fixed fee probate

What happens if beneficiaries die?

It is more common than one might think, that a beneficiary named in a will, dies before the writer of that will.

In this instance, should the beneficiary have been their adult child, then that person’s claim to the estate is automatically passed to their children.  If there are no direct grandchildren in existence (children of the deceased) or the beneficiary wasn’t their child, then any nominated assets are absorbed back into the estate.

Some more detailed wills, anticipate this scenario and add further instructions, often stating that if the beneficiary dies before the person, then their share of the assets will pass to another named individual.

The key to avoiding complications during the probate process is to ensure that the will is drawn up correctly and without ambiguity in the first place.  This involves careful wording and additional clauses where necessary.

How to Decide If You Need a Fixed Fee Probate Service

If you have lost a loved one, you may be faced with the choice of dealing with probate yourself, appointing a solicitor to deal with probate on your behalf, or using a fixed fee probate service.
 
It may be the first time you have found yourself in a position where you need to deal with probate, and the prospect of doing so can be daunting at a time when you are grieving. This guide should help you to decide whether to deal with probate yourself, or appoint a fixed fee probate service.
 
Has The Deceased Left Assets of Less Than £5000?
 
If your loved one has left assets of less than £5000, after funeral expenses you will not need to apply for probate at all. You will just need to provide your bank with proof that your loved one has died to access their accounts. Some banks have raised this limit to £10,000, so do check with the deceased’s bank.
 
Are Your Loved Ones Assets Held in Joint Accounts?
 
If all of your loved ones financial assets are held in joint accounts with you, you won’t need to apply for probate. Again, you will just need to provide proof that your loved one has died, to the financial institutions involved and they will transfer the joint accounts into your name.
 
Are Children Under the Age of 18 Involved?
 
If children under the age of 18 are entitled to some of the deceased’s assets, it is wise to seek legal advice or contact a specialist fixed fee probate service to deal with the estate on your behalf.
 
Are the Deceased’s Financial Affairs Complicated?
 
If the deceased’s financial affairs are not straightforward, it may be better to use a fixed fee probate service to deal with the estate on your behalf.

Do You Feel Comfortable Calculating Taxes?
 
Part of your loved ones estate may be liable for inheritance tax. This will involve dealing with HMRC and calculating any taxes owing. If you don’t feel comfortable doing this and you are worried that you might get it wrong, it is better to get a specialist company to deal with probate on your behalf.
 
Is The Will Likely to Be Contested?
 
If relatives of the deceased are likely to contest the will, it may be less stressful for you to appoint a specialist probate service to deal with the estate on your behalf. Even if the will is unlikely to be contested, those who are entitled to benefit from it may not understand how lengthy the process is, and they could put pressure on you if you are dealing with probate yourself. If you use a specialist fixed fee probate service, you will not have to deal with the additional stress this may cause you.

Fixed Fee Probate & Declining Solicitor Market Share

The latest figures released by the Probate Service have shown a decline in the number of solicitor applications made for grants of probate.
 
56% of all grants were issued to private individuals in 2011. This is a major increase on 2010 when just 36% were personal applications.  Why are so many people rejecting solicitor’s probate services?
 
A Guardian article titled The £600m RIP-off published in 2009, sparked a media frenzy of negative publicity for banks and solicitors offering probate services. At this point, High street banks and solicitors had a massive 88% share of £1.25 billion probate services market. The £600 million is actually a reference to a quote from Adam Walker of Final Duties, who claimed that half of this was blatant over-charging.
 
"It's a £600m a year rip-off, where banks and solicitors are charging large fortunes to sort out small estates. It's worse because they prey on grief-stricken families who are not in a mood to argue, or shop around.”
 
The reason for this is the archaic way that fees are calculated, based on estate value. Some probate companies charge between 1-4% of the estate value for their services. The problem is, this is not always in proportion to the amount of work that must be carried out to administer the estate. For example, one determining factor in the amount of time and paperwork involved in winding up an estate is how many financial institutions assets are spread over. An estate with 4 bank accounts will involve more work than one with 2, regardless of the amounts of money involved.
 
Solicitors with traditional hourly-rate/ plus disbursements, pricing structures have also been criticised.  Consumers have reported on the unwillingness of solicitors to quote a fixed price, using the ‘how long’s a piece of string?’ argument. Ultimately leaving consumers shocked and confused when they get their final bill. With rates of up to £400 per hour, plus extra charges for court fees, extra client support, postage, stationery, receiving emails, sending letters etc., it’s no surprise that people opt for a fixed fee probate service.
 
More, and more reports and damming evidence came to light from Which?, The Daily Mail, BBC’s Rip-Off Britain and Panorama. It is indeed possible that all this negative media attention has led to the rise in personal probate applications.
 
There’s no need to fall into any of these traps, you can still get a fair price for probate. Use a company that offers a low-cost fixed fee probate service.   Make sure that fees are agreed in advance and that you fully understand the service that will be provided. Get a full breakdown of what’s included in the fees and any extra charges your likely to incur. Watch out for small print and any hidden extras.

Probate fees and the rise of DIY

The number of grants of probate issued to solicitors has dropped significantly. The latest figures from the probate office show that 56% of all grants were issued to private individuals in 2011. This is a massive increase on 2010, when just 36% were personal applications. 
 
Many probate practitioners are of the view that these figures do not accurately reflect the real picture. Just because someone applies for probate individually, doesn’t mean they haven’t had legal advice or sought professional assistance. It is not uncommon for people to employ the use of a solicitor after probate has been obtained to ensure that their executors’ duties are carried out correctly, saving them the time. An estate administration service may include closing bank accounts, informing utility companies, maintaining a set of accounts for the estate and even the sale of property. This can simply be too time-consuming for an executor to fit into their busy life.
 
The fall in the number of people who use a professional to apply for probate began in 2006. This indicates a direct correlation with the start of the recession.   Falling property prices are a likely contributing factor in the decline of solicitor probate applications. This has resulted in fewer estates being valued above the threshold. Similarly, there has been a reduction in more complex estates where inheritance tax is due. Perhaps, individuals feel more confident about DIY probate when there’s no necessity to complete a full inheritance tax return and deal with HMRC. 
 
The internet has also led to the availability of downloadable DIY probate kits. These empower the executor to take matters into their own hands rather than being reliant on a legal practitioner. Doing-it-yourself enables you to save money on probate fees. However, it is only recommended in straightforward cases, with uncomplicated estates. Mistakes can be costly and executors can be held personally liable. Common problems include; undervaluing the estate, under paying tax or failing to trace missing heirs.
 
The Probate Service states that it includes solicitors, notaries or barristers in its statistics. However, it is not necessary to be a fully qualified solicitor to offer professional probate services. It is not clear whether figures include applications made by professional practitioners who are not actually firms of solicitors. Therefore, whether these percentages are a true reflection of the rise in DIY probate is questionable. 
 
The continued negative publicity of the probate fees charged by some banks and solicitors could account for the decline in the uptake of their services. The practice of charging percentage fees based on estate value, is becoming archaic. Solicitors, who traditionally charge an hourly rate will not necessarily be competitive in today’s marketplace. More people are choosing low-cost, fixed fee probate services offered by specialist practitioners. These may not be included in the figures released by HM Courts and Tribunals Service.
 
For more information visit the HMCTS Probate Service.

Who Should Use a Fixed Fee Probate Service?

You may have already heard of the benefits of using a fixed fee probate service if you have been left with the responsibility of dealing with a loved ones estate. But is a fixed fee probate service right for your situation?
 
This will depend on a number of things, including the value of the deceased’s estate and whether you feel up to executing the estate yourself at your sad time of loss. If the deceased has left significant assets of about £10,000 after funeral costs, you may want to use a fixed fee probate service to deal with the estate on your behalf. But if the estate is worth under £5000 after funeral costs, you will not need to apply for probate at all, as the bank will allow you to access your loved ones money.
 
If the proceeds of the estate are tied up in property, or shares, or anything other than just money in the bank, you may want to use a probate service to deal with everything on your behalf. Also if there are bills to be paid and money to chase up from those who owe the deceased money, it may be easier to opt to get an expert to do all this for you.
 
You may not need to apply for probate at all if all the assets your loved one left is in joint names with you. In that case, you will probably just need to ask the financial institutions concerned to transfer the assets into your name only.
 
Another reason that many people choose to use a fixed fee probate service, is to avoid massive legal costs. You may not wish to deal with your loved ones estate yourself, at this time of grief. But you may be worried that legal costs will eat up a large amount of the estate if you appoint a solicitor to deal with the estate on your behalf.
 
And your concerns are understandable. After all, each solicitor’s letter could cost you around £100, and a simple telephone call could be as much as £50. You have no way of knowing what the final bill may be, particularly if the deceased’s finances are complicated and dealing with the estate is a long and drawn out process.
 
This is a good reason to opt for a fixed fee probate service. By agreeing a fixed fee, you know the exact costs before you proceed and you don’t need to worry about a huge legal bill at the end.

Fixed Fee Probate in Scotland

IWC are pleased to announce that we are now able to offer fixed fee services for probate in Scotland. Our partners are able to provide a complete service for confirmation and estate administration. This includes –
 
Making an inventory of assets
Valuation of the Estate
Completing the application for confirmation
Completing the Inheritance tax return
Correspondence with beneficiaries
Informing all Relevant Persons – banks and financial institutions, passport office, local authorities, the Inland Revenue, utility and service providers etc.
Distributing the copies of the grant of confirmation
Collecting monies owed to the estate
Paying creditors
Distributing assets to the beneficiaries
 
Scotland has a separate judicial system to the rest of the UK and probate law is upheld by the Scottish Courts. This means there are considerable differences between applying for probate or letters of administration in Scotland and applying in England, Wales and Northern Ireland. 
Probate terminology and processes are different, for example, in Scotland probate is called confirmation and the personal representative applies for a grant of confirmation.  Different forms are required too. Here’s a brief overview.
 
Small Estates
 
If the deceased's assets are valued at £36000 or less, this is classed as a small estate. The Small Estates Act allows you to obtain probate in a simplified way through The Sheriff Court. It is not necessary to have legal assistance, you must contact the office local to where the deceased was domiciled to make an appointment. However, once confirmation has been issued, you will have to wind up the estate so may prefer to have a professional undertake this on your behalf. 

Large Estates
 
If the estate is valued over £36000 the executor must go through the full application process for a grant of confirmation. When there is no will, the next of kin must apply to the Sheriff Court to be appointed as Executor-dative. A bond of caution from an insurance company will normally be required. This guarantees you will administer the estate in accordance with The Succession Act 1964. In cases of intestacy, professional legal advice is strongly recommended. 
 
The first step is to make a complete inventory of the deceased’s assets. This will enable you to fill out the probate application form C1. If the estate is excepted (no inheritance tax is owed), you must also fill out form C5, along with required documentation and forward to the Courts. If the estate exceeds the nil rate band of £325,000, you will need to complete an inheritance tax return. You must complete form IHT400 where you will give HMRC a full account of the estate.

Legal Services Board Recommendations Concerning Fixed Fee Probate

 Legal Services Board Recommendations Concerning Fixed Fee ProbateThe Legal Services Board has made proposals for stricter regulations for companies offering probate services. This has stemmed from growing concerns about probate fees- specifically excessive costs and deficient information regarding fees and unclear pricing and over-pricing. In contrast to fixed fee probate services (such as those offered by IWC Ltd.), consumers are being forced into paying extortionate hourly rates and snowballing charges.  
 
They are also subjected to percentage fees based on estate value – which have little relevance to the amount of work that must be done. Leading high street banks have been heavily criticised for this – a well-publicised report by the Office of Fair Trading in 2010 exposed massive differences in fees. They approached 4 leading banks and reported “For an average estate, consumers can pay between £3,000 and £9,000;” that’s £6,000 difference for the same service.
 
Another concern is fraud and theft from estates – “Regulating the probate application alone… seems to target regulation at the wrong place.” They state that the tight focus on the probate application leads to considerable scope for fraud in the other aspects of the estate administration process.
In a recent post – we cited a shocking case where Leanne Harris of Arscotts Solicitors in Hove stole almost £500,000 from probate clients. It is reported this was to maintain a lifestyle many of us can only dream of.  She took advantage of one client, for whom she had been given power of attorney, to the sum of £65,000. Harris had no formal legal training.
 
The LSB propose that will writing and probate services should become reserved activities. In other words they should be regulated. “Action is needed to protect consumers of will-writing, probate activities and estate administration services and to promote their interests.”
 
At present, if you want to protect yourself, it is recommended to choose a fixed fee probate sstep logo Legal Services Board Recommendations Concerning Fixed Fee Probateervice by a company that is regulated by STEP (The Society of Trust and Estate Practitioners). STEP is a worldwide professional body for the trust and estate profession. 
 
If the LSB’s suggestions come into effect – they will enlist approved regulators. This would mean a criminal conviction for any unauthorised provider charging for probate or ancillary services. Solicitors will not be immune either; they too will have to demonstrate that they have the appropriate expertise to handle will writing and probate matters.
 
You can read the full LSB report here-
 
http://www.legalservicesboard.org.uk/what_we_do/consultations/open/pdf/1.pdf
 
For further reading check out the following posts –
 

Fixed Fee Probate and Genealogy

Following on from a recent post which highlighted the problems in the heir hunting industry; high probate fees and lack of regulation – Here’s a more in depth look at probate genealogy fees.
 
An independent poll was conducted by market research company, Opinium, amongst 2,161 members of the general public. They found that people could be handing over as much as £10 million a year to heir hunter firms. The average amount charged by heir locators is 20% of the inheritance. 40% of people found by heir hunters felt under pressure to pay. 
 
Sadly, genealogy fees tend to be out of proportion to the amount of work that’s actually involved. Many heir hunters calculate their costs as a percentage of the estate value. Whereas, an hourly or fixed fee probate rate is a much fairer system. 
 
In many cases, solicitors appoint genealogists to seek out missing heirs. Therefore, they too have a responsibility to ensure estates only pay fair fees that reflect time spent on research. 
 
STEP (the Society of Trust and Estate Planning) issued a briefing note to its 6000 members to explain genealogical research fees; fixed fee probate, time based and contingency fees.   Here are a few excerpts-
 
“It is good practice to obtain a range of quotes from genealogists and you should be fully aware of the different options available.”
 
Fixed Fee Probate – “Fixed fee options are set fees agreed in advance and in some cases may be payable only if a pre-determined goal is achieved.”
 
Time-based fees – “Time-based fees are charged according to the actual time spent, normally on a per hour basis, which is recorded and billed.”
 
Contingency Fees – “once the genealogists have undertaken the research, they come to an agreement with each beneficiary they identify; whereby the beneficiary agrees that the genealogist is to be paid a share of their entitlement when the estate is distributed.”
 
Many heir hunters charge contingency fees as a percentage of the inheritance as their fee.  This can amount to charges that are out of proportion to the value of the service they offer. After all, they’ve used information that’s available freely on Government websites.
 
If you’ve been contacted by an heir hunting firm and are faced with an excessive finder’s fee. Seek independent legal advice before you sign anything. Beware that some companies may apply excessive pressure or shock tactics to get you to commit. Put your foot down and do your own research – you could save thousands.

Is Fixed Fee Probate The Right Choice For You?

If you have been unfortunate enough to lose a loved one, you may want to be relieved of the burden of dealing with their estate. And that is understandable. Coping with a death in the family is never easy, without the added pressure of dealing with the deceased’s finances.
 
But if you have never been in this situation before, you may feel overwhelmed by the options available. Do you appoint a fixed fee probate service to deal with everything for you? Or do you pay a solicitor to do the work on your behalf, on an hourly or per item rate? Or would you be better off just dealing with the deceased’s estate yourself?
 
Your choice will depend on many things including your circumstances and your ability to cope with the additional stress, as well as the state of your loved one’s financial affairs.

DIY Probate
 
In some circumstances, it can be easier to deal with probate yourself. If your loved one did not leave huge assets, or debts, and they didn’t have a lot of money owing to them, you may want to deal with the estate yourself. It could simply be a matter of applying for a grant of probate to gain access to your loved one’s bank account, then paying any bills they owe.

Using a Solicitor to Deal with Probate
 
If the deceased’s finances are not so straightforward and they have left quite a large amount of assets, you may want to get someone else to deal with probate on your behalf. Solicitors do offer these services, but if you feel up to dealing with financial institutions and taxes, you may still want to do it all yourself. And if you don’t, you can expect a solicitor or legal expert to do the following for you:
  • Apply for probate on your behalf.
  • Deal with financial institutions including banks, stockbrokers, and offshore funds.
  • Pay debts owed by the deceased and collect money owing to the deceased.
  • Deal with the sale of any assets such as properties and businesses.
  • Calculate any inheritance tax owing and deal with HMRC.
  • Distribute the proceeds of the estate.
The amount of work involved will depend on your loved ones estate, and if you appoint a solicitor to deal with everything on your behalf, you can expect to pay either by the hour, per each activity that needs to be done – for example writing a letter, making a phone call, or a percentage of the estate.
 
Using a Fixed Fee Probate Service
 
A fixed fee probate service can do everything that a solicitor does, from applying for probate, to distributing the estate. The main difference is, they will speak to you about the estate then agree to do everything for a fixed total fee. Many people opt for this service to avoid escalating legal costs, particularly if the deceased’s financial matters are complicated and it is not clear how long it will take to deal with the estate.

Some Advice About Fixed Fee Probate

grant of probate Some Advice About Fixed Fee ProbateIf someone close to you has passed away, the chances are, you’re not in the best mind-set to consider all the financial implications of death. When faced with probate, the first task for many families is to appoint a professional to deal with the legal and financial aspects on their behalf.
 
It is wise to agree a price for probate services in advance, so you know exactly what the legal costs will be. Here are some questions to ask to ensure you appoint the right practitioner when looking for a fixed fee probate company.
 
Are they Qualified?
 
Unfortunately, there are no legal requirements for firms to offer probate and will writing services. Therefore you may find that a practitioner offering a cheap fixed fee does not have any legal qualifications. Choose a STEP member (The Society of Trusts and Estate Practitioners) to ensure that the company has the appropriate qualifications.
 
Are they Reputable?
 
They may have a professional website but do they have the reputation to back up their claims? Study reviews, testimonials and do a check on the company to make sure they’ve no skeletons. Make sure they are fully insured too.
 
Is the Fixed Fee a Percentage of the Estate?
 
A company may quote a fixed fee but if this is calculated as a percentage of the estate value, you could be paying much more than you need too. Companies and financial institutions that do this tend to charge between 1-4% of the estate which can work out extremely costly. Choose a firm that calculates fees fairly, based on the amount of work they have to do. If you have a high value estate that is relatively straight-forward, eg just 2 beneficiaries with funds contained in 1 or 2 bank accounts, you have the potential to save thousands.
 
What about Extra Charges?
 
Double check and read all small print that the fee is indeed fixed. Some companies will charge a fixed fee then add £s onto the final bill. This could be a fixed fee plus an hourly rate or fixed fee probate but hourly rates for administrating the estate.
 
Will they Provide Free Advice Whilst Dealing with your Case?
 
Probate can be a long, drawn out affair. In some cases in can last years. If your case is relatively complicated or you feel there may be a dispute, ensure you’ll not be charged any extra for further legal advice and help. Once again, it’s imperative to find out exactly what the service includes. You need to be able to pick up the phone to the practitioner and know you’re not on a meter each time you need an update or little extra help.

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