Receiving an inheritance could provide an unexpected (or anticipated) financial windfall. There’s just one thing you may have to contend with – people attempting to steal what you’ve inherited. Inheritance theft is sometimes a very real problem for people who inherit money, property or other assets. Inheritance theft laws exist to protect heirs and beneficiaries. If you’re set to receive an inheritance or have received one that was stolen from you, it’s important to understand what legal rights you may have for getting those assets back. A financial advisor can help you with estate planning to minimize conflicts after your death.
What Is Considered Inheritance Theft?
Inheritance theft can take different forms, with some being more obvious and others being more subtle. Some common examples of inheritance theft or inheritance hijacking include:
- An executor of a will who steals or attempts to hide assets from the estate inventory
- A trustee who diverts assets from a trust for their own use or benefit
- Executors or trustees who charge excessive fees for their services
- Abuse of power of attorney status
- Use of coercion or undue influence to force a will-maker or trust grantor to change the terms of their will or trust
- Fraud or forgery related to the will or trust document or the destruction of said documents
Inheritance theft can also happen on a more personal level. Say you and your sister share caregiving duties for your aging mother. Your sister has access to your mother’s bank accounts and without your knowledge, withdraws a large amount of cash from them while your mother is still living.
Meanwhile, your mother names you as executor of her will. Once she passes away, you begin creating an inventory of her assets only to discover that money is missing from her bank accounts. If you and your sister were supposed to have inherited those assets jointly, this could constitute a violation of your state’s inheritance theft laws.
Is Stealing Inheritance a Crime?
People who commit inheritance theft, whether it’s an executor, trustee, beneficiary or someone else, may be subject to both criminal and civil penalties. For example, a trustee who embezzles money from someone’s estate can be charged with a felony or misdemeanor, depending on state laws. They can also be sued by the beneficiaries of the trust for breach of fiduciary duty.
Likewise, a caregiver who steals money from someone’s bank accounts or coerces them into signing over other assets could be charged with a felony or misdemeanor crime. Typically, whether a felony or misdemeanor charge is brought depends on the nature of the theft and the value of what was stolen. Felony convictions can result in a prison sentence while the punishment for misdemeanor convictions is typically jail time and/or fines.
The injured parties, i.e. someone’s heirs or beneficiaries, may also choose to pursue a civil claim against someone they believe has stolen their inheritance. Going back to the previous example, you may decide to sue your sister for the money that was taken from your mother’s bank account. If you win a judgment, they’d be forced to repay your share of those assets along with your attorney’s fees.
Inheritance Theft Laws
Each state has different laws regarding inherited assets but they’re all designed to do the same thing: Protect the rights of people who inherit assets.
State inheritance theft laws typically cover four distinct aspects:
- Who has committed the inheritance theft (i.e. a family member, friend, caretaker, etc.)
- When the theft occurred (i.e. before or after the owner of the assets passed away)
- What was stolen (i.e. bank accounts, real estate, jewelry, etc.)
- How the theft occurred
As far as the “how” goes, it’s important to remember that inheritance theft can take many different forms. One of the most common examples involves elder financial abuse, in which someone takes advantage of an elderly person’s weakened physical or mental state to steal from them. This is something to be aware of if you have aging parents and someone else is their primary caregiver.
What Can You Do If Someone Steals Your Inheritance?
If you believe someone has stolen your inheritance, it’s important to review inheritance theft laws in your state. Again, each state has different guidelines regarding:
- What constitutes inheritance theft
- Who has the standing to bring a civil claim or file a criminal complaint in connection with a stolen inheritance
- Legal grounds for successfully pursuing an inheritance theft claim
- Penalties and remedies for inheritance theft
Talking with an experienced estate planning attorney can help you determine if you have standing and grounds to file a claim for inheritance theft. Your attorney may advise you to take certain steps to develop a case, including:
- Taking an inventory of the estate’s assets
- Reviewing estate documents, such as wills or trusts, to look for any potential signs of fraud or forgery
- Verifying the validity of will or trust documents
In the case of a larger estate, it may be necessary to hire a forensic accountant. Forensic accountants specialize in examining financial documents, which may be helpful if you’re struggling to create a paper trail in order to provide inheritance theft.
You could also reach out directly to the person that you believe stole the inheritance, though your attorney may or may not advise this. If the person is aware that you’re pursuing a civil claim or criminal case against them, they may be willing to return any stolen assets to avoid legal trouble. If your request is unsuccessful then you may have no choice but to pursue a civil or criminal case.
The Bottom Line
Inheritance theft laws can help to preserve your rights to an estate if you believe your inheritance was stolen from you. You can also take steps to preserve your own estate for your heirs by drafting a valid last will and testament, creating a trust and choosing trustworthy individuals to act as your executor, trustee and power of attorney.
Estate Planning Tips
- Consider talking to a financial advisor about what to do if someone steals your inheritance or how you can protect your heirs and beneficiaries from theft.Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you disagree with the way an executor or trustee is managing an estate, you could take steps to remove them– even if no theft has occurred. And there may be situations where you might feel it necessary to contest someone’s will or a trust if you believe that it’s in some way invalid or that a breach of fiduciary duty has occurred on the part of the trust. In those situations, it may be helpful to talk with an estate planning attorney to discuss whether you might be able to challenge a will or trust.
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