What Everyone Needs To Know About Recognizing Fraud in Estate Planning

Probate fraud litigation arises when interested parties claim a testamentary document in probate was executed under deception or contains forged provisions.

Seasoned probate litigators can scrutinize fraudulent estate planning documents without hesitation, but non-lawyers may find it challenging to figure out whether a fraudster has deceived a testator into disinheriting them.

Let’s check out what the experienced estate fraud litigators at iowaprobatelitigation.com have to say about this common will dispute issue…

Probate Fraud in a Nutshell

Wrongdoers can commit criminal fraud or civil tort fraud in several capacities, but when we talk about probate fraud, we’re referring to a fraudulent inducement that took place while the testator planned the estate.

Example: Janet suffers from psychosis, and Dr. Larry tells her that he is her spouse and that she has no heirs, all of which is untrue. Larry then induces Janet to plan her $5 million estate and to leave everything to him, effectively disinheriting Janet’s two sons and hijacking their estate assets.

Janet’s testamentary documents became invalid the moment that Larry fraudulently induced his patient to execute her will under false pretenses.

Example: Larry asks Janet to sign a release form, but in reality, the document placed in front of her is a forged will that her doctor drafted the night before. Janet believes that she’s signing a medical form, and she executes the forged will without reading it.

When Janet’s will enters probate, her two sons will have to convince a judge through proper evidence that Larry intended to deceive Janet and actually tricked her into leaving everything to him.

Here, Janet’s sons will have to initiate a will challenge and show to the court that Larry induced Janet into endorsing a false will.

Red Flags Showing Probate Fraud Took Place

The number one red flag in probate fraud is actually an instinctive one—if something looks or smells fishy, it probably is.

Yet, probate fraud suspicion alone can’t win lawsuits. Interested parties must search for more red flags to justify their skepticism. The following situations are signs that someone may have defrauded your estate:

  • An estate planning attorney did not draft the will or the testamentary document in probate lacked a will signing ceremony.
  • The testator made sudden modifications to the will just before death.
  • A caregiver did not allow family members to visit the decedent before he passed away.
  • The deceased cut off all communications with his heirs just before altering the will.
  • The provisions found in the will differ from what the testator promised his heirs.
  • A fiduciary opened a joint bank account with the decedent before death and upon a review of past bank statements, you notice the fiduciary took money from the account for personal gain.
  • The testator made valuable inter vivos gift transfers while in the care of another.
  • The testator’s personal representative is taking too long to settle the estate and assets are slowly disappearing.

When looking at the red flag list above, you can easily see that estate fraud is always about money.

Big Tip: When investigating probate fraud red flags, you should ask yourself:
– Why did he/she get all money
– Where are all the estate assets, should there’ve been more.

Remember not to accuse others of estate fraud while investigating potential red flags—sometimes perfectly reasonable explanations exist that can explain what happened. Accusations can come later after your will dispute attorney finds evidence to support your probate fraud lawsuit that he or she will bring to take back your inheritance.

Individuals Who Engage in Probate Fraud

Potential fraudsters can be family members, friends, fiduciaries, agents or any person who establishes a confidential relationship with the deceased before death.

  • Executor Fraud—testators often name family members who they enter into a confidential relationship with to serve as their executor. These fiduciaries may have fraudulently induced their way into the assignment and may have further plans to loot estate assets while serving the role.
  • Guardianship Fraudguardians take care of incapacitated adults and hold dominating positions over the wards during their tenure. A misuse of this authority usually leads to fraudulent management of the ward’s finances or a hijacking of the ward’s intent while planning his estate.
  • Caregiver Fraud—caregivers form confidential relationships with vulnerable testators before death and can fraudulently induce recipients into modifying their testamentary documents to obtain a financial benefit from the estate.
  • Agent Fraud—individuals who hold power of attorney (POA) over vulnerable testators may loot estate assets during their tenure by participating in POA abuse while testators plan their estates.
  • Spousal Elective Share Fraud—the courts may preclude a surviving spouse from taking an elective share of estate assets in probate if the individual fraudulently induced the deceased into marriage.
  • Attorney Fraud—unethical lawyers sometimes forge testamentary documents and trick vulnerable clients into signing them.

Elements of Probate Fraud

It’s always useful to have a general sense of how the law defines a fraudulent inducement so that you can discover fraudulent activity before it gets out of hand.

In estate law, probate fraud litigation holds three elements:

  1. Deceit, Misrepresentation and Reliance. A fraudster must have made a false representation that the testator relied on which led to the draft or modification of the estate planning document in controversy. Such deceit is also known as a “misrepresentation” in legal terms.

In our first example above, Dr. Larry misrepresented himself as being Janet’s spouse. The doctor also falsely presented the will that Janet signed as a medical release form in the second fact pattern.

In both instances, Janet relied on Larry’s deceit before taking action to her detriment.

Showing a fraudster knew he was deceiving the testator is the hardest part of proving this element.

Most wrongdoers contend they believed the misrepresentation was true when defending probate fraud lawsuits. However, “not knowing” a statement was true is not the same as “should have known” the representation was false, which usually is enough to defeat this defense.

  1. Intent to Deceive. The fraudster must have also intended for the testator to execute or modify his estate planning documents based on the false representation.

If Dr. Larry made a bad joke to Janet, suggesting that he was her husband, the doctor would most likely be off the hook for civil fraud liability because he never intended Janet to believe him, let alone change her will because of the joke (the good doctor may however be liable for medical negligence).

On the other hand, Dr. Larry handed Janet a forged will to sign in the second example—a prime case of intentional fraudulent inducement.

  1. Actual Harm to the Estate. The fraudster must have damaged or injured the estate by actually taking assets or property away from the testator’s heirs and beneficiaries.

Under these circumstances, injury and damages will only arise after the testator passes away and after his estate planning documents enter probate. The harmed party named in an estate fraud lawsuit is accordingly not the deceased but rather the individual who the fraudster stole from.

Conversely, interested parties cannot claim another intentionally defrauded the testator if the culprit never received assets from probate. Janet’s two sons therefore cannot sue Dr. Larry for estate fraud if after signing the forged will Janet realized her mistake and altered her testamentary documents to disinherit the doctor.

 

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