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Unjust enrichment and self-dealing

On Behalf of | Apr 6, 2021 | Estate Administration |

Several financial issues can arise when a person becomes incapacitated or passes away. In these painful situations, it could be possible that a party unfairly benefits at the expense of others. 

Thus, there could be concerns of unjust enrichment or self-dealing when a loved one gets sick or passes away, triggering legal and personal disputes.

What is self-dealing?

In the context of estate planning for incapacitated individuals, self-dealing can occur when someone like a guardian or trustee makes decisions that benefit themselves instead of the person or beneficiaries they should be acting on behalf of.

An example of this could be using the money you are managing for someone else to invest in a company where you hold financial stakes. If you do this without direction from them or the courts, and it results in losses to beneficiaries, you could face legal and financial penalties.

As such, individuals in fiduciary roles would be wise to:

  • Comply with the wishes in a person’s will
  • Take their fiduciary responsibilities seriously
  • Carry out transactions transparently
  • Seek legal guidance to avoid missteps in the administration process

Taking these steps can prevent legal contests and personal conflicts.

What is unjust enrichment?

Unjust enrichment is another way that a person may receive some financial benefit or compensation unfairly.

Often, these claims can arise when a child provides care or services for a parent with the promise that the parent will compensate them in a will. However, if the parent does not follow through with this, the child could have grounds to file a claim of unjust enrichment.

Another example could be if a person contributed in some way to a decedent’s property that increased its value with the expectation that they would receive appropriate compensation for their efforts. If they do not, they could make a claim citing unjust enrichment because the other party was enriched by their actions.

Managing the financial details of someone’s life after death can be enormously complicated, especially when there are indications of impropriety or unfairness. Thus, interested parties may want to retain all pertinent financial documentation and discuss any concerns of wrongdoing with a lawyer.