When someone passes away, their heirs and creditors rely on the services of the executor or personal representative. But while most executors fulfill their duty the best they can, some take advantage of it in order to enrich themselves at the expense of the estate, an action known as self-dealing. How might they do this? And what signs can you look for? Here are a few of the most common ways self-dealing occurs.
1. Getting Kickbacks
Generally, any benefits from estate transactions or investments go back to the estate itself. But an executor might keep financial or other perks for themselves, often not even letting heirs know about them. They might offer the large estate account to a vendor in exchange for free personal services, for instance, or pay estate expenses through their account to get the rewards points or cash back.
2. Overpaying Themselves
Managing an estate is a big job, and it's reasonable that an executor may be paid — especially if using a professional, such as an attorney. However, because the executor may write that check directly, some are tempted to pay themselves more than the going rate or for work not completed. An honest executor will account for their time and effort for heirs to understand.
3. Mingling Assets
The estate's assets should always be maintained completely separately from any heir, beneficiary, other entity, or executor's own assets. If the executor mingles their own assets with the estate's, they can hide payment of personal expenses, use funds for their own purposes, embezzle, or even sell assets without heirs knowing. Stakeholders and the probate court have the right to see how assets are being managed. Failure to present this could indicate co-mingling.
4. Delaying Distribution
Has the executor missed any deadlines? Does it seem like there are never-ending delays and excuses why the estate hasn't been distributed? These could be signs that they are misusing its assets. An executor who has used estate funds for their own purposes or breached their fiduciary duty may delay, thinking that they can put the money back before anyone knows.
5. Paying Expenses
Finally, the executor could simply use estate accounts to overtly pay for non-estate, personal expenses. Some signs that this might be going on are a refusal to show anyone the estate accounts, missed deadlines with the court, or vague answers when directly asked about transactions.
Where to Learn More
Do you suspect that the executor of an estate could be self-dealing through one of these methods? Worry about other signs of possible mismanagement? Start by meeting with a probate attorney in your state to learn how you should respond. This is the vital first step in protecting the estate and your fellow heirs.