‘Siblings betray family members, even their own mother, just to get a bigger payout for themselves.’ Watch out for these scam attempts.

Based on interviews with Alan and my own personal experience, I created a list of red flags that may help you successfully survive family financial transactions: inheritances; insurance payouts; real estate deals, loans and stock sales are fraught with opportunities for scammers, even among family members. 

1. Pressure tactics

Let’s say a sibling, with help from their lawyer, has documents for your signature. Signing documents, especially if the relative is the executor of an estate, is expected. Do not get pressured or bullied into signing documents on the spot. 

To protect your interests, take the documents with you and for your own lawyer to review. Unethical relatives can be stopped early when you refuse to sign anything without a thorough vetting. Many future financial problems could be averted if people would just read the document before signing. 

2. Psychological clues 

Be on the lookout for relatives (or anyone else) seeking a psychological advantage. Be wary if someone appears nervous when presenting you with a contract to sign, or a family member becomes secretive and vague, and unwilling to answer direct questions. An honest person will reveal everything to all family members. Dishonest people keep you in the dark and hide relevant information. If you ask for information, they may promise to “let you know,” but never do, hoping that you will forget. 

Do not ignore psychological clues. The best antidote for dishonesty is truth and full disclosure. Keep all of your family members in the loop, make sure your relative keeps promises, and push for the facts. Dishonest family members will try to distract, deceive, hide, and bully. Do not accept this behavior. Also, never make any side deals with them — you will get the “short end of the stick.”

3. Lawyering up

A common red flag is when a relative “lawyers up.” In Alan’s case, his brother claimed that other family members were stealing from the estate (this lie is a false flag), which was an excuse to “protect” the money. The brother then brought in lawyers and money managers, and directed the inheritance money to himself. Be forewarned, the larger the estate, the more cautious you need to be. 

If your sibling acts suspiciously, overspends (as an executor), or hires a lawyer, it is essential to hire your own lawyer or financial adviser for guidance. It’s likely that your sibling will discourage you from getting help, or even attack you for doing so. Do not back down. Independent counsel is needed to protect yourself and innocent family members. 

Sometimes the family member you least suspect of being unethical is the biggest scammer. In Alan’s case, his sister-in-law may have been the predator, but his greedy brother went along with the schemes, including pocketing all of the real estate profits. 

4. Unusual financial actions

Be alert to unusual or impulsive financial actions. For example, a relative may abruptly put a wealthy elderly family member into a nursing home (claiming “they will love it there”), transfer a large sum out of the estate (this may be impossible to discover before it’s too late), or initiates a rushed property sale. These are all serious red flags. 

5. Changing the will 

Extremely dishonest family members will attempt to influence the contents of the will. They often get away with this by preventing the elderly relative from communicating with others. For example, I was involved with a family whose nephew moved his sick aunt into a nursing home, cut her off from speaking to her family, and secretly had her sign documents making him the executor and sole beneficiary. After her funeral, other relatives discovered they were left with nothing. 

If an elderly family member stops communicating with you, find out what is going on before it’s too late. Be sure to keep all family members informed.

6. ‘I don’t care’

Some deceitful family members will act as if they don’t care about the money, or that they don’t need it (a red herring). This lie is created to avoid suspicion. In reality, this individual may secretly be planning to take possession of as much of the family money as possible. To prevent this, get involved in your family’s financial affairs and don’t be left in the dark. This will help avoid unnecessary future surprises. 

Don’t be a victim of family fraud

When it comes to large family fortunes especially, be prepared for anything. It’s not enough to identify red flags: Have the courage to protect what is rightfully yours so you don’t become a victim. For example, do not be surprised if unethical family members fight back with bullying tactics and threats — a reason why you must hire independent legal and financial professionals.

Money can change people. Previously honest family members may succumb to the temptation to grab the bulk of the family fortune. For the sake of your financial future and that of other family members, don’t allow these fraudsters to get away with a “crime of opportunity.” Nip it in the bud by being on guard, verifying all transactions, and most importantly, not signing anything unless reviewed by a lawyer.  

And of course, once these schemes are uncovered, family relationships will never be the same.

Michael Sincere (michaelsincere.com) is the author of “Understanding Options” and “Understanding Stocks.” His latest book, “How to Profit in the Stock Market” (McGraw Hill, 2022), is aimed at advanced short-term traders and investors. 

More: ‘I feel heartbroken’: My father refinanced my late mother’s house, even though she wanted it to be divided among all the family. What recourse do I have?

Also read: My mother cut me from her will and my sibling cashed out her annuity, on which I was a beneficiary. Should I sue?

Plus: MarketWatch’s most widely read Moneyist column of 2022 concerned a bitter battle over a family will