The death of a family member or close friend is never easy to deal with. Combined with having to deal with the financial matters when they pass makes it even more difficult for everyone involved. If an individual dies without a will, the settling of the estate will go through probate, a long and cumbersome process. Hopefully, the individual properly planned the transition of assets with estate planning and expressed their wishes to their beneficiaries beforehand. We recommend individuals meet with a qualified estate planning attorney to communicate their wishes and periodically update the estate plan as life and financial circumstances change. Good communication and planning for one’s estate can go a long way in avoiding quarrels among family members when someone dies.
However, even with good planning, there is always the possibility that someone may contest or object to the will because of concerns of what will happen to the estate assets. It has been reported that Trust and Estate matters are the third highest growth area among CPA firms per the IRS, and with the increase of the demand for these services, there is a correlated increase of potential abuse within estates.
Family members and caregivers are the highest perpetrators of financial exploitation. It could also be a trusted advisor. In these situations, the people closest to the decedent are typically the ones that steal from the estate. Unfortunately, a person who is physically and mentally weak are easy victims of fraud. Therefore, family members and beneficiaries should look for red flags.
Some red flags to look for:
- Undue influence by others
- Benefits distributed to some individuals before death
- Multiple wills or trust documents executed prior to death
- Family members left out of the will for no reason
- Individuals added into the will as beneficiaries later in life
- The will benefits non-relatives such as an advisor or caregiver
- Personal property of decedent is missing
- Substantial gifts given prior to the death
If some of these red flags are identified, it would be beneficial to contact a forensic accountant to review the financial records of the estate. The forensic accountant can discover and analyze irregularities. Tasks generally performed by forensic accountants include:
To help deter fraud, the attorney and/or forensic accountant should advise their client to periodically inquire about caregiver and advisor relationships and, if possible, monitor financial and investment activity. The need to monitor the financial activity of the estate and look for red flags is critical to mitigate the losses and abuse to the estate.
In the end, we always recommend getting a forensic accountant involved from the beginning to assist in the entire process of putting an effective case together for potential abuse in an estate matter.
How Can a Forensic Accountant Help?
1) Discovery assistance (i.e., knowing what specific information to request, and identifying the specific individuals to interview or depose);
2) Perform an appropriate financial analysis and develop a detailed, yet simplified, analysis and report that communicates the appropriate findings and conclusions; and
3) Delivering effective testimony, if necessary, whether it be in deposition, trial, arbitration, or other dispute resolution forums.
The professionals at Ferraro, Amodio & Zarecki, CPAs have significant experience pertaining to estate fraud. For discussions about our forensic accounting services or to discuss a specific matter regarding estate fraud, please e-mail Kristen Draus at firstname.lastname@example.org or contact our office at 518-288-2160.