Uncovering Hidden Assets During Probate

Issues in connection with hidden assets are not uncommon during the process of administering an estate. For instance, a decedent may have failed to properly document all the property they left behind, either intentionally or inadvertently. In other cases, a dishonest relative may have taken the asset without permission. Regardless of the reason, it’s vital for the personal representative (sometimes also called the executor) to ensure all assets are accounted for during the probate process to correctly calculate the value of the estate — and distribute the assets to the beneficiaries.

How Can a Personal Representative Find Hidden Estate Assets?

The personal representative of the estate is responsible for locating and taking an inventory of the decedent’s assets. They should first look to the last will and testament to learn what property the decedent owned and for instructions regarding how it should be distributed. The document should also contain the information necessary to locate the assets. If there is no will, or the will does not address certain assets, the personal representative may have to identify the assets on their own as they conduct an inventory of the decedent’s property.

Locating assets that have not been included in a will can be challenging. Common sources for information about hidden estate assets can include the following:

• The decedent’s personal property — Often, a person will keep essential legal documents, including a will and any trust instruments, in a secure location in their home. In the event there is no will, the personal representative may find information and documents regarding hidden assets in the decedent's desk, file cabinets, or computer.
• Any lists or notes the decedent prepared — Even if the decedent did not create a valid will, they may still have compiled a list of their personal and real property.
• The decedent’s attorney — If a will cannot be found in the decedent’s home, their attorney may have a copy in their office.
• Financial institutions — The personal representative may be able to obtain the decedent’s financial information by requesting account statements from their banking institutions.
• Saved financial statements — By reviewing the decedent’s financial statements, the personal representative can determine whether there are hidden estate assets or property that was not included in the inventory.
• Safe deposit box — A decedent may have kept important documents, jewelry, or valuables in a locked safe in their home or in a safe deposit box at a financial institution.
• The decedent’s recent tax returns — Tax returns can provide crucial information about the decedent’s financial assets. If their most recent tax return cannot be found, the personal representative can request a copy from the IRS.

A personal representative can conduct a Minnesota property search to uncover information about real estate with monetary value owed by the decedent in the state. While these records are available to the public, it is necessary to have certain information about the property — including its location — for a search to yield successful results. In complex cases, or those where financial wrongdoing is suspected, it may be necessary to work with a forensic accountant who can conduct a thorough investigation concerning the decedent’s hidden assets. These professionals can work alongside a probate and estate litigation attorney to help uncover hidden assets by analyzing documents for assets that have not been accounted for, reviewing disbursements, and reconstructing accounts.

What Happens if Assets Are Found After the Estate Has Been Closed?

Sometimes, hidden estate assets are only found after the probate process has concluded. For instance, stock certificates, valuables, or other property that must be distributed might not be discovered until months after the estate has been closed. Minnesota law provides a mechanism in cases such as these to ensure the assets are distributed properly.

When assets are discovered after probate proceedings, a “petition for descent of omitted property” can be filed with the probate court by any person who has an interest in the estate, such as an heir or creditor. Upon distribution of the omitted property, the entire estate will need to be reviewed to determine whether estate taxes are owed. If any taxes are due, they must be paid.

Can You Take Action Against a Personal Representative for Mishandling Assets?

Issues concerning hidden estate assets can also arise as a result of a personal representative’s misconduct or their mismanagement of the estate. Importantly, a personal representative has a fiduciary duty throughout the probate process to act in the best interests of the estate and its beneficiaries. If they fail to do so, the beneficiaries may be entitled to pursue legal recourse.

Specifically, if the personal representative willfully concealed assets to avoid distributing them to beneficiaries or avoid paying estate taxes, they have breached their fiduciary duty and can be subject to a wide variety of penalties, including suspension and removal. In cases involving self-dealing or embezzlement, a surcharge action may be brought — the personal representative would be required to refund the estate from their own funds for any financial harm they caused.

Contact an Experienced Probate and Estate Litigation Attorney

If you are facing a probate or estate litigation matter where hidden estate assets are at issue, it’s critical to consult with a knowledgeable probate and estate litigation attorney. At Dave Burns Law Office, I provide skillful counsel for a broad scope of probate issues and have extensive experience handling complex estate litigation matters. If you would like to discuss a probate or estate litigation matter, I welcome you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com. I assist clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.