The executor or personal representative of an estate has a wide range of powers to handle the assets of a deceased person. Even if they have the advice and assistance of professionals, they are the ones who make many of the decisions about when and what payments are made and how the assets are managed until they are distributed. For dishonest individuals, or those that are merely desperate for funds, this can prove a great temptation.
While we all want to believe that those we love and trust will follow the details of our will, especially as the personal representative can be compensated fairly for their time, the surprising reality is that people can get greedy when face with the prospect of easy gains. Mismanagement of an estate is a common cause of family rifts even when the personal representative is not actively embezzling funds.
How Embezzlement Occurs
The executor is responsible for communicating information to the probate court about the assets in the estate, setting up and managing a bank account for liquid assets and payment of debt, inventorying and managing estate assets, paying final debts, accounting for the funds and assets and the steps they take to manage, and finally, distributing those assets in accordance with the guidance in the will.
Stealing assets from an estate is a clear violation of an executor’s fiduciary duty, but there are plenty of ways it can happen. From poor management to self-dealing to straight stealing, personal representatives have the access and often lack oversight and can easily embezzle and steal funds.
If beneficiaries suspect embezzlement or theft, they have the right to bring an action in the probate court against the executor and make a claim on the bond. This must be done in a timely fashion. Although you can make a claim against the executor after the estate is closed, it will likely be more difficult to collect monies and assets that have already been disposed of.
Steps to Avoid Embezzlement
There are steps that an individual can take when crafting their will, beyond appointing someone they believe to be unimpeachable to serve as their personal representative. You can also provide the executor with oversight and assistance by directing they use the guidance of certain professionals when making decisions or solicit their help in handling assets. You may also choose to put funds in trust and have those funds transfer outside of the probate process to the beneficiaries of your choice.
Choosing the right plan of action will be very specific to the assets in your estate and the end goal you want to accomplish. The experienced trust and estates planning team from Dunn Law Firm have helped individuals craft estates that take many different forms. To learn more, reach out to the Dunn Law Firm by calling (435) 628-5405 to set up a free consultation today.