I’m not sure if you can tell by the mini super-computer on which you’re likely reading this article, but we are now living in the future. Sure, it’s lacking the flying cars and hoverboards the past so optimistically hoped for. However, we are in the midst of lightning fast change of pace. Estate planning has not been immune from such a pace change. In fact, estate plans look nothing like they did decades ago; thus, fraud has had to adapt. It has done so rather well, with the same insidiousness and disastrous result.
Not Your Grandmother’s Fraud
When I talk about fraud and estate planning, I’m talking about someone either using duress or undue influence to make a person to change their estate plan or fraudulently changing the estate plan themselves. This use to—and still does to an extent—look like a will created by fraud or other dishonest means. Years ago, most of a person’s property passed through their will. So, if a morally disturbed individual wanted to ensure their chance to receive an inheritance through deceit, they could manipulate the will or the person making it. This led to thousands of lawsuits challenging the validity of wills and alleging misconduct.
Nowadays, the bulk of wealth that most of us accumulate will not pass through our wills—or through probate for that matter. This is because most of us have the bulk of wealth in accounts like 401ks or IRAs. For some, a decent amount of the wealth they will be passing at death will be through life insurance policies. All of these accounts have something in common, they have a beneficiary designation.
If you have a beneficiary named on an account, the balance of that account will pass to the beneficiary or beneficiaries upon your death with very little process. This makes these accounts attractive because they avoid the long and drawn out process of probate. What’s also attractive about these accounts is that they are held with a company that has a whole department just for fraud investigation. However, that does not mean that fraud doesn’t happen. The folks in the fraud department stay busy.
The whole reason there’s a fraud department is because the opportunity for foul play is abundant. So, how does it get done? There’s no one way that an individual commits fraud with respect to beneficiary designation. In fact, criminals tend to get creative with this sort of thing. The common thread in all of these instances is the beneficiary designation form. As you may have guessed, that’s the form that dictates who gets the balance of the account when the owner dies. This form is the target for those seeking to take the money.
How do you know if fraud was committed? Well, there tends to be pretty obvious red flags with this sort of thing. Maybe the account went to someone that would not have otherwise inherited anything (like a distant relative or friend). Maybe the person who owned the account couldn’t have been in their right mind to change it because of substance abuse, dementia, incapacity etc. Maybe the account owner was isolated and subject to undue influence from the person who received the death benefits. Either way, there tends to be enough clues at the crime scene to put the pieces together.
What Happens if There is Fraud?
If fraud does happen, the company that hold the account should know immediately. Otherwise the funds will be paid out and it will be much harder to recover them. If the company knows of possible fraud, they will freeze the payout and perform an internal investigation. They may even initiate a legal proceeding where they deposit the proceeds of the account/policy with the court and bring the other parties in to battle it out. Regardless, the best course of action if you suspect fraud is to hire an attorney to help you navigate the process.
The only constant is change but something that hasn’t changed is people’s love for money. Fraud is a useful tool for many people of moral indignity and will remain as such for the foreseeable future. All the rest of us can do is remain vigilant. If you suspect fraud with respect to a beneficiary account, don’t hesitate to call McIntyre Elder Law at (740) 259-7040 or visit our website at www.mcelderlaw.com.
Brenton S. Begley
Elder Law Attorney
McIntyre Elder Law
“We help seniors maintain their lifestyle and preserve their legacies.”