Trustees and Personal Representatives of estates (PRs) have a great deal of control and power over the assets for which they are responsible. In a small number of situations a personal representative of an estate, or trustee, may have acted without integrity and may have used the trust or estate assets for their own benefit. The rogue trustee or executor may have transferred assets to themselves such as property or money from a bank account. They may not have declared all of the assets and claimed them for themselves. This is formally known as misappropriation of estate/trust property.
How common is a claim that someone has taken estate assets?
Such claims tend to be most in situations where there is only one PR or trustee and they are dealing with the assets without any assistance from a professional e.g. a solicitor. There is no one to oversee their actions and prevent any fraudulent behaviour. Beneficiaries of an estate or trust may never discover what has happened or if they do it can be a long time after the event so cannot hold them to account.
Can other people be guilty of misappropriation?
Other people, such as other family members (whether a beneficiary of the estate or not), are often guilty of misappropriation of estate property. This tends to occur when one family member has keys to the deceased’s property and they have removed items of jewellery or other valuable possessions before they have formally been accounted for and safeguarded. It will be difficult to prove that someone has taken those items if there is no record of them. Another common scenario is someone making withdraws from the bank account after the person’s death. That person may have been helping the deceased with their finances during their lifetime and still has the bank card and pin number or access to online banking.
Can someone misappropriate assets unintentionally?
This often occurs when the person who has taken assets does so on the mistaken belief that they were promised them by the deceased before their death. Or on the basis that it has been agreed with other family members previously that they should have that particular item even if it was promised to someone else in the will. Alternatively, a person may feel that they deserve those assets for the help and assistance that they gave during the deceased’s lifetime. Some people can take assets on the assumption that it’s simply classed as an “advance” of what they are due to receive from the estate. However, all these assets have to be accounted for and should have been administered properly. The PRs of the estate should investigate such claims and ensure that all assets are returned. Though again it can be difficult to prove.
What can be done if someone has taken estate or trust assets?
Anyone who has misappropriated assets would be personally liable to pay them back or the equivalent value. If they are a beneficiary under the estate/trust then their share can be reduced to take into account the value of the assets that they have already had. If their share is not large enough to cover these losses in full, or they are not entitled to anything from the trust, then they would be ordered to pay back the monies from their personal assets such as savings accounts or property.
Assets such as property or valuable unique items (such as paintings) may have to be traced if they have found their way into a third party’s hands.
If a PR or trustee takes assets, then in addition to paying it back, it would amount to a breach of trust and they would almost certainly be removed from their role. They would not be considered suitable to continue to act. If the assets were not declared in any tax returns and the right amount of tax paid on it then HMRC are also likely to be interested in their actions! They will be personally pay the tax that is due.
Misappropriation of estate or trust property may also have criminal consequences and in certain circumstances could be considered to be theft.
It is important that anyone who has concerns about possible misappropriation of trust or estate assets acts promptly. Steps should be taken to safeguard assets to prevent further losses to the estate and to improve the likelihood of any assets being recovered. Given the serious nature of the allegations, anyone facing such claims should take specialist legal advice to protect their position.