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Warning signs of improper actions involving your parents' estate

Your parents spent their working lives building up a valuable estate, likely with the hope of leaving substantial assets behind for your family. Unfortunately, your parents made a questionable choice when it came to naming an executor or a trustee.

Now, you feel worried that the person in charge of your parents assets is actually mismanaging them for personal profit. You may feel powerless, but that doesn't mean there is nothing you can do. Educate yourself about warning signs of issues with the administration of an estate or trust and take action over poor estate administration as soon as you have reason to suspect the problem.

Selling assets for less than market value is a common warning sign

One of the more complicated duties that an executor or trustee has to undertake is the process of converting physical assets into financial ones. Depending on the nature of the assets involved, the process can be quite protracted.

First, the executor will have to determine a fair value for an item. Then he or she needs to locate a seller. Everything should be done with attention to detail and also transparency. You may need to ask to see copies of valuations and offers from potential buyers.

You should know the price that professionals attached to property and what offers came in, other than the final one that the executor accepted. You should also look for signs that the executor has a pre-existing relationship with any person who purchases assets from the estate.

Sometimes, people make arrangements with friends who run a business related to the asset. Whether it's antique china or a piece of property, it is possible for an executor to sell it at a loss to the estate and then profit from the difference when the person they sell it to turns around and sells the property as well. This kind of conflict of interest could reduce the overall value of the estate or trust.

Lack of adequate financial documentation is a red flag

If the executor cannot account for every financial transaction and physical asset, that is a warning sign that he or she is attempting to cover up mismanaged assets. It is important for anyone tasked with the execution of an estate or the administration of a trust to document every step of the process. Failing to do that could be an attempt to cover up unethical business dealings.

If you have reason to suspect that the executor of your parents' estate or the trustee managing their trust is attempting to derive personal profit from these responsibilities, you should look into your legal options.

You may need to challenge that person's position or challenge the administration of the estate. California law does protect heirs and trust beneficiaries from those who would breach their fiduciary duties for personal gain.

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