My Sibling Cheated Me Out of My Inheritance in New York City

If your sibling cheated you out of your inheritance, you have legal avenues to pursue. The first step is to identify how the inheritance was taken, because the remedy depends on the method. Below are the most common forms of inheritance theft between siblings, the remedies the Surrogate’s Court offers, and what usually happens when a case is brought. We also represent siblings who are being accused, so we write with both sides in mind.

Contesting a will

If your sibling is presenting the court with a will, you would have to contest the will successfully and have it set aside. Disagreeing with a will is not enough. You would have to establish one of five grounds: technical failure (errors in how the will was signed and witnessed), pressure and manipulation (undue influence), diminished mental capacity (cognitive decline that kept the person from understanding the will), forgery, or fraud (the person made the will because someone lied to him). To learn more, read our guide to will contests.

Contesting a trust

To recover an inheritance your sibling took through a trust, you would have to contest the trust. The process is similar to a will contest. To contest a trust, you would have to prove that the person who made it lacked the mental capacity to do so or was unduly influenced into making it. In some cases you would also allege that your sibling defrauded or forced the person into making the trust, that the trust is a forgery, or that it was not executed correctly.

Undoing abuse of a power of attorney

If your sibling abused a financial power of attorney, whether before or after the account owner’s death, you can file a discovery or turnover proceeding (or the equivalent) asking the court to direct your sibling to return the funds. Money in a bank account is easy to trace as long as it has not been laundered.

Abuse after death is the easier case. Any transaction made under a financial power of attorney after the principal’s death is illegal, so you only need to show the transaction and the death certificate establishing the date of death. Abuse before death is more complex: you must show that the withdrawals were not made for the principal’s benefit and were not gifts the principal chose to make to the agent. If the principal is still alive, the way to stop the abuse is to bring a guardianship proceeding.

Recovering property in a joint account

If your sibling took your inheritance through a joint account, there are three pathways to recovery. The first is to prove that the person who put the money into the account was unduly influenced into adding your sibling, or lacked the capacity to sign the beneficiary designation. Capacity and undue influence are related: the usual theory is a combination of undue influence and fraud or misrepresentation made possible by the owner’s weakened mental state, and it is usually proven through the account owner’s medical records.

The second pathway is to prove that the account was a convenience account. In New York, you may be able to invalidate a joint-owner designation by showing that your sibling was added to the account only for the original owner’s convenience. That is proven by showing that every withdrawal during the owner’s lifetime was made for the owner’s benefit alone. The third pathway is to prove that the account was changed without authorization, either online or through a power of attorney. Banking law governs these claims, and your lawyer will review the signature cards and bank records to see whether the account was one of convenience.

Contesting a deed

Real estate and vehicles can be taken through a deed. The owner may have been unduly influenced into deeding the property to your sibling. Most deeds are set aside by proving a combination of undue influence and fraud or misrepresentation. Undue influence occurs when the owner was coerced into signing by the person who benefits, and it usually happens when the owner is in a weakened state or physically dependent on that person for daily activities. The proof comes from the owner’s medical records: the medication the owner was taking and the owner’s health at the time the deed was signed. Evidence that the owner had a mind-debilitating disease, was taking mind-altering medication or was physically reliant on your sibling strengthens the claim.

Self-dealing by a sibling who is executor or trustee

A sibling who serves as executor or trustee can cheat the other beneficiaries in three ways: by transferring estate property outright to himself, by making distributions only to himself or to family members aligned with him, or by skimming estate funds and charging personal expenses to the estate. If you can prove it, the judge can remove your sibling as executor or trustee, and you can ask the court to restrain him from further acts while your petition is pending. If the court finds that your sibling took from the estate, you can bring a surcharge action holding him liable for the damage to the estate. In New York the remedy is a surcharge for the loss, not punitive damages.

Theft of personal items

Personal items can be physically taken before or after the owner’s death. This is the hardest form of theft to prove, because personal property can be sold immediately so that your sibling is never caught with it, and because possession of untitled personal property raises a presumption that the person in control owns it. Titled property, such as a car or a valuable painting with a provenance record, is easier to trace.

Remedies

The most common way to recover an unfairly taken inheritance is a civil case. If you wish, you can also try to get the police and the district attorney to bring a criminal case. Both are discussed below.

Recovering a stolen inheritance through the civil courts

Before filing a case against your sibling, weigh three things: the strength of your evidence, the value of the property at stake, and the time and legal fees the case will require. Those three factors decide whether pursuing the recovery is worthwhile. The remedies available in a civil proceeding are these.

Setting aside a document

Your attorney may ask the court to set aside a will, to annul a deed or beneficiary designation on the ground of undue influence, to reform a deed on the ground of mutual mistake, or to declare a bank or investment account a convenience account. If your sibling forged the will or pressured the testator into leaving him most of the estate, the vehicle is a will contest.

Bonding

Sometimes a sibling who is executor has posted a bond, which is a form of insurance against executor theft. If there is a bond, or your estate lawyer was careful enough to ask for one, you can make a claim against the bonding company when your sibling is found to have taken money or property that cannot be recovered from him.

Surcharge

Your lawyer can petition the court to surcharge your sibling for the amount he took. Surcharge is a legal term meaning that the person who took the money is charged with returning it. If your sibling is the executor and also a beneficiary, the court can surcharge his share of the estate, giving some or all of it to you and the other beneficiaries.

Turnover

Beneficiaries can bring a proceeding for discovery and turnover. If the court grants turnover, it forces your sibling to return property he wrongfully transferred. In New York, if the sibling who has been taking from the estate is the executor or administrator, you can bring a reverse discovery and turnover proceeding against him. If you are the executor or administrator and your sibling took from the estate, you are the one who must file the discovery and turnover proceeding. If the executor or administrator refuses to bring the proceeding against your sibling, you may be able to force the issue by petitioning to remove the fiduciary for failing to do his job.

Accounting

If your sibling is the executor or trustee, you can compel him to provide a formal accounting. Once he does, you have the chance to object to it. If the court finds that your sibling took from the estate, it will order the property returned, and if your sibling is also a beneficiary, the court will deduct the amount from his share.

Removal of the executor

If your sibling is the executor or administrator and is caught stealing, the Surrogate can remove him and take away his power to manage the estate. The court can remove an executor “by reason of his having wasted or improperly applied the assets of the estate” (NY EPTL § 11-1.1). The court then appoints someone else, typically one of the beneficiaries who brought the proceeding to remove the misbehaving executor.

Guardianship

If your parent’s or another relative’s property is being taken while the relative is still alive, which diminishes your eventual inheritance, you can consider bringing a guardianship proceeding to stop your sibling from siphoning money and to have the property returned to your relative.

Forfeiture of commissions

An executor is entitled to a commission for his services; the commission is about three percent of the value of the estate. As a penalty for stealing from the estate, the court can take away the executor’s or trustee’s right to a commission.

Attorneys’ fees

A sibling who is executor or trustee will use estate funds for his defense. If the court finds that he improperly took funds, it can order him to reimburse the estate for those attorneys’ fees. In rare cases the court can even order him to pay your attorneys’ fees.

Recovering a stolen inheritance through criminal restitution

It is not common for someone to press charges against a sibling, and the district attorney’s office does not like to prosecute cases that can be resolved in civil court. It does happen from time to time. Whether there is a prosecution depends on whether the DA’s office agrees to take the case; it typically declines, calling the matter civil, but under some circumstances it will take on a stolen inheritance case. If it does, the potential penalties are significant even if the case never goes to trial. Everyone has a side of the story, and a judge or jury may find that theft was not proven beyond a reasonable doubt.

A sibling who took money or property that did not belong to him can be prosecuted for theft from the estate even if he is one of the beneficiaries. Taking more than the law entitles you to is stealing from the other beneficiaries. Suppose a mother left her estate to her four children and the executor-sibling withdraws cash, saying he is only taking his own share. The estate is not his; it belongs to all the beneficiaries. If he withdraws four thousand dollars, the law does not treat that as four thousand dollars of his own money. It treats him as having cheated each of his three siblings out of a thousand dollars. If he withdraws a penny, most of that penny belongs to the others.

The Penal Law. The estate is the owner of the property, and an executor or anyone else who takes from the estate commits larceny. New York’s Penal Law provides that “a person steals property and commits larceny when, with intent to deprive another of property or to appropriate the same to himself or to a third person, he wrongfully takes, obtains or withholds such property from an owner thereof,” and that larceny “includes a wrongful taking, obtaining or withholding of another’s property, with the intent prescribed in subdivision one of this section, committed … by conduct heretofore defined or known as common law larceny by trespassory taking, common-law larceny by trick, embezzlement, or obtaining property by false pretenses” (NY Penal Law § 155.05; see also EPTL § 11-1.1 and EPTL § 11-1.6).

Sentencing. Article 155 of the Penal Law grades larceny by the amount taken. An executor convicted of grand larceny faces up to twenty-five years in prison.

Restitution. The criminal court can order the executor to return the property to the estate and pay restitution to the beneficiaries.

Although we speak of an executor, the same rules apply to an administrator and a trustee, and to a preliminary executor, administrator d.b.n., administrator c.t.a.d.b.n., administrator c.t.a., ancillary executor, ancillary administrator and ancillary administrator c.t.a. (EPTL § 11-1.1). Nor are fiduciaries the only ones who can be accused. Anyone with access to estate funds could be the thief: the attorney, a real estate broker, a financial advisor, a caretaker.

What are the red flags?

Certain signs can point to a sibling helping himself to more than his share: a recent and unexplained increase in spending, nicer and more expensive clothing, a new car bought or leased, a new house or a renovation, or children suddenly enrolled in an expensive school. None of these proves that your sibling is taking from the estate, but they are red flags that point in that direction.

Trying to resolve the matter personally

Before hiring a lawyer, consider asking your sibling directly to return the property to the estate. Perhaps he only intended to keep it if he could do so undetected; once caught, he may prefer to return it rather than face a proceeding. If that works, the matter is over. If it does not, the next step is legal action.

Once you engage an attorney, they will need all the details of what was taken and how. Your attorney compiles that information and presents it to the court in a petition or complaint. Dishonesty between siblings over an inheritance is not unusual; the lure of easy money is strong, and siblings construct elaborate justifications and use many tactics to hide what they have done, especially where relationships are strained or the siblings live far apart.

Whether you believe your sibling is cheating you out of your inheritance, or you are the sibling being falsely accused, we can review the facts and tell you what the court is likely to do. Email us at [email protected] or call 212-233-1233 to discuss your options.