You may have heard the terms “inheritance theft” or “inheritance hijacking.” This might bring to mind things like your sibling taking the antique desk you wanted your grandchild to have or your wedding ring going “missing” instead of to your daughter, as you intended.
Certainly, these are examples of inheritance theft. However, there are many other ways that people can take assets meant for others after you’re gone. As you develop your estate plan, you can reduce the chances of inheritance theft with some careful planning.
Inheritance theft can occur before or after death
Many types of inheritance theft can only be perpetrated by those appointed to be executors, trustees and other estate administrators. For example, an executor may neglect to list assets when they do an inventory and take them for themselves. A trustee may take assets they’re tasked with managing for a beneficiary.
Some types of inheritance theft occur while a person is still alive – particularly if they’re very ill or cognitively impaired. For example, a caregiver or even a family member may use undue influence to get someone to change the terms of their will, trust or other estate plan document. They may just plain steal things. Someone with power of attorney (POA) over an incapacitated person’s finances may misdirect them to themselves.
Choose those you give authority wisely
If you’re preparing to put your estate plan in place, there are steps you can take to help prevent many kinds of inheritance theft. First, it’s crucial to appoint only people you implicitly trust to manage your estate. You may choose to appoint two executors (preferably people who can work well together) to minimize the chances of wrongdoing or pressure by heirs and other beneficiaries. The same is true with trustees.
You don’t have to appoint people from within your family. In fact, you can choose professionals.
Discuss your estate plan with loved ones
It’s also generally wise to be open and transparent with loved ones about who is getting what, in addition, of course, to detailing it in your estate plan. This can minimize arguments and questions after you’re gone.
By having sound legal guidance as you develop your estate plan, you can detail your wishes clearly and make the best choices for your administrators. It’s also a good idea to make sure that your family members have access to financial, tax and wealth planning professionals you trust to help them get the most out of what you’re able to pass on to them.