Executive Summary
- Undisclosed assets are those belonging to a probate estate that either are accidentally overlooked, like assets that are thought not to be owned by the estate or to have a beneficiary designation, or deliberately concealed by someone for their own personal benefit.
- Indicators of hidden assets may include discrepancies in financial records, suspicious behavior from family members, reluctance to disclose information about estate assets, or an executor or beneficiary exhibiting questionable conduct.
- If you suspect assets have been hidden during an administration, it is critical to begin gathering evidence and consult with a probate litigation attorney to protect your rights.
- Potential strategies for addressing hidden assets include demand letters, negotiation, mediation or litigation.
Introduction
The probate administration process is the court process by which a decedent’s creditors are paid and their remaining assets are distributed to the identified beneficiaries of an estate. This process requires marshalling and inventorying all estate property and determining what debts are owed and need to be paid and how the remaining property should be distributed to beneficiaries according to either the decedent’s will or state intestacy laws.
However, throughout the probate process, certain assets may surface that were either unintentionally overlooked by the decedent or executor or purposely hidden by a third party. Concealed assets can undermine the decedent’s intentions and prevent heirs from receiving their rightful inheritance, adding unnecessary complexity and emotional strain to an already emotionally taxing and time-consuming process.
If you suspect that assets are being concealed from an estate during probate, it is essential to take action swiftly. Begin gathering evidence and seek the counsel of a probate litigation attorney who can advise on how best to protect your interests and preserve the integrity of the decedent’s final wishes.
The Basics of Estate Assets
Probate involves the administration of a decedent’s estate, payment of their debts, and distribution of their assets to their legal heirs and/or beneficiaries. If the decedent left a valid will, the probate process will result in the assets remaining after debts are paid being distributed to the beneficiaries identified in that will. If no will exists, the estate will be distributed according to state intestacy laws to the decedent’s rightful heirs.
Typical assets in an estate include:
- Bank accounts
- Investment accounts (stocks, bonds, etc.)
- Real estate (homes, vacation properties, etc.)
- Life insurance policies with designated beneficiaries
- Yachts and vehicles
- Jewelry
- Art collections
- Valuable collectibles
- Business interests
The ultimate goal of probate is to distribute a deceased person’s assets to their rightful heirs and beneficiaries as dictated by the decedent’s wishes or by law. A personal representative, such as an executor (in a testate estate where there is a will) or administrator (in an intestate estate, where there is no will), is appointed to manage the estate and distribute the assets to the appropriate beneficiaries and heirs.
Recognizing Hidden Assets in Probate
The estate’s personal representative is tasked with gathering, inventorying and managing all assets, including any potential hidden ones. Hidden or undisclosed assets often are those that were not identified in the decedent’s will or estate plan or may include those that may have been overlooked during the probate process. These assets can include financial accounts, investments, crypto, real estate, art, collectibles, heirlooms, and other personal property. Most often a mistake in title or a missing title to the property at issue is the cause for overlooked estate property.
Similarly, hidden assets could result from intentional concealment by individuals seeking to benefit at the expense of the estate and its beneficiaries. For example, a beneficiary, executor or other person may divert inheritance assets for personal gain. Known as stolen inheritance, when a family member takes an heirloom for emotional reasons, even though it belongs to the estate, they are robbing the estate creditors, beneficiaries and heirs of property belonging to them.
Signs that an estate may have hidden assets include:
- Inconsistent financial records or bank statements
- Missing heirlooms, art, collectibles, etc.
- Asset transfers without explanation or for less than market value
- Individuals who are reluctant to share estate-related information
- Missing documentation for real property, physical or financial assets
- Discrepancies in an estate inventory
To uncover hidden assets, a fulsome investigation of the property the decedent owned before they passed is advisable, followed by a thorough review of the estate’s financial records and, where necessary, engaging professional assistance, such as private investigators or forensic accountants and of course, with a qualified estate litigation attorney.
Legal Steps to Take When Suspecting Hidden Assets
If you suspect hidden assets, it is crucial to take action to investigate your claims before you lose your ability to do so. Executors, administrators, and other representatives of the estate have a legal obligation to disclose all assets in a transparent manner. Beneficiaries, heirs and creditors also have the right to take legal action if they suspect mismanagement or concealment of assets.
Key steps to take when hidden assets are suspected include:
- Consulting an Experienced Estate Litigation Attorney: A probate litigation attorney can help assess your situation and advise on the best course of action for investigating, uncovering and recovering missing assets.
- Gathering Evidence: Document any suspicions and collect supporting evidence of the missing assets, such as prior financial statements, photographs, receipts, insurance records and other relevant documents.
- Requesting an Estate Accounting: Beneficiaries, heirs, creditors and interested parties have the right to request a detailed inventory and accounting of all estate assets and transactions, which can provide insight into any asset mismanagement or omissions.
- Pursuing Legal Action: If your informal efforts fail to address missing estate assets, a probate litigation attorney can assist you in pursuing formal legal action to recover missing estate assets.
Navigating Concealed Assets by Family Member
More often than not it is family members who hide assets due to their own personal interests or emotional attachment to certain estate property. If the property is not returned voluntarily, formal demand for its return or even legal action may need to follow.
Signs that a family member may be concealing assets or information include:
- Sudden evidence of wealth (houses, cars, jewelry, vacations, etc.)
- A reluctance to share details about assets believed to belong to the decedent
- Withholding documents
- Evidence of altered documents
In such cases, a probate litigation lawyer should be consulted on the best method to right any wrong. A probate litigation attorney will be able to wield the full power of the probate laws for the benefit of the estate and its creditors and beneficiaries. For instance, initiating legal action to return stolen assets under California Probate Code 850 can force the responsible party to return the assets or face further consequences.
Additionally, California Probate Code 859 may force the responsible party to repay the estate not only the stolen asset but also double the value of the financial loss resulting from their actions, as well as attorney’s fees and costs. Finding the right probate litigation lawyer who knows these laws is crucial to help you understand your options to ensure the decedent’s true wishes are respected.
Uncovering and Valuing Hidden Assets
If you suspect assets are missing from your loved one’s estate, there are several steps you can take to investigate and uncover these assets. While self-investigation is possible, professionals should be enlisted to ensure thorough and accurate discovery. It’s important to utilize your resources and seek professional help where necessary so you can maximize your success in finding assets before it’s too late.
Methods for uncovering hidden assets include:
- Reviewing Financial Documents: Tax returns, bank statements, insurance and investment records may reveal assets overlooked during probate.
- Examining Personal Documents: Personal correspondence, documents and photographs left by the decedent may mention assets that are not identified in their estate planning documents.
- Researching Property Records: Investigating county property records may reveal hidden or stolen real estate holdings.
- Collaborating with Experts: Private investigators, forensic accountants, or an attorney can offer valuable expertise in uncovering hidden assets.
Once hidden assets are identified, proper valuation of those assets is necessary to ensure the spend to pursue them is worth it. This involves assessing the value not only at the time of death but also currently, and where an expert is needed, such as a certified appraiser, a probate litigation attorney can help identify them, saving you time and headache.
In ultrahigh-net-worth estates involving international assets, it’s important to engage a probate litigation attorney with international experience and contacts who can ensure compliance with local probate laws.
Resolving Disputes Over Hidden Assets
There are multiple ways that interested parties in an estate can address disputes, including where the goal is to resolve the conflict in the least invasive way possible. Whether by demand letter, informal negotiation, mediation, or formal legal proceedings, an experienced probate litigation attorney can advise you on which process may be the most beneficial for your specific case.
Often, clients want to start with a demand letter to the person who took the missing estate asse,t demanding its return. It’s a reasonable place to start. However, depending on the specific asset, the thieving party’s own proclivities, and timing issues, it may be a futile and/or ill-advised approach.
Mediation is one of the most effective ways to address hidden assets, especially when someone is wrongfully holding onto hidden assets. Mediation provides a platform for multiple parties to engage in a confidential discussion with an impartial mediator facilitating the conversation. Some of the key benefits of mediation include faster resolution, lower costs compared to litigation, confidentiality, and the ability for parties to maintain control over the outcome. It also encourages open communication, fosters collaborative problem-solving, and can help preserve relationships by avoiding the adversarial nature of court proceedings.
However, if mediation does not work effectively to recover the hidden assets, it may be necessary to pursue litigation. A probate litigation lawyer can help you initiate litigation against a party responsible for estate theft when appropriate.
Resolving Hidden Asset Disputes with RMO Lawyers
Addressing concealed assets is critical for the smooth administration of a probate estate and ensuring the decedent’s wishes are honored. Through careful legal intervention and professional support, hidden assets can be uncovered, properly valued, and fairly distributed among beneficiaries.
At RMO Lawyers, our team of skilled probate litigation attorneys has decades of experience in recovering stolen estate assets and ensuring that families receive their rightful inheritance. We are equipped to guide you through every step of the process.
Schedule a consultation with our team to see how best together we an address your concerns about hidden estate assets.