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If you have money, property, or other assets to pass down when you die—or if you’re a beneficiary expecting an inheritance from a relative—you want to make sure all gets distributed according to plan.
But it’s not unheard of for family conflict to complicate or completely derail the allocation of an inheritance—and this can even devolve into a type of theft known as “inheritance theft,” or “inheritance hijacking,” which could be charged as a misdemeanor or a felony. So what exactly does it involve, and how can you protect your money?
What is inheritance hijacking?
Inheritance theft may occur in a variety of ways:
Stealing, destroying, or forging trust or will documents.Coercing or using undue influence (part of which involves “excessive persuasion”) to convince someone to change their will or trust.Stealing, hiding, or diverting assets from an estate or for personal gain.Abusing power of attorney authority.Charging excessive fees for services related to executor or trustee duties.Marrying under false pretenses for the purpose of benefiting from an inheritance.While inheritance theft can be perpetrated by professionals aiding in estate planning or execution, it’s more likely to occur within a family or among close caretakers. Emotional manipulation is one common tactic, and usually involves a family member who is after someone’s assets trying to get closer to that person, often by doing them favors. Similarly, family members may bad mouth each other to convince the person to reallocate their inheritance.
Note that stealing assets from an older adult or forging documents related to finances is considered a form of elder abuse.
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How to protect your assets from hijacking
First and foremost, start your estate planning process early, and with the help of a lawyer who specializes in this area. An experienced attorney can help you draft a sound estate planning agreement. Keep multiple sets of extensive records of anything related to your estate, and discuss your wishes clearly with those involved.
You may also consider distributing assets early so they are dispersed the way you want, says Jason Porter, a UK-based senior investment manager with Scottish Heritage SG. This could prevent coercion or diversion, though you’ll want to work with a tax prep expert to understand the impact of large gifts.
Again, because emotional manipulation among relatives is a more likely scenario than any sort of professional theft or fraud, employing legal and financial professionals who specialize in estate planning can be your best protection. You may also consider having multiple executors who are accountable for distributing your assets according to your estate plan.
How to protect your inheritance
Let’s say you’re an heir, and we’ll assume you have the best intentions to honor a relative’s wishes and be above board legally. You can watch for family members acting weird or cozying up to a relative they’ve had a lot of conflict with. Financial abuse and exploitation—mismanagement or misuse of money—can be difficult to spot, but warning signs may also include sudden changes in banking, large or unexplained withdrawals or asset transfers, and unpaid bills.
The laws governing inheritance theft and the penalties for violations vary by state, but if you suspect this is occurring, an estate planning attorney or forensic accountant can help you pursue these concerns. You can also report elder abuse to your state agency.
