Disputes frequently arise in matters involving trusts, estates and wills. They arise as a result of misunderstandings, differing interpretations, complexities and nuances in trust or estate structures as well as when there are suspicions of undue influence or misappropriation. Forensic accounting expertise is an essential component in resolving these types of disputes. The role of a forensic accountant in these matters can encompass:
- Investigating allegations of wrongdoings; or
- Providing other litigation and dispute resolution support as required
Adam and his sister Allie believed that they were victims of a’probate fraud’ perpetrated by their stepbrother with whom they share the same mother. Their stepbrother Orenthal James – acting asthe soleexecutor and holding aPower of Attorney (henceforth referred to as POA) for their late mother – transferredfunds that totaled$750,000 by using the POA to a bank account in his own name just prior to her death.
The documents that were obtained indicated thatOrenthal James had convinced his mother to change her Will three months prior to her death. Medical evidence suggested that their mother lacked the mental capacity to be able toinstruct a Will writer to change the content (the previous will divided the estate equally betweenthe three siblings). Nevertheless, the new Will was drafted and finalized,which resulted inAdam and Alliebeing removed as beneficiaries.As previous beneficiaries,Adam and Allie would have been entitled to a copy of the estate accounts, which would have shown how the shares in the estate werecalculated. The siblings decided to hire a forensic accountant to assist them in rectifying the situation.
The forensic investigator found attendance notes made by the legal clerk who had prepared the disputed Will. These notes suggested that the deceased had been in full possession of her mental faculties. The notes did not describe someone as being terminally ill and suffering from an advanced stage of Alzheimer’s.Copies of the deceased’s bank statements were subsequently obtained that dated back five years prior to her death. The statements were scrupulously analyzed with the hope of understanding the changes in the deceased’s financial behavior during this period. That is, before and after the amended Will. TheForensic Analysis revealed that the deceased had a number of credit card accounts, all of which were obtained while she was mentally incapacitated. Other examples of ‘gifting’ to Orenthal James were observed within the accounts.
Theforensic investigators report was used as a basis to understand the potential loss to the deceased prior to her death and therefore, to the beneficiaries of her estate. The Will was disputed on the grounds that the Will maker lacked testamentary capacity to provide direction to the Will writer, as well as on the grounds that the newWill was based on the undue influence and coercion applied by Orenthal James.
Relevant Evidence:
- Financial Records
- Real Estate Records
- Oral Evidence
- Asset Tracing
- Accounting Records
- Electronic Evidence (text or email)
Red Flags:
- An unequal distribution of assets among the children of the Will maker
- Ongoing tension between family members
- A noticeable decline in the relationship between a spouse and the children from a prior marriage
- The selection of fiduciaries
- The disposition of a family business
- Economic disparities among the beneficiaries
- The inclusion of a co-trustee to administer, manage and distribute assets
- Beneficiary dependency or mental illness
- Estrangement or Disinheritance
- A marriage that occurs at an advanced age
- Advanced benefits allotted to one heir and not to the others