Do you leave intending testators in the dark about your probate charges?
Most solicitors preparing Wills are happy to offer their firm’s services when it comes to the provision of executors if clients are unsure who to appoint. However, do you suggest it is compulsory? Do you inform the client of the choices open to them? Do you make it abundantly clear how you will charge for acting as an executor?
Failing to shop around for Will preparation and executor services could be costing consumers around £40 million per year, the Office of Fair Trading (OFT) warned on 16 June 2010.
88% of people paying for Will preparation apparently use a solicitor, while 7% use professional Will writers, according to the OFT.
The LawSkills Monthly Digest
Subscribe to our comprehensive Monthly Digest for insightful feedback on Wills, Probate, Trusts, Tax and Elderly & Vulnerable client matters
Not complicated to read | Requires no internet searching | Simply an informative pdf emailed to your inbox including practice points & tips
Subscribe now for monthly insightful feedback on key issues.
All for only £98 + VAT per year.
Although the cost of preparing a Will can, as we know only too well, be relatively modest, (more than half of services surveyed charged less than £100) the costs for using a professional executor to administer an estate can be high and vary considerably. According to the OFT for an average estate consumers can pay between £3,000 and £9,000.
Whilst there is no requirement in law to appoint a professional executor, 43% of testators appoint the same solicitor or professional Will writer who wrote their Will. 23% said they had not been made aware of the likely charges.
As a result of this evidence the OFT have worked with both the Solicitors Regulation Authority (SRA) and the Institute of Professional Will Writers (IPW) in order to help people preparing Wills understand that they have the option to shop around for professional executor services, or to appoint a lay executor, for example a friend or family member, who can then choose to be assisted by a professional if required.
At the time this work was undertaken the IPW made much in the press of its Code of Practice which was given approval by the OFT under its Consumer Codes Approval Scheme.
The SRA did not make so much noise but it too changed its guidance to the profession to reflect the interests of consumers and this can be found at http://bit.ly/eqHgXz It is simply in the form of a Q & A.
- “You must not exploit your client’s lack of knowledge for your own advantage by leading the client to believe that appointing a solicitor is essential or the norm (see rule 10.01 of the Solicitors’ Code of Conduct 2007).
- You have a duty to act in your client’s best interests (rule 1.04). It would not therefore be proper to encourage the client to appoint you or your firm unless it is clearly in the client’s best interests to do so. Whilst it may be beneficial to appoint a solicitor in certain circumstances (e.g. where the client’s affairs are complex, or there are potential disputes in the family or all the beneficiaries are minors), there may be no particular advantage where, for example, the estate is small or straightforward and a professional executor is likely to be more expensive and the client should be advised accordingly.
- Before drafting a will which appoints you or your firm as executor(s), you should be satisfied that the client has made the decision on an informed basis. You should therefore:
a) explain the options available to the client (rule 2.02(1)(b));
b) ensure the client understands that the executor(s) do not have to be professionals; that they may be a family member or friend, whether or not that person also benefits under the will; and that lay executors can choose to instruct a solicitor to act for them and will be indemnified out of the estate for the solicitors’ fees.
c) explain what your basis of charging would be for carrying out the administration of the estate. If this includes a time element, you should inform the client of your current hourly rate.
Particular care needs to be taken to ensure that the client has all the information necessary to make an informed decision if you are providing the will-writing service online. The information referred to above, including information about your basis of charging if you are appointed, should be presented in a way which is readily accessible and easily understood. If you are using tick-boxes, you should avoid having an automatic default which appoints you as executor.”
Law Society Practice Note
On 17 March 2011 the Law Society posted a new practice note entitled “Appointment of a Professional Executor” on its web site which can be found at http://bit.ly/f8ecdT
It sets out succinctly what a solicitor should do when preparing a Will so far as appointing an executor is concerned.
- Inform the client who may be an executor
- Take into account the likely size & complexity of the estate BEFORE promoting your firm’s executorship services
- Make sure appointing you or your firm is not contrary to the client’s best interests at the time of drafting the Will
- Provide an indication of the likely CURRENT costs of your firm carrying out the administration of the estate and of acting as executor
- Explain how the fees are calculated i.e. based on an hourly rate; and/or a percentage of the estate
- Explain whether in the particular case you would need to continue to act as a trustee and if so how you would charge for doing this
On death the residuary beneficiaries of the estate may question a professional executor’s appointment and ask him or her to renounce. It is of course not compulsory to renounce when asked to do so.
However, this is an appropriate moment to consider why the client appointed you and whether it is still necessary to act – it may be the complications which existed at the time of making the Will have now disappeared.
You are advised by both the SRA and the Law Society to review the appointment in the best interests of the estate at this time and, if appropriate, renounce. Please note that if you are appointed as both executor and trustee remember these are separate roles and you may need to renounce both of them.
If you do decide to renounce, you are entitled to charge for the work involved in doing so, but it would not be proper to make any charge for agreeing to renounce.
Do you leave intending testators in the dark about your probate charges? It is hoped in the light of the above you do not or if you did you no longer will do so. Remember, where ever we ‘should’ do something and fail to do it under our Code of Conduct you must be able to justify to the SRA why it was appropriate to deviate in a particular case from what is regarded as good practice.
© Gill Steel LawSkills Ltd
FREE monthly newsletter
Wills | Probate | Trusts | Tax | Elderly & Vulnerable Client
- Relevant learning and development opportunities
- News, articles and LawSkills’ services
- Communications which help you find appropriate training in your area