Making Sense of Probate Fraud Litigation

Probate Fraud Explained

To be liable for probate fraud in Iowa, a fraudster must have made a false statement (intentional misrepresentation) to a testator who believed in the lie and subsequently altered his testamentary documents to benefit the wrongdoer.

A misrepresentation alone therefore is not fraud if the alleged defrauder did not prosper from his dishonesty or if the testator believed in the wrongdoer’s lie but changed his will for reasons not related to the false statement.

Fraud in the Inducement—takes place when testators convey their estate assets differently because they believe an alleged defrauder’s intentional misrepresentation is important.

For Example: Fiduciary Mike convinces Testator Tom that Heir Alice has passed away. Unbeknownst to Tom, Alice is still alive, but this fact doesn’t stop Tom from altering his will to transfer Alice’s inheritance to Mike.

Fraud in Duress—occurs when alleged defrauders exert undue influence over a testator’s true intent to convey estate assets by threatening violence or by engaging in wrongful coercive acts that compel the testator to alter his will.

For Example: Testator Tom was very ill, and he depended on Fiduciary Mike’s care to survive. Mike advises Tom that he’ll stop caring for him if he doesn’t change his will to transfer Heir Alice’s inheritance to his estate. Tom wants Alice to keep her future assets, but he complies with Mike’s wishes because he cannot risk Mike leaving him alone to care for himself.

Fraud in the Execution—happens when alleged fraudster tricks the deceased into signing (executing) a testamentary document that was not his own.

For Example: Fiduciary Mike drafted a fake will that named himself as the primary beneficiary, he then substituted the false document for Testator Tom’s will and convinced him to sign it.

Probate Fraudsters

Alleged fraudsters named in estate dispute claims are usually fiduciaries who were tasked with planning or executing the deceased’s estate; or individuals that formed close, intimate or confidential relationships with an ill, elderly or vulnerable testator while he was alive.

• Relatives hold positions to commit fraud because they usually have direct access to estate property and estate planning documents before the testator dies. Their close and personal relationship with the deceased likewise allows them to influence a testator’s intent on how to convey property after death.

• Caregivers are fiduciaries who hold legal responsibilities to work in the best interests of the testators they care for. The courts will make caregivers personally liable to pay back the estates they loot if evidence shows they breached their fiduciary duties by exercising undue influence or by tricking vulnerable testators into altering their testamentary documents.

• Estate planning lawyers and individuals who hold Power of Attorney authority over a testator’s estate are also fiduciaries who sometimes hijack inheritances by misleading testators into conveying probate assets to them.

Probate Fraud Red Flags

Family members, heirs and benefices may preempt fraud from taking place in their estates by paying close attention to the following probate fraud warning signs:

• Testamentary Document Alterations—make inquiries when learning about modifications to wills or trusts that name new beneficiaries or add individuals from outside the family.
• Forgeries—verify that new estate planning documents or alterations to older ones reflect the true intent of the testator.
• Movement of Estate Assets—hire an estate lawyer to subpoena random formal accountings of estate assets while the testator is alive and scrutinize any unusual financial transactions or newly open accounts.
• Post-Death Fraud—investigate removals of estate property occurring before probate proceedings begin and never pay probate debts, taxes or fees to anyone other than the court or verified creditors.

Claimants in Probate Fraud Litigation

Only interested parties with standing may file a probate fraud claim. An individual holds standing if they own a pecuniary interest in an estate linked to a testamentary document that impacts their inheritance or inter vivos gifts negatively.

Probate Fraud Litigation in Iowa

Since fraud sometimes occurs before or during probate, executors and trustees may administer estate assets only after the courts validate testamentary documents and declare they reflect the deceased’s actual intent.

Interested parties often employ skilled estate dispute attorneys to investigate suspected probate fraud. If the attorney discovers a wrongdoing took place, he’ll file a cause of action with the probate court to redress losses to the estate and probate fraud litigation will begin.

Victims may alternatively ask their estate dispute attorneys to help authorities convict the alleged fraudster. An interested party may later sue the fraudster’s estate in civil court to recover damages while the wrongdoer is in prison.

Let’s examine typical probate fraud litigation in Iowa:

• Will Challenge—an alleged fraudster tricked the testator into reducing or eliminating an interested person’s inheritance.
• Undue Influence—a person in a confidential or close relationship with the testator misled the deceased into believing a false statement which caused a disinheritance to the beneficiary.
• Forgery—an alleged fraudster forged the testator’s signature on a phony will or misled the deceased into signing a will that was not his own.
• Legal Malpractice—an estate planning attorney breached his fiduciary duties after negligently planning the deceased's estate or after tricking the testator into adding provisions to benefit the attorney.
• Executor or Trustee Removal—an executor or trustee fraudulently mismanaged estate assets, or the alleged defrauder mislead the testator or the courts into appointing him.
• Power of Attorney Abuse—an agent breached his fiduciary duties or used his power of attorney authority to exercise undue influence over an estate that caused a disinheritance to a beneficiary.
• Post Death Fraud—an intentional misleading communication from a third party to a beneficiary or an estate administrator during probate provoked unwarranted payments of debts, taxes, or fees.
• Guardianship Removal—a guardian hijacked an inheritance after exercising undue influence over the testator they care for.
• Formal Accountings—court ordered accountings made during evidentiary discovery that force executors or trustees to conduct a detailed inventory of estate assets and justify expenses incurred.

Probate Fraud Redress

Probate courts will remedy fraud by either striking an estate planning document in part or rejecting it entirely.

Partial annulment will call for the fact finder to determine what the testator intended or would have intended had the fraud not existed, and afterwards, decide who will take.

Contrarily, total revocation of testamentary documents will move estates into intestate succession where Iowa’s strict intestacy codes mandate which parties can legitimately take estate property and assets.

Iowa courts rarely reopen probate proceedings once probate closes. However, the courts will accept tortious interference with inheritance claims after probate where beneficiaries and other interested parties can personally sue the fraudster for damages.

Inheritance hijacking takes place when a fiduciary uses his legal authority to loot the estate of an heir or beneficiary.