Uncovered possible Executor fraud after Probate granted

[Highlandroad]

I’ve discovered financial irregularities regarding the deceased’s finances where the Executor has included in the Estate Report an ‘IOU’ letter benefiting the Executor which I’ve found bank statements to prove is false, and, expert handwriting analysis that casts serious doubt on the veracity of the deceased’s signature. Additionally I have suspicions of Attorney malpractice and possible misuse of funds. I don’t believe the amounts will significantly effect the estates tax position and probate has been granted, however, if I inform HMRC of the fake & forged IOU and other concerns will they rescind probate until it is clarified or is it too late?

[PallasAthena]

When you refer to Attorney malpractice do you mean by a solicitor involved with the estate or by something an Attorney holding an LPA did before the the death of the person?

Are you a residual beneficiary of the estate? If you are then you might be in a position to take action against the executor(s) in court.

HMRC don't grant probate and their interest is only in relation to IHT. If you believe the estate has been undervalued for IHT purposes you could report it to HMRC (because it is a potential tax fraud). HMRC may then follow up with the executor(s) and investigate the allegation as they would with any alleged tax irregularities but it wouldn't affect the validity of the grant of probate from the probate court. HMRC have no power to rescind that.

[Highlandroad]

Thank you. I mean the Attorney holding LPA, not a solicitor. Yes, I’m a beneficiary. I’ve contacted a solicitor, I was wondering if I could freeze the estate and distribution by involving HMRC now, but it appears that ship has sailed.

[PallasAthena]

I think that once HMRC gave the go ahead to probate court to issue the grant of probate that can't be reversed. Beneficiaries can still bring legal action. HMRC could have delayed giving their approaval to the probate court prior to probate being issued, if HMRC were investigating the IHT return, but once they have given the probate court approval it can't be rescinded.

There was thread on here recently where after the death the benificiaries found evidence that before death the LPA attorney had acted illegally, taking money for their own benefit. It is the OPG (Office of the Public Guardian) that investigate illegal behaviour by an attorney but they told the person reporting the illegal activity that they would only investigate if the donor was still alive. Because an LPA lapses the moment the donor dies the OPG's position seems to be that any fraud discovered after the donor has died is nothing to do with them and they won't investigate because by then the LPA is no longer in force.

[Highlandroad]

Understood thanks. Since I last wrote, it has become clear the LPA attorney has also under reported cash residue in the Estate Report.I have a copies of the donor’s bank statements.

The LPA transferred large sums from the donor account to their personal account, some was used to pay for the donor’s living expenses, but the LPA kept a significant sum in their own account after the donor died. They omitted this from the Estate Report, and have sent me false accounts.

Obviously I’m appalled but what’s the legal pov? The executor is trying everything they can to evade facing up to this. Is threatening to inform HMRC plausible leverage to force transparency? If I keep getting blocked do I have to attempt mediation before starting court proceedings? Thanks, comments much appreciated.

[PallasAthena]

Well HMRC can, and do, investigate the values reported on IHT400 after they have authorised Probate to be issued. Look at a copy of the blank form online, it expressly states that HMRC don't investigate the values declared until after probate is granted and their acceptance of the form does not mean HMRC have agreed the reported values. So reporting to HMRC your suspicions could well get the Executor investigated, whether for fraud or just negligence.

[Highlandroad]

Right, thanks, will investigate reporting to HMRC. I can’t find an answer to this, but, once the donor dies shouldn’t any cash the LPOA holds in their personal bank account be returned to the deceased’s account andfrozen?

[PallasAthena]

The OPG guidance to Attorneys says

3.4 Set up a separate account for the donor

The law says property and finance attorneys should usually keep the donor's finances separate from their own or anyone else's. This is to avoid confusing the donor's financial affairs with your own.

So the Attorney shouldn't have had the donor's money in their own account to start with. But if they did then at the death of the donor the money forms part of the donor's estate and should be transferred to the Executor, although that wouldn't necessarily mean it was frozen. I appreciate the practical issue here is that the same person was both the Attorney under an LPA before death and is now the Executor but the principle is clear. Executors too should keep the deceased's money separate from the Executor's personal money.

[Highlandroad]

Understood, bit of a grey area in that “usually”, I guess its not illegal just considered bad practice to mix finances, but with the statements and spend data I have I can categorically point to money missing from the deceased’s bank, which is either sitting in the executors bank, or has been spent and not accounted, and this is after months of obstruction and b.s., all backed with a paper trail, so it looks pretty solid claim to me of fraud at worst and negligence at best. Thanks

[PallasAthena]

If you have a look at that paragraph in the OPG guidance I linked to it explains why "usually". There could be a good reason not to if, for example, the donor and attorney are spouses and have always had a joint bank account.

[Highlandroad]

Hello again, appreciate your thoughts, the main issue I have right now is ascertaining exactly how much money the LPOA/Executor has misappropriated from the deceased’s estate. I have bank statements to show how much money was transferred to their personal account but the executor is claiming this was spent on the deceased’s care, and will not provide receipts or statements to prove it. I know this is not true but can’t prove it. I could go to court to get the information but if I make a formal complaint to HMRC explaining that the Estate Report & IHT financial data is incorrect can they force the issue to demand relevant bank statements? As this would save me the court fees, and time.

[Mr Jay]

Hello HighlandRoad, I have a similar experience to yours in so much that I suspect asset misappropriation by an errant executor who was previously an LPA controlling finance. Just wondering if you have got anywhere with your issue as the thread seems to have gone cold since mid August.

[Highlandroad]

In short after 6 months of solicitors letters the executor has still not provided a credible expenses report that matches bank statements, and the estate report contains misinformation and false accounts. The law is such that I’ll have to go to court if they choose not to voluntarily clear it up. Their strategy so far has been incremental gestures, tokens of amelioration, which I think is probably rooted in wanting it to go away but not having to admit they’ve done something wrong, which to be clear is fraud. The executor is a pathological liar known to everyone apart from the testator who didn’t want to see it. Right now I’m waiting on a ‘revised’ estate report/set of accounts from their solicitor. If you do or have instruct solicitors I’d ask them to map out the steps they’ll take, and to anticipate total fees, assuming executor resistance/evasion, because it can take a few letters and they have to go politely before they go hard. Bon chance!