Inheritance “hijacking” is on the rise. How can you protect yourself?
By Renee Chamberlain
While it may seem like the script for a made-for-television movie, inheritance “hijacking” is a real-life drama unfolding daily in the United States. In an inheritance hijacking scenario, assets intended for specific beneficiaries are illegitimately re-directed to others.
Rightful heirs who are victims of inheritance hijacking lose more than just money and peace of mind.
They also forfeit the connection those inherited assets give them to a deceased loved one.
Sadly, family members are responsible for most inheritance theft, which is probably why many of these thefts go unreported. Therefore, those anticipating receiving an inheritance must be aware of this issue and be vigilant in safeguarding against it.
There are a few standard methods crooks use to hijack inheritances.
Someone exercises undue influence over an elderly or disabled family member. Grandma has a soft spot for Randall, her youngest grandson.
Randall is a scoundrel. He’s been in and out of jail for everything from petty theft to vandalism to drug possession. Still, with some method acting and a slathering of TLC, he persuaded Grandma to change her will and leave the bulk of the estate to him, cutting out the rest of the grandchildren. Undue influence is one way bad actors steal rightful inheritances.
Borrowing money “off the books.” Mary’s daughter Sarah (a serial entrepreneur) asks for a private loan from her mother to fund her latest endeavor- an electric motorcycle dealership. She gets a no-paper work, no-signatures loan from Mom for $500,000. Sarah promises her mother a percentage of the profits in return. This transaction takes place without the rest of the family knowing anything.
Unfortunately, Mary passes away suddenly before her daughter repays her. Mary’s estate is now a half million dollars lighter than anticipated.
No other family members know about the loan, and Sarah’s not saying a thing. If questioned later, she plans on saying, “It was a GIFT.”
Someone marries mamma under false pretenses. Wealthy, lonely widows, widowers, and divorcees are prime targets for grifters, especially in community property states such as California and Texas. Community property laws virtually guarantee that a spouse will inherit part of an estate. Unscrupulous people marry these widows or widowers with the sole intention of getting their hands on the assets. They may also increase their share of wealth by convincing their new spouse to cut out other family members from the will.
Abuse of trust with power of attorney. For obvious reasons, individuals with Alzheimer’s or other cognitive issues are especially vulnerable to inheritance theft. As their decline worsens, some ailing seniors may decide to give a family or friend power of attorney over their finances. A power of attorney legally obligates the financial agent to act in a fiduciary capacity, making only those decisions that benefit the person who granted the power. However, those designated agents often ignore the law, squander the money, or use it to pay their own expenses. When the decedent passes, their heirs are often shocked to discover that the financial agent their loved one trusted has stolen their inheritance.
Document forgery. Although rarer than a few decades ago, document forgery can still be an issue.
There have been numerous incidences where family members or advisors create fake documents, such as wills and codicils (amendments), to give themselves shares of an estate to which they were otherwise not entitled. It’s then up to the rightful heirs to prove that the document in question is a forgery, a process that could be very expensive and time-consuming.
Outright thievery. Annabelle thought she was Aunt Eunice’s favorite niece. Aunt Eunice, however, didn’t necessarily agree. She decided to leave Annabelle’s sisters the bulk of her estate, with Annabelle getting only a token amount. Angry, Annabelle got revenge by stealing Aunt Eunice’s rare coin collection, a bag of designer shoes, and some expensive jewelry when no one was paying attention.
If you believe you will get an inheritance, protecting yourself is critical. Here are some things you can do right now to ensure you don’t become a victim of inheritance hijacking.
- Always inventory valuables. Have your loved one make a list of valuables, such as jewelry, antiques, collectibles, and other items, along with their location. Distribute that list to all family members. Then, you’ll know what to look for when your loved one passes and prevent items from mysteriously disappearing.
- Educate your loved one on the value of record keeping. Suggest to your elderly mother, father, or grandparent that they should document, sign and copy every loan. Ask them to make multiple copies and give them to trusted people outside the home, such as their estate planner, financial advisor, sibling, or other trusted family member.
- Stay tuned in to what others may be telling Grandma. Some heirs will unfairly tarnish the reputations of other heirs to get a more significant share of assets. “Grandma, you don’t want Tony to have your money. He’ll just gamble it away.” Or, “Jackie’s business is growing; she doesn’t need that money.” Honest, consistent communication can greatly help squash rumors that could affect your inheritance.
- Ask for copies of estate documents. Ask your relative to make and distribute copies of their will, trusts, and other estate documents to all the heirs. Doing so will make forgeries much less likely to occur.
Make sure an attorney is involved.
- Estate planning with a seasoned attorney reduces the odds that an unhappy family member will cause problems or that the will could wind up in court for years. Ask your relative if they’ve used an estate planner, attorney, or CPA to assist them, and get all the contact information and details.
- If you have doubts, consult your lawyer. If you are concerned that your inheritance may be in danger of theft or fraud, it might be wise to hire an estate planning attorney. Your attorney can help you understand the process, documents, and other aspects of estate planning. They may also spot potential weaknesses and help you address them before your loved one dies.
The bottom line: Family feuds over inheritances can often be avoided by having open communication between heirs. You can help ensure you get the money and assets your relative intended you to receive by asking questions, requesting documentation, and keeping yourself informed about changes. Staying positive and respecting your family members and fellow heirs will help make the wealth transition smoother and less stressful. Contact me if you’d like some ideas about how best to protect your inheritance. Also, if you have gotten an inheritance already, I can help you safeguard and grow that money.