Center for a Secure Retirement
Protecting Your Heirs From Inheritance Theft

Protecting Your Heirs From Inheritance Theft

Inheritance theft is a serious and underreported problem. You might assume that an estate plan is all you need to ensure that your wishes are carried out. Unfortunately, there are many ways that an unscrupulous family member, executor or trustee could get around your estate — and then it's up to your heirs to resolve the matter in court.

No one wants to add a legal burden to their loved ones' grief. Use these strategies to protect your heirs from inheritance theft.

Ask What Could Go Wrong

It's easy to assume that everyone named in your estate will act honorably and in good faith, but that assumption could leave your heirs vulnerable. Even if your estate planning spells out what you want to happen after you die, someone could go against your wishes — unless there are checks and balances in place to ensure compliance.

Have your drafting lawyer or estate attorney cast a critical eye on your plan. Ask them: "Based on how my estate plan is currently written, how could my wishes be ignored or taken advantage of?"

Your lawyer can determine where the plan could go wrong and offer solutions. It's also helpful to have your attorney handle this question as a third party, as they don't have personal relationships with your family members and won't make any assumptions about anyone's trustworthiness. They'll simply point out where you can take extra precautions to ensure that your heirs are protected.

Consider Appointing Two Executors

An executor is someone you appoint to handle the logistical details of your estate after you die. They could manage your assets until they have been distributed to your heirs, pay your debts, set up an estate bank account or pay your final taxes.

Many people appoint a friend or family member as their executor, as the role doesn't require legal or financial expertise. Unfortunately, that means an untrustworthy executor could take advantage of the position, as they have a great deal of leeway with your estate and funds.

Appointing two executors can prevent this problem, especially if the second executor isn't part of your family. Consider appointing your attorney, a trust company or a financial planner. With two executors, one of whom is an unrelated professional, you can feel more confident that your estate will be handled appropriately.

Include a Disclosure Requirement in Your Estate Plan

Your estate plan can include a provision requiring that your executors disclose to your heirs every detail about estate expenses, assets and financial transfers. Disclosure requirements enforce transparency — meaning it's much more difficult for executors to hide any misappropriation.

Make sure that your heirs know your disclosure requirements so they can enforce them. Families should know what to expect long before reading your will when you die.

Be Transparent About Your Estate Plan

Talking about money and inheritances can be awkward, especially if your family is tight-lipped about financial matters. But having open discussions about your estate is one of the best protections against inheritance theft. When your family knows who your beneficiaries are and what you're leaving in your estate to whom, it's harder for someone to lie about your assets, misrepresent your plans or steal from your estate. When everyone knows what to expect, an inheritance thief can't exploit a lack of knowledge about your plan.

The Gift of a Clear Inheritance

Making your estate plan theft-proof is one of the best gifts you can offer your loved ones. Scrutinizing your plan, thoughtfully appointing executors, including a disclosure requirement and talking openly about your plans will help protect your heirs from inheritance theft.

Speak with an attorney, financial planner or estate planner as you navigate your estate planning process to make a plan that fits your inheritance needs and goals.

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