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Protecting Your Legacy

What does misappropriation of funds mean in probate?

by | Sep 30, 2020 | Probate & Estate Administration |

When someone passes away, another person has to work through the process of handling their funds. This could be a lawyer, a legal professional or a financial professional. It could also simply be one of the person’s heirs who has been selected for the task.

Jobs that this person has to do include taking inventory of all that the deceased person owned, gathering those assets, distributing said assets to the other beneficiaries, paying off taxes, paying down debts, selling major assets (like a home) and many other tasks of this nature. A lot of them involve large sums of money.

Misappropriation means using this money in a way that is not authorized by the estate plan or the person who wrote it. This could include stealing the money, naturally, but may also include using it without “personal gain or benefit.” This could even be a temporary use, as long as it is unauthorized.

For example, perhaps a person has been given access to the deceased party’s investments in order to withdraw the money and distribute it to the heirs. However, that person knows that the heirs do not know how much money is in the account. They could take it out, skim 10% off of the top, and distribute what is left.

Or, perhaps they know they have a long time, such as a year, before they actually can get the money to the right people. They could decide to illegally invest that money for the year. When the year is up, they may give the heirs the exact amount that was left to them. This could still be seen as illegal because they used that money to earn their own money in the waiting period. In fact, if the account increased in value, they may still keep it open with the earned interest and let it grow. All of this is illegal since they never should have used the seed money that way to begin with.

These are just a few examples of how funds can be used inappropriately. Whenever money is involved, there is a chance that someone will try to gain from it. If this happens, the other heirs who were harmed by this action need to know exactly what legal options they have at their disposal.