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How do executors steal from estates?
The money is totally in the executor’s control, frequently with little or no court supervision. For some people, the temptation to steal is simply too hard to resist. They come up with all sorts of elaborate excuses and use a number of schemes to cover up what they did.
Just look at a case we took to court this week. A will stated that “the estate should go to the decedent’s children or grandchildren, and if none of them are alive at the time of her death, to her nephew and three friends.” She has one granddaughter. The nephew, who was appointed as executor, ignored the granddaughter’s existence, skipped her, and distributed the estate to himself and the three friends instead. His own lawyer was surprised to hear this, of all people! We suspect that the crafty executor switched lawyers every time they found out about the granddaughter, covering up their scheme just long enough for the estate to receive money.
Why do executors distribute the estate’s money to the wrong people?
Some executors improperly distribute the estate’s money to the people they like, cutting out the people they don’t care for. Once again, let’s look at our case from this week, where the New York executor skipped the granddaughter and distributed the money to himself and three friends. It seems to us that the executor had a preference for the three friends and neighbors and a dislike for the out-of-state granddaughter whom he dis not know as well. When the executor and one of the beneficiaries have a strained relationship or when they were geographically separated for a long time, the executor will sometimes deny the beneficiaries their share of the inheritance.
Red flags that an executor might be stealing
Do you see a sudden increase in the executor’s spending? Is the executor buying nicer clothing? Bought or leased a new car? Bough a new house or is renovating their house? Sending their kids to an expensive school? While those things don’t prove that the executor is stealing from the estate, they could be red flags.
What can we do when an executor steals money from an estate or gives money to the wrong people?
The simple answer is, we try to get the money back. As we turn back to the case we’re discussing, the executor’s attorney was compelled by the court to ask his own client to refund the money back to the estate and distribute it properly. The executor was also compelled to force the three friends to refund the money back to the estate. Where an executor refuses to return the money, we sue the executor and execute his property in favor of the estate.
There are a number of remedies available to force the executor to return the money.
Accounting. The standard process in the Surrogate’s Court is to compel the Executor to provide a formal accounting. Once the executor provides the accounting, the beneficiary has a chance to object to the accounting. If the court finds that the executor stole from the estate, the court will surcharge the executor. If the executor is also a beneficiary, the court will deduct the money from the executor’s share. If the executor is not a beneficiary, the court can surcharge him with the money he stole. I
Turnover Proceeding. If the executor stole property as opposed to money, the beneficiary’s estate lawyer can bring a proceeding for turnover of the property.
Bonding. Sometimes there is a bond on the executor. A bond is a kind of insurance against executor theft. If you are lucky enough that there is a bond, or your estate lawyer was experienced enough to apply for a bond, then you can make a claim against the bonding company if the executor is found to steal money or property but the money is impossible to recover from the executor.
If you think that your estate’s executor is no distributing the money in accordance with the will, call our New York estate attorneys at (212) 233-1233.