Helping with funding Estate expenses
New research has shown that 94% of the larger UK law firms have seen delays in clients settling their bills since Covid hit.
The Legal Cash Flow report was based on responses from 800 finance executives and managing partners at law firms about the effects of the pandemic on their cashflow.
Delays in clients settling bills
Almost 50% of those interviewed had seen an increase in write-offs of up to 60% of their fees. 15% reported increases in writing off larger amounts of over 60% of their total fees.
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The reasons given were that legal firms are supporting clients with extended payment terms throughout these difficult and uncertain times. Many firms are looking to address profit leakage across their operation to help counter these external pressures.
In addition to the challenges thrown up by Covid, unprecedented increases in the cost of living have seen many families under increasing financial pressure. Any unexpected and unplanned expenses add even further strain onto clients’ already stretched finances.
Probate and Estate Administration is no exception to these downward pressures. When someone passes, an individual will be named as the Personal Representative to oversee the administration of the deceased’s estate. Quite often, both the passing of a loved one and the demands on the Personal Representative can be unexpected and a challenging learning curve for the Personal Representative.
Thankfully, the Personal Representative can get help from professional Estate Administrators to guide them through the process, however, the financial demands can be more difficult to manage.
Although testamentary expenses can be funded by the estate of the deceased, there may not be sufficient funds available pre-grant to pay for things such as funeral costs, property maintenance, not to mention Inheritance Tax. If the Personal Representative is not able or willing to pay the IHT personally then this could lead to the entire process being stalled.
There is also the matter of the legal fees that need to be paid for. Some firms are having to wait to be paid until the estate distributes which can take over twelve months in many cases. Law firms can find themselves involved in complex and time-consuming processes to try to support their clients with financial help either out of their own working capital or through partner organisations.
WIP is often an issue raised at top-level meetings within a law form and recent feedback suggests this may be getting worse with some firms reporting an average of 130 days before getting paid. This can hit cash flow and add to operating costs and in any other sector, this would be unacceptable.
The good news is Tower Street Finance recognised these problems and has created financial products that can help you help your clients. This means your WIP moves quickly, no locked estates and your working capital isn’t tied up.
Two unique products to unlock estates
Personal Representatives who need help with funding can use Estate Expense Funding from Tower Street Finance.
Estate Expense Funding is available to Personal Representatives dealing with testamentary expenses which may need to be paid before the estate proceeds are released. These could include:
- Inheritance Tax
- Funeral costs
- Professional fees
- Property or estate maintenance
- House clearance or sale costs
Estate Expense Funding gives them a drawdown facility in conjunction with their professional Estate Administrator to pay these expenses and then the fund is repaid once the estate is settled.
Tower Street Finance also offer Inheritance Dispute Funding which allows beneficiaries to dispute an inheritance in cases where the solicitor feels there is a good chance of winning. The funding is settled once the estate proceeds are paid.
Partnering with Tower Street Finance is easy – we don’t ask you to sell our products, just send on a few simple details and we’ll let you know how we can help.
For more information visit the partnering with us section of our website or call on 0343 504 7100.
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