What if a Beneficiary Steals From the Estate?

By Tom Streissguth

An estate is created when someone dies. By the terms of a will, estate assets pass to heirs and beneficiaries. If someone named as a beneficiary gets up to fraud, larceny or theft of estate assets, he's subject to criminal charges brought by other heirs or by a prosecutor. If that same individual has been named as a personal representative or executor of the estate, state law would also provide sanctions such as fines, court costs and restitution.

Beneficiary Theft

Sometimes it happens -- a beneficiary steals money or assets from an estate before the estate is distributed to heirs. This crime can take many forms. A deceitful beneficiary might "borrow" from the estate with no intention of returning the funds. She could wrongfully sell estate property or withdraw from a bank account of the deceased without authorization from the executor or the personal representative who's handling the estate. Not understanding the probate process, it is also possible for a beneficiary to unintentionally steal by accessing money or investments before they legally belong to him; this can result from poor communication by the executor or personal representative.

Defending the Estate

State law governs estates and the administration of wills, and the acts of executors and personal representatives. If a beneficiary steals or misappropriates property, he may be subject to criminal charges as well as a civil lawsuit by the person administering the will. This individual is responsible for bringing claims against other parties on behalf of the estate, and defending the estate against criminal actions such as theft or fraud.

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Liability of Administrators

An executor or personal representative who is also a beneficiary remains personally responsible for the estate administration. State law sets down the liability of personal representatives and executors; in Florida, for example, a personal representative must reimburse the estate for any losses due to his own actions. In addition, a court may remove an estate administrator, issue an injunction to prevent his access to estate assets, or uphold a motion by other beneficiaries to remove him.

Beneficiaries and Wills

Misbehavior in connection with a will can also result in civil and criminal charges against a beneficiary. If an individual exercises "undue influence" over someone with the purpose of being named a beneficiary or diverting estate assets, the other beneficiaries can sue in probate court to overturn the will. They would support the claim by showing that the beneficiary isolated the author of the will, threatened or otherwise coerced the author, or wrote the document himself. Another common charge against beneficiaries is common fraud -- deliberately rewriting the will or forging the signature of the deceased on a falsified document. It's the job of a probate court to "prove" a will submitted by an estate administrator, and ensure all beneficiaries receive what the deceased intended to leave them.

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Does the Executor of Will Debt Need a Beneficiary's Signature to Pay Off Assets & Debts?


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Rules for Witnessing a Will

A last will and testament is a powerful legal document that instructs the executor of an estate how to distribute the property of the writer of the will, known as the testator, after he dies. Because of the potential and motivation for fraud, state governments have passed laws imposing strict restrictions on the format of a will. All states require that the testator's signature be witnessed.

How Is a Beneficiary Removed from a Will?

When a person is named in a will, he is called a beneficiary. Heirs, on the other hand, are individuals who stand to inherit from a relative who failed to make a will; thus, leaving inheritance division to the laws of intestate succession. Testators, or will makers, may remove beneficiaries from wills by executing specific documents that effectively disinherit the beneficiary -- usually by express terms.

Contesting a Will as a Beneficiary

Will contests take place in probate court: One of the functions of probate court is to hear any disputes pertaining to the execution of a will. A beneficiary who seeks to contest a will must have verifiable grounds upon which to do so. If a probate court deems the evidence sufficient, it may declare the entire will invalid or merely strike certain provisions.

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