Estate Fraud: Spotting and Stopping it For Virginia Farmers and Woodland Owners
ID
CNRE-187NP
Introduction
Fraud is not something most of us think about touching us individually. It’s a “corporate thing.” Or is it? Are landowners at any particular risk of fraud?
The Association of Certified Fraud Examiners (ACFE) estimates that fraud touches about 2% of companies and/or transactions globally.
In 2022, Virginia had more than 8.6 million residents. With a death rate of 0.8%, about 70,000 people/year in Virginia pass away. If fraud touches 2% of those estates, it means that 1,400 cases of estate fraud start every year in Virginia. This is an average of five new cases every day.
Definition
Fraud = theft or gain by deception; “theft with a smile” typically done by someone the victim knows.
Estate fraud = fraud in probate, trust, estate or guardianship.
Estate Fraud often involves land and investment properties.
Understanding Fraud
Fraud has two core shapes:
- Commission: Claims presented as true, that are false.
- Omission: Facts that are true, but which are concealed.
Estate fraud may include:
- Inventories that are missing assets such as timber contracts, mineral rights, water rights, grazing or other ag deals.
- Under or over-valuing assets.
- Incomplete or missing accounts.
- Forgery: Documents presented as authentic that are fake.
- Deeds, surveys, contracts, easements, leases, et cetera.
Warning signs of fraud:
- Bill-churning: Billing for services that don’t benefit the estate.
- Delayed or concealed accountings.
- Delayed or incomplete billings from professionals.
- Chaos & confusion in the process (fraud thrives in crisis.)
- For example: “We need to sell assets fast to pay bills!”
- Exaggerated & exotic claims by people involved.
- Failure to pay bills & taxes due.
Protecting Against Fraud
It is up to you. See something? Say something! Always make your concerns known, in writing, to everyone. This includes the administrator, judge, attorneys & accountants. If problems persist, ask for an audit. An audit is simply a verification of the accounting/inventory and should not be contentious unless there are questionable actions being taken.
Ideally, fraud is avoided by open communication and good legacy planning of which estate planning is a key, but not the only, component.
What is Legacy Planning?
An Estate Plan is a critical tool to pass assets from one generation to the next in a manner that honors the wishes of the predecessors and reduces the risk of conflict among heirs/beneficiaries.
Successful legacy planning not only includes a solid estate plan with the accompanying legal documents but also an ongoing process of engagement with heirs &/or beneficiaries.
This ongoing process is critical to pass on intrinsic values as well as practical documents that make up a comprehensive Legacy Plan.
Virginia’s Generation NEXT program suggest the following Essential Documents:
- Forest property and estate overview. See Worksheet 1.
- Heirloom Scale. See worksheet 2.
- Land management plan.
- List of responsible parties. See worksheet 7.
- List of pertinent information about your land. This may include Deeds, leases, cell tower contracts, Right-of-ways, easements, special permits, mineral rights and tax/land use valuation
- Last will and testament
- Advance medical directive
- Durable power of attorney
- Identification of heirs. See worksheet 4
Additional Resources
Legacy Planning for Forest Landowners https://ext.vt.edu/natural-resources/legacy- planning.html
Planning the Future of Your Farm: A Workbook Supporting Farm Transfer Decisions. https://vtechworks.lib.vt.edu/items/029925e7- a87a-4adc-9103-3f9799526d17
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Publication Date
January 31, 2025
