VFS Senior Manager Presents Trust & Estate Disputes: A Forensic Accountant’s Perspective
On March 5, 2025, Greg Saunders, Senior Manager in Keiter’s Valuation and Forensic Services (VFS) group, presented to the Trust Administrators’ Council, offering a forensic accountant’s perspective on trust and estate disputes. His presentation explored financial fraud detection, business valuation challenges, and best practices for trust administrators to prevent disputes before they arise.
Key takeaways
Fraud in estate and trust administration can take many forms, including embezzlement, misappropriation of assets, self-dealing, and investment scams. Saunders emphasized the Fraud Triangle, a framework that explains how financial deception occurs through three key elements: motivation, opportunity, and rationalization. Whether driven by financial hardship, frustration, or a perceived need to manipulate financial outcomes, individuals may take advantage of weak internal controls to commit fraud while justifying their actions to themselves. Recognizing red flags—such as missing financial records, unexplained transactions, duplicate payments, or an individual exercising excessive control over financial matters—is critical in detecting fraudulent activity early. Saunders encouraged trust administrators to implement strong internal controls, conduct regular audits, and leverage technology to identify financial anomalies before they escalate into major issues.
Trust and estate financial investigations
Throughout his presentation, Saunders shared real-world examples of financial misconduct uncovered through forensic accounting at Keiter. In one case, executors of an estate engaged in self-dealing by selling real estate at below-market value to a related party, effectively diminishing the assets available to beneficiaries. In another, a guardian misused a conservatorship by making unauthorized disbursements and transferring funds into personal accounts, actions that were only discovered through a detailed forensic review of bank statements and financial records. Saunders also discussed high-profile cases of investment fraud, including a Ponzi scheme in which a trust intermediary misappropriated investor funds to support an extravagant lifestyle, ultimately defrauding clients of millions. In these and other instances, forensic accountants played a crucial role in tracing funds, uncovering financial irregularities, and supporting legal actions against fraudulent actors.
Trust and estate business valuations
Business valuation also plays a critical role in trust and estate disputes, particularly when beneficiaries disagree over asset distribution. Saunders explained that valuation discrepancies often arise when co-executors have conflicting interests—such as when one party seeks to retain estate assets while another demands liquidation. In one case, two brothers serving as co-executors of a family estate could not agree on how to distribute interests in private real estate holding companies. The disagreement escalated to legal proceedings, where an independent appraisal was necessary to establish fair market value and facilitate a resolution.
The valuation process itself presents challenges, particularly when determining discounts for lack of control or lack of marketability. Saunders stressed the importance of ensuring that valuations adhere to professional standards such as VS100, USPAP, NACVA, and ASA. Common red flags in estate valuations include aggressive discounting, unsupported financial projections, and the use of post-valuation date information, all of which can trigger IRS scrutiny and lead to disputes. To mitigate these risks, he advised trust administrators to work with credentialed appraisers, clarify valuation methodologies in estate documents, and review appraisal reports carefully to ensure consistency and compliance.
Ultimately, Saunders emphasized that proactive planning and financial oversight are essential in preventing trust and estate disputes. Trust administrators should establish clear documentation, enforce financial controls, and ensure transparency in financial decision-making to protect beneficiaries and fiduciaries alike. Forensic accountants and valuation professionals serve as valuable partners in navigating these complexities, offering expertise that can help resolve disputes efficiently and ensure fair outcomes for all parties involved.
If you have concerns about valuation discrepancies or financial irregularities in estate administration, our team is here to help. Contact us | 804.747.0000.
