of assets that happened around the time the person died. This is called a flow of assets because you want to make sure there are no fraudulent conveyances. A fraudulent conveyance is when someone takes an asset and transfers it away when they're not supposed to. They might put it in their name or someone else's name. Many times, these assets are hidden, like a hidden bank account, a vehicle that nobody knew was owned, or real estate that somehow gets transferred to a family member.

If one of the family members is the executor of the estate, they sometimes do things improperly with their handling of the estate. The difference is that if an executor does something wrong, it's even worse because, in many cases, that’s considered a crime, rather than just transferring an asset away. If you're a nephew, for example, you might get a slap on the wrist and have the asset clawed back. But if you're an executor and improperly transfer assets, in many states, that’s actually a criminal offense.

If you are a victim of inheritance theft or probate fraud, you first want to make sure you get a good inventory of the assets. Run through what is owned, and don’t assume you know what assets the deceased person had. Many times, as a person becomes older, they accumulate assets in things like 401(k) funds, retirement funds, or other brokerage accounts that you may not know about. How well do you know all the assets your family has? You probably know the house they own and maybe their cars, but you don’t know all their bank accounts, insurance policies, or investments. If somebody is trying to be clever, they can be close to that person and snatch those assets or try to before they get distributed properly. Usually, the only reason they get away with it is because nobody looks.

If you are a family member when someone dies and you look properly at all the assets, you can catch it easily because there’s no way to completely hide it. It leaves a paper trail. Not only can you get those assets back, but in many cases, you can ask the court to have penalties put on the other person, like getting a bigger share of the assets transferred to you or even getting fees or legal costs for the time and effort you put into finding those assets.

So, if you're a victim of inheritance theft, or you're just suspicious that when somebody dies—or maybe they haven’t died yet—but you're suspicious in advance, make sure you're getting a good handle on the assets. Get good legal advice if you need it, have an attorney involved if necessary, but also get a good asset search and asset inventory done. Perform forensics on the numbers to make sure no one’s trying to get away with it. And, look, it’s a matter of principle. Even if you don’t think you need the money or if it’s not that big a deal, you want to know if another family member is doing something that’s not in your best interest because that might change how you deal with them in the future.