Self Dealing — How An Executor Might Steal From The Estate

The heirs and the estate of a deceased person rely on the estate's executor to work in their best interests. But what happens when that executor or personal representative doesn't do so? One of the most common ways that an executor misuses their position is known as self-dealing. What is self-dealing? How can you spot it? And what can you do about it? Here's what every heir needs to know.

What Is Self-Dealing?

Self-dealing refers to the actions of fiduciaries to take advantage of their position to enrich themselves rather than work in the interests of the estate. A fiduciary is a person entrusted with the assets of another and they have a legal responsibility to act in the best interests of the owner of those assets. 

What Does Self-Dealing Look Like?

There are a number of ways for an executor to self-deal. While executors are allowed to submit expenses for the estate to reimburse and be paid a fee for their management services, an unscrupulous executor might charge exorbitant fees or use the estate to pay personal expenses. 

If the executor has an interest in anything of the estate, they may also use their position to cut themselves a 'sweetheart deal'. For instance, an executor who wants to buy the estate's real property might limit offers or list it at a low price in order to pay less. 

Finally, there is self-dealing through others. Perhaps they have a cousin who does landscaping, so they hire the cousin and overpay them, pocketing some of the money or just enriching their relatives. Or they might arrange a trade of some service, such as agreeing to hire a contractor for the estate if the contractor will do work on their own home at a deep discount. 

What Can You Do?

The good news is that while self-dealing can happen before heirs are aware of it, there are tools built into the probate process to help you stop it. Heirs and other stakeholders (those with a financial interest in the will or estate) may petition the court for a hearing to present their case.

The probate judge will take an impartial look at your evidence and may even request documentation from the executor, such as a formal accounting of the estate's books. The judge has the power to remove an executor or personal representative and appoint a new one. 

Where Can You Learn More?

If you suspect self-dealing, it's vital to stop it as quickly as possible. Every moment you wait, the estate could be losing more money. Learn how to fight it by meeting with an estate litigation attorney in your state today.