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The looting of estate assets, also known as Involuntary Redistribution of Assets (IRA), can occur through the use of various probate instruments – wills, trusts, guardianships, powers of attorney – and with the actual acts configured in different ways. Guardianships or powers of attorney can provide for estate looting while a person is alive, but asset diversion can be perpetrated posthumously via wills or trusts. Whether these acts are instigated by greedy lawyers, disgruntled family members or wannabe heirs (or often a combination), the sad reality is that death doesn’t necessarily bring the closure one might expect. Death, even with the most meticulous of estate plans, in no way ensures the honoring of a decedent’s wishes or heirs’ avoidance of IRA.
In December 2006, Austin American-Statesman reporter Tony Plohetski wrote a special report entitled Breach of Trust. In this article, Plohetski detailed how “Texas estate laws make stealing from the dead a relatively easy crime.” These are nothing more than cases of postmortem IRA. He described not only the estate theft activities of Austin attorney Terry Erwin Stork, but Plohetski also pointed out how Texas probate laws do little to ensure that people’s belongings reach those designated in the decedent’s will. The article also depicted a loose approach to oversight on the part of some probate judges.
The Statesman report prompted law makers to introduce several reform-oriented bills during the 80th Texas Legislative session. Effective September 1, 2007, SB 593, as per the Texas Senate Research Center, requires the personal representative of a decedent’s estate, within a certain time period of an order admitting a will to probate, to give notice to each beneficiary named in the will whose identity is known or, through reasonable diligence, can be ascertained, and to file an affidavit with the court listing the beneficiaries notified. The bill also set out what the notice must contain which is a good thing as estate administrators previously operating on the “honor system” didn’t seem to workout so well. This legislation can seem (and might be) a helpful “first step,” but as IRA practitioners routinely ignore laws and bypass normal business/legal courtesies, more than an assumption of compliance is needed.
Stork ultimately plead guilty to three counts of felony theft and in September 2008, was sentenced to 15 years in jail. Attempts to reconcile what’s due to each estate continue, but as often happens in these cases, heirs will likely recover few of the assets left to them.
It is important to note the inaccuracy of believing these type situations only occur with high dollar estates. The three estates from which Stork stole had a combined value of less than $1 million. Another misconception to dispel is the absolute protection provided by “proper estate planning. The estates outlined in the Austin American-Statesman article belonged to people who took the proper steps to ensure the orderly distribution of their assets. They, however, fell victim to IRA due to a betrayal by the attorney they trusted for assistance.
The legal industry won’t tell you this, but an estate executor can basically do anything he/she wants with an estate. Realistically, judicial oversight is minimal – most judges believe what attorneys tell them and perform little or no independent follow-up. Heirs believing something is amiss must mount their own challenge. The Stork case was unique in that it was prosecuted as a criminal case, but most heirs pursuing “justice” in an estate dispute are relegated to the civil court system which is a pay-to-play venue open only to those willing and capable of expending significant sums of money for an eye-opening, but rarely confidence-inspiring experience. Steal $250,000 from a bank, people get excited. Steal the same from an estate, it’s hard to get law enforcement or any other officials to care. These points are never lost on today’s grave robbers or other property poachers while an unsuspecting heir has no idea the web of deceit and gamesmanship into which they are entering with a civil estate dispute case.
Dishonest estate administrators sometimes contrive a dispute to draw legitimate heirs or beneficiaries into litigation requiring their response to be self-funded while the administrator/executor can use the dispute as justification for additional billing against the estate of his/her time along with legal or other applicable professional services.
The threat of legal action can also be used to pressure heirs into forfeiting or sharing rightful bequests rather than risk being the target of a contrived dispute. It’s been called an inheritance litigation tax, but extortion when defined as “iIllegal use of one’s official position or powers to obtain property, funds, or patronage” is also an apt description. Either spend time and money fighting or get out – it’s that simple, it’s that ugly.
As people’s entitlement mentality grows, probate has become an excellent venue for weaponization of the legal system by grave robbers, property poachers, asset looters and walker stalkers looking to divert assets in a manner contrary to the stated intentions of honest, hard-working Americans. Losing the ability to determine the final distribution of one’s assets is a tragedy for Americans individually, as families and for us as a country in that the intergenerational transfer of assets has historically helped to strengthen our social and economic fabric.
Reform in this area will be difficult as the legal industry is powerful. However, the stories of estate abuse and probate corruption seem to increase almost weekly and as they do, a generally unsuspecting public is starting to awaken to the growing threat to their property rights and to their heirs’ rights of inheritance.