As more and more people are reaching retirement age and living longer, protecting one’s finances against unexpected expenses and the possibility and of needing long-term care are important parts of any retirement and estate plan. However, one thing most people may not realize is that in today’s digital world, most people should also protect themselves against the possibility that someone out there will try to steal, rob or scam them out of their money. 

While many seniors who experience financial fraud do so at the hands of dishonest strangers, sometimes an individual’s own family members or caretakers can also take advantage of them. Having access to someone’s financial information and assets makes it easier to commit fraud. 


Why Is Estate Fraud So Prevalent?

The reason for estate theft is simple: Money. All it takes is a signature or access to someone’s bank accounts to shift large amounts of wealth from one person to another. Often, beneficiaries and heirs of estates are left wondering, (1) I thought they were wealthier; what happened to all the money and assets in the estate? And (2) how did he or she become the executor of the estate?  It’s common for beneficiaries to have those questions regarding estates and inheritances. 

Often, the people closest to the victim steal from the estate through undue influence, intimidation, deception or manipulation. The perpetrator can be a family member, an advisor or healthcare worker. 

Don’t Ignore the Red Flags

Estate theft often goes undetected because family members do not identify red flags or know how to go about investigating potential theft. As a result, beneficiaries often accept an unexpected estate plan out of respect for the dying parent’s “wishes.” The help of attorneys and forensic accountants is needed to get through the legal process, documents and to follow the tracing of the assets in an estate. 

Examples of red flags that may signal potential estate theft:

  • Any changes to a will executed by an individual whose death is imminent. Who benefits from the new will and/or changes to it?
  • Did the decedent depend upon a major beneficiary for shelter, medical attention, care, etc.?
  • A child or spouse excluded for no obvious reason
  • Does the will primarily benefit non-relatives, such as a home healthcare worker or advisor?
  • Decedent gave away large “gifts” prior to death
  • Large pieces of the estate are unaccounted for

Examples of Estate Fraud

Examples of estate fraud could be the following:

  1. A family member takes money from your parent’s bank account for their personal benefit.  
  2. A person cut out of the will destroys the will to force the estate into intestate succession, in which they would get an equal share of the assets.
  3. A family friend or caretaker uses undue influence to get a dying parent to change the beneficiary designation on his or her brokerage account to them.

Case Example

An attorney is hired to represent an individual in a lawsuit brought forward against a sibling, alleging the defendant misappropriated monies while providing care for an elderly mother. The defendant alleged there was no wrongdoing on her behalf. 

The attorney retains a forensic accountant to prepare a discovery request list for financial documentation to determine if there was any wrongdoing. The forensic accountant compiles a list of items to request, including bank statements and records.

Once the requested items are produced, the attorney instructs the forensic accountant to review the information received. The forensic accountant determines that the defendant opened various bank accounts and, unbeknownst to her mother, made transfers (hundreds of thousands of dollars) from the mother’s account to her personal accounts throughout the years. Per review of bank and other legal documents, the forensic accountant later determined that some of the larger transfers coincided with amounts used to purchase real estate properties by the defendant, all of which were under the defendant’s name. The forensic accountant’s report and testimony helped summarize and prove the transfers made by the defendant, ensuring a judgment for the plaintiff.


Don’t Go It Alone

Estate theft is often undetected since most families are unable to perceive the red flags, nor do they know how to investigate potential fraud. Therefore, it’s important to get the assistance of an attorney, and potentially a forensic accountant, to help answer any legal or financial doubts when it comes to estates or trusts. 

Having the right team in place can help provide answers to families related to estates and trusts by filing probate documents to request discovery and/or file lawsuits to find answers to their questions and determine where estate assets disappeared to and/or if they were disposed of improperly. 

Cesar Mejia, CPA, CFE is a shareholder with Sol Schwartz & Associates, P.C. and has been in public accounting since 1998. He is in charge of the audit department and holds the Certified Fraud Examiner (CFE) credential. He uses his experience and analytical skills to provide attorneys with litigation support and forensic accounting work. Mejia’s practice concentrates on financial statement audits, reviews and compilations, consulting services and agreed-upon procedures. He also is experienced in auditing employee benefit plans, performing internal control reviews and working on due diligence engagements. Mejia previously worked for a Fortune 500 company as an internal auditor and has authored numerous published articles.