Probate: Fees, Time Scales and Self Help

SOLICITOR IN CHARGE: TOM FITZPATRICK

Fees

  • Types of Estate

    There are two basic types of estate, being those where there is a will and those where there is no will. Where there is no will, we call it an 'Intestacy'. Intestacies are dealt with later in this note. For the present, it is sufficient to say that intestacies involve a lot more work, because careful enquiries must be made to find out who should be made administrators and who the beneficiaries are. Intestacies are always far more expensive to administer than estates where a will has been left.

    This distinction apart, administrations come in all shapes and sizes. There may be a great many assets and a great many beneficiaries, or few assets and few beneficiaries. Most estates are somewhere in between. Sometimes assets are based abroad, or for some other reason are difficult to administer. Sometimes beneficiaries have to be traced, or trusts set up. It is not possible to know until we receive the papers whether an estate will be quite simple or rather complex. However, for small and uncomplicated estates we can make special arrangements, which our clients usually find helpful.

  • Charging Basis

    Because solicitors do not know what is involved until they get the papers, our fees tend to be worked out by reference to a capital charge and a time charge. The former is based on the gross value of the estate and whether or not the solicitor is an executor. The latter is an hourly charge, which depends on the charging rate of the fee earner and the time taken to complete the administration.

    Whether the full capital charge is billed by the solicitor depends on the complexity and size of the estate.

    A simple estate, however large, is unlikely to attract the full capital charge. In an average estate, whatever that may mean, our experience is that the combination of the time and capital charges results in an overall budget figure for legal fees of 3% of the gross estate, plus VAT. Disbursements ( what we pay out for Court fees, fees for swearing probate papers and other necessary payments) will be extra. There are Law Society guidelines for solicitors' fees.

    Solicitors are not alone in being able to apply for Grants and administer estates. Some organisations tend to have more confusing ways of charging, with different heads attracting extra fees. If such an organisation is to be used to administer the estate, it is worth asking in advance for an overall budget figure (like FitzPatricks' 3%) to include all the different types of charges. This should be readily available.

    Solicitors normally take their fees in part when the Grant has been obtained and the remainder when the administration is complete.

    In simple estates, FitzPatricks offer a service limited to preparing the probate papers and obtaining the Grant. Fees will be about £400 - £600 + VAT, depending on what is involved. Probate Registry fees and 'Disbursements' will again be extra. This service will not include transferring shares or other assets, filing tax returns, preparing estate accounts, or carrying out other aspects of the administration on the basis that the client wishes to do this him/herself.

    Solicitors are required by the Law Society to advise clients at the outset what their fees are likely to be and to confirm the figure in writing in what is called a 'Client Care Letter'.

  • Time Scales
  • FitzPatricks would expect in most cases to obtain the Grant of Probate or Letters of Administration within three to four months of being instructed. If there is especial urgency, this may be improved on. This would be discussed at our initial meeting.
  • The Capital Taxes Office, which has responsibility for collecting Inheritance Tax, has recently announced that if estimated valuations of assets which come to their attention are significantly different from the values later confirmed, it may well levy a charge against the estate by way of penalty. The old habit of estimating values, without any particular concern as to real values simply to obtain a quick Grant and sort things out later, is therefore to be avoided if possible. It is sensible to obtain correct valuations at the outset to avoid future difficulties. Inevitably, this process takes time and cannot get very far until we have details of the assets in the estate.
  • As the assets will include most gifts greater than £3000 made in any financial year (6th to 5th April) within seven years before the date of death and maybe longer, details of all relevant gifts will be needed when details of the assets are provided. This also applies where, for example, deposit accounts, not mentioned in the will, have been nominated in the recent lifetime of the person who has died.
  • Assuming there is no challenge to the will, that the estate is straightforward and the various people we have to write to reply promptly with the correct information – we all know from experience in other fields that this cannot be taken for granted – the collection of assets should be complete in a further month from receiving the Grant. If assets have to be sold, this period will inevitably be extended until the sales have been completed. As funds come in, any bills can be paid, legacies can be settled and payments 'On account' can be made to residuary beneficiaries, with the balance being paid when all tax liabilities have been resolved and loose ends tied up. These are matters which the solicitor will consider carefully with the Personal Representatives.
  • If a challenge to the will is possible, the normal rule is that this should be made within six months from the Grant of Probate and the Personal Representatives will be advised not to distribute any funds to beneficiaries until that period has expired. The word 'Normal' indicates that all estates are different. The time for a challenge can be longer than six months where a potential claimant can show a Court that it is appropriate to extend the six month period

  • Self-Help

    Although the Personal Representatives frequently wish to help the solicitor by, for example, making enquiries concerning bank balances etc, conducting sales of shares, or undertaking other parts of the administration themselves, this may be counter-productive as our solicitor's systems deal with these matters automatically.

    The solicitor may need to check the work the client has done, add extra questions of the bank or other organisations, or seek extra information to enable tax returns or estate accounts to be completed. This can entail extra work by the solicitor and may delay the administration, as well as increasing costs.

    It may be wise for the Personal Representatives, before taking any action, to discuss with the solicitor how much useful help they can give and how much will involve duplication of effort. The wise solicitor will understand the need for the clients to be involved and will also recognise that there are occasions when help from the client can, in fact, be a veritable boon.