Chris Butcher, Partner and Head of the Probate Department, Michelmores LLP
Efficiency, professionalism and openness
Best practice in estate administration should be much more than simply following the requirements of the Solicitors' Code of Conduct 2007. Key matters are efficiency, professionalism and openness.
Efficiency requires not only the right staffing structure of experienced lawyers and appropriate other fee earners for the more routine work, but also the use of modern systems, be they a purchased probate package or a system that a firm has developed itself. Although some of the administration includes routine work and should be effected with the use of standard letters, there must be experience in the team in order to identify scope for tax planning or simply to make use of available exemptions. How many firms arrange for investments to be sold as soon as probate has been obtained without in better financial times considering making use of executors' capital gains tax allowances? In the present financial climate, relief from inheritance tax arising from the sale of shares and houses at a loss should almost always be claimed. Those reliefs will not be available if the assets are transferred to the beneficiaries to be sold later.
Professionalism is more that just carrying out the basic estate administration. We in Michelmores seek to know our clients fully so that we can advise the family in a wider sense while at the same time distinguishing between work that is included in the administration and that for which a separate fee will be incurred. Deeds of variation are classic examples, not just for the estate itself but also for someone who has died in the previous two years. Alas, so many solicitors concentrate just on the matter in hand without considering the wider picture.
An important aspect of best practice is openness with the client. The client understandably needs to know the anticipated costs and timescale. If a fixed fee cannot be quoted because of uncertainties at the outset, it is important to state at the beginning how the fees are calculated and to give as good an estimate of the likely figure as possible. That in itself must be followed up with appropriate reviews (and diary notes made accordingly).
The estimate of fees should make it clear what work is included and importantly what is not. Additional costs may arise from the need to trace assets or beneficiaries. In most if not all cases, Personal Representatives should agree that the costs for this should be based on the amount of work involved, with a working time-and-expenses budget, rather than on a percentage commission basis.
Internal systems
Best practice is not just for the benefit of the client. There is no reason for a bill only to be submitted at the end of the administration. Billing should be carried out frequently, such as on obtaining a grant of representation and on a monthly or quarterly basis thereafter.
Projected timescales can be over-optimistic. If nothing is happening for good reason, it is not difficult to tell the client why. A simple email will often suffice.
And the way ahead? It is no longer the case that, when the administration of an estate has been completed, the file can simply be put away in store and then destroyed after a fixed period. With the introduction of the transferable nil rate band for inheritance tax, essential information should be retained in order to be able to claim the additional exemption in the future. In that way we can be seen to be looking after our clients in the round.
With the advent of large institutions entering the probate market, there will be an uneven financial playing field. It is even more important now for solicitors to have good systems for carrying out the administration of estates with all their financial ramifications. Clients can then make a reasoned choice on whether they want a cheaper no frills service or one that goes the extra mile for their long term benefit.
What tools are available for all of this? For clients, why not send them a simple guide to the administration of an estate for them to refer to during the administration? For the lawyers, courses are arranged through the Society of Trust and Estate Practitioners and the Probate Section of the Law Society. Help is also at hand in the form of books such as the Law Society's Probate Practitioner's Handbook and Sweet & Maxwell's Probate Practice Manual.
Elnora Terakopian is a partner specialising in wills & probate at West London firm Owen White & Catlin.
Understanding client needs
When I think about best practice in estate administration, I consider what it would mean to me if I were the client rather than the solicitor. A friendly, professional, understanding service provided efficiently and at a reasonable cost? Someone who could identify with the bereavement process as well as the legal process? A cheap and quick service? All of the above?
Googling ‘best practice’ reveals adverts for cheap or even free advice from non-solicitors – and there lies the conundrum. In today’s market we have to provide an individually tailored (possibly out of hours), competitively priced service, with sound legal and taxation advice (perhaps across various jurisdictions) with a strong network of colleagues standing behind us ready to assist.
Best practice to me means understanding my clients and their needs and wishes, advising them of the law and of the best way forward for them in their individual circumstances, thinking outside the box and finding alternative solutions.
I attend a range of good quality conferences to keep abreast of the current caselaw, to understand the best approach to take in dealing with more complicated estates, and to keep up-to-date with current and foreseeable changes in the law, procedures and practice.
Providing a complete package
My legal training is but one string in my bow: my response as a human being - my empathy and my understanding – is, at times, more valuable to my client then explaining the probate process and the ins and outs of IHT200. I have trained with Cruse at their bereavement and loss workshop, which has helped me better understand my bereaved clients, allaying their fears and, when necessary, passing them a box of tissues. To me, best practice is providing my clients with a complete package from start to finish:
What does this complete package consist of?
- Explaining the probate procedure to my clients including giving tax advice.
- Assisting in valuations of properties and chattels by having a range of trusted external professionals to recommend (with whom you have built good trustworthy working relationships with over the years).
- Being on hand to swiftly reply to telephone calls, emails and letters by clients and having well-trained support staff to assist.
- Progressing cases quickly and efficiently.
- Obtaining the assistance of external companies when required – for example Title Research. Ensuring a professional relationship with them and agreeing their charges to be hourly rather than contingency based, to the financial advantage of the estate and the beneficiaries.
- Having a good team of in-house specialists for example civil litigators, conveyancers, and commercial solicitors to assist with areas outside my expertise.
- Providing clients with clear guidance as to costs and preparing regular invoices (the first once the grant has been obtained) and keeping clients informed of the costs.
- Paying legacies and making interim distributions as soon as possible.
- Above all, being respectful of my clients and the deceased. - my firm often acts as Executor and we do so with discretion, understanding and respect for the deceased, from arranging the funeral, looking through the deceased’s home and paperwork to ascertain the estate assets and liabilities.
In providing this service I realise I am competing with other solicitors and professionals. Do we all provide the same service? Regrettably, my experience suggests, that we do not. Many clients have come to me having appointed another solicitor or other professional to act on their behalf and having been disappointed. The most common complaint I hear is that the matter was not dealt with promptly, that the person handling the matter was insensitive and often unreachable, did not advise them of the law, or of the possibility of claims against the estate or the current tax regime. These are things we all need to heed. As the market expands we need to be the best we can be and, as the Americans say, ‘on top of our game.’ In today’s increasingly competitive marketplace, we cannot afford to lose clients for any of the above reasons.
Nicholas Beetham, Business Development Manager at Title Research.
Managing risk
The themes that emerge from our contributors’ pieces in this “Best Practice” edition are those of client service, empathy, professionalism and efficiency. Competition is rife and likely only to increase and practitioners need to keep abreast of the challenges of the changing market., as well as keeping up-to-date with developments in the law.
Risk management is a live issue and our role is, as much as anything, to assist in that part of the best practice process. Our clients transfer risk to us with every set of instructions: the risks of distributing the right amounts to the wrong people, or the wrong shares of residue, albeit to (some of) the right people, or overlooking the distribution of a pecuniary legacy to its intended legatee. Every time we value a portfolio, we identify the (frequent) discrepancies and demonstrate its true composition, enabling the correct completion of the relevant IHT account. We arrange for the transfer of overseas assets into the PRs’ names, and the subsequent sale. All of which facilitate the administration and reduce risk.
Occasionally, our research will disinherit those who were thought entitled to take on intestacy: in a number of cases, we’ve shown that well-meaning PRs’ DIY research has put them on the point of distributing to the deceased’s cousins when, in fact, the next of kin has been in the class of the deceased’s siblings of the whole blood – and the PR has not even been entitled to the grant. In other cases, PRs have mistakenly identified second cousins (never entitled as of right on intestacy in England & Wales) instead of first cousins once removed (who can be) and we’ve been able to help our clients avoid an incorrect distribution and its effects. Our reports help with court proceedings, applications for statutory wills and applications for missing beneficiary indemnities.
Transparent charging
We do our best to be absolutely transparent – certainly we are very open about our fees: we always quote a fee for a job based on how long the work will take to do, based on hourly rates and the cost of certificates and other disbursements which we charge at cost with no mark up.
We do not operate on the percentage commission, or so-called “contingency fee” basis where heirs are required to sign an agreement giving up a percentage of their entitlement to the heir-locator who’s found them. Not only is it inconsistent with value for money, it discriminates in favour of known beneficiaries at the expense of the equally entitled missing, and exposes the PRs (and their advisers) to the risk of action against themselves personally. Furthermore, no-one has yet constructed a satisfactory argument that the commission basis is consistent with best practice in estate administration.
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