South Africans’ inheritance money is being stolen

Criminal syndicates are increasingly targeting deceased estates in South Africa, intercepting sensitive documents and impersonating executors to take money meant for beneficiaries.

The fraud exploits weaknesses in the estate administration process, which remains highly manual and involves multiple public and private-sector organisations.

This is according to Association for Savings and Investment South Africa (ASISA) Forensic Standing Committee member and deceased estate fraud expert, Helen du Toit.

Speaking on The Money Show, she said the problem cannot be traced to a single vulnerability because criminals are targeting weaknesses throughout the estate administration process.

It involves multiple parties, including the Master’s Office, executors, attorneys, banks and other financial institutions.

According to du Toit, much of the process remains manual and fragmented. “Criminals are exploiting exactly that,” she said.

Because the process is divided among so many parties, bad actors can intercept documents and impersonate people involved in an estate.

This can include sensitive documents such as powers of attorney and letters relating to the administration of an estate.

Once criminals obtain these documents, they can attempt to impersonate an executor or beneficiary when dealing with financial institutions.

Du Toit said moving the process entirely online would help, but would not be enough to solve the problem. The bigger issue is establishing who the legitimate beneficiary or executor actually is.

She compared the situation with financial institutions’ move towards stronger identity verification. Previously, consumers could simply provide a copy of an identity document to apply for financial products remotely.

Today, many institutions use biometric verification to establish that they are dealing with the correct person.

Du Toit said a similar “source of truth” is needed when financial institutions identify beneficiaries of a deceased estate.

Without a reliable way to independently verify the identities of beneficiaries and executors, criminals can continue to exploit gaps between different organisations.

South Africans are losing significant amounts of money

ASISA has been collecting information on deceased estate fraud since 2023 and is currently working with the financial intelligence sector through the SAMLIT project.

Du Toit explained that while the number of attempts may not be particularly high, the amounts involved are significant.

The financial impact can be particularly serious because the money involved may represent a person’s lifetime savings or assets intended for their family after their death.

To protect themselves against this fraud, Du Toit said beneficiaries should reduce the amount of information criminals can exploit by making sure financial institutions know who is legitimately involved in the estate.

One important step is to identify all the assets forming part of the estate and the financial institutions holding them.

Beneficiaries should then contact those institutions directly and provide the identity and contact details of the legitimate executor. They should also ensure that their own contact details are independently verified.

This creates a direct line of communication between beneficiaries, financial institutions and the legitimate executor.

Du Toit explained that this can help prevent criminals from using intercepted documents to present themselves as legitimate representatives of the estate.

“If the financial institution knows who actually is that single source of truth or is the beneficiary, and that is independently verified by you, then you have a better chance of protecting yourself against that.”

People can also reduce some of the risks of this happening to their estate by having a valid will and carefully considering who should be the administrator.

Du Toit said that appointing an executor who can perform the role directly can reduce the need for extra documentation.

Where an executor needs to appoint an attorney or another person to act on their behalf, a power of attorney may be required.

These documents can create another point of vulnerability because they can potentially be intercepted and manipulated.

Stopping this problem on a systemic level would require South Africa to learn from international approaches to estate administration, Du Toit said.

One option would be to create centralised digital systems for wills and estate administration, allowing authorised users to access relevant information after being authenticated.

A fully digital process could reduce the number of physical documents moving between different parties and make it easier to monitor who has access to sensitive information.

The private sector is also working with government-linked organisations to address the problem.

For example, ASISA is working with the banking industry and financial intelligence bodies to find ways to reduce fraud involving deceased estates.