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.
Disbursements are simply extra charges, they are normally the costs incurred by a company to handle a case. For example, a conveyancer will charge a fee, plus disbursements – these are normally the charges to carry out property searches and obtain certificates etc. In the case of probate fees, disbursements could be newspaper notices, valuing or disposing of estate assets.
When looking for a probate company and considering quotes is important to be aware that even a company who offers a fixed fee, will probably make extra charges. You need to be sure of exactly what the service includes. Here are some examples of services which may incur extra charges:
Find out more about the cost of probate
If the net estate value is over £5,000, you’ll also need to factor in Her Majesty’s Courts and Tribunals Service (HMCTS) fees. For estates valued over this amount, a fee £105 applies. Plus, HMCTS make charges for every official, sealed copy of the grant of probate or letters of administration you require. They are £1 each but you’ll be charged more if you need extra copies after the grant has been issued.
It’s important to scrutinise these terms because some companies will add on extras for professional time, phone-calls, stationary, faxing, emailing. Here are some real life examples;
10 minute telephone call with client
Receiving an email instruction
Sending a fax
Replying to query by letter
30 minute consultation with client
As executor, you are responsible for managing the estate and may be being blamed by beneficiaries for spiralling legal costs which eat into their inheritance. It’s important to read all small print and make sure the probate fees you’ve been quoted are genuine, without any extras. This way, you won’t end up with a shock when you receive the final bill.
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.
If you are a UK citizen with assets in Florida you may need to apply for probate overseas. Here’s an overview of how much you can expect probate fees to amount to.
When a non-resident owns property in Florida and passes away, the property is subject to Florida Probate laws. Probate fees will depend on whether the proceeding is Summary Administration or Formal Administration.
Summary administration is a streamlined probate procedure for smaller estates. It may be used for a non-resident’s estate if the value of assets does not exceed $75,000 and the death occurred more than 2 years ago. It is usually the quickest and least expensive. An attorney will normally charge an hourly rate for this. Rates range from $200 to $300 per hour so a flat-fee is sometimes preferred depending on the circumstances.
The formal probate process is necessary for estates that exceed $75,000. Florida law sets forth a presumptive schedule for probate fees.
3% of the first $1 million
$1-$3 million at 2.5%
$3-$5 million at 2%
Additional fees may be charged for extra services such as the sale of property, advice regarding homestead, or preparation of a Federal estate tax return.
IWC Estate Planning & Management does not charge the statutory formula for probate fees. We operate a fixed fee policy and our rates are extremely competitive. Rather than charge a percentage of the estate, fees are calculated based on the amount of work that`s required.
This is much fairer – it is not the value of the estate but the type of assets and complexity of the Will that determines the amount of work involved. Our prices are calculated based on the type of assets, the number of beneficiaries, and conditions in the Will.
While an hourly fee may seem fairer because it is directly proportionate to the amount of work carried out. If you are being charged at an hourly rate, it can escalate considerably. The average formal administration case lasts 1-2 years and you will only be given an indication of the likely cost; when the final bill is presented, you may get a terrible shock. IWC do not charge hourly rates either, but calculate a fixed-fee which will be agreed with you in advance.
We can help non-US citizens with all aspects of estate administration and overseas probate in Florida. Call 0800 612 6105 from the UK or +44 20 8150 2010 from overseas.
There are statutory Court fees for issuing confirmation in Scotland. If the value of the estate is £5001 or more a fee of £200 is payable to the Sheriff Court, for estates with a value of £5000 or less, there is no fee. You must calculate how many official copies of the certificate you are likely to require. Certificates of confirmation are £5 each. The statutory probate fees will need to be enclosed with your application.
If you decide that you don’t want to go it alone, you’ll need to employ the services of a probate practitioner and will incur legal fees. Legal fees for probate services vary considerably. Banks and solicitors charge between 1-4% of the estate value. This can work out very costly and is not always a fair way of calculating a price for probate. This is because the size of the estate doesn’t necessarily reflect the amount of work that must be carried out to administer it. For example, more work is required to wind up 2 separate bank accounts rather than 1 single account, regardless of the amounts that are involved.
Some solicitors offer their services for an hourly rate or a rate per task. This can be risky. As the fee isn’t fixed, you really have no guarantee how much the final bill will be which can lead to problems later on. As an executor you are responsible for mistakes and can be made liable by beneficiaries for anything that can be deemed as an unjustified expense. This includes excessive legal costs. When probate fees are fixed in advance there can be no arguments. Plus, you don’t want to feel like you’re on a meter if there’s a problem or you need extra help and advice. Some solicitors will charge extra for every phone-call, email and letter they must send.
Last week, IWC announced that our services now extend to Scottish probate. We offer a low-cost, fixed fee probate service. Our rates are calculated based on the amount of work that must be carried out, rather than as a percentage of the estate. Fees are agreed in advance and payment can normally be settled from the estate later. Practitioners are highly qualified and our inclusive service includes help and advice when you need it, without extra charges.
You can find full details about our Scottish Probate Service or call our helpline for more information on 0800 612 6105.
Probate fees can vary greatly depending on the state the deceased has left their finances in. If you are trying to plan ahead so that you don’t leave loved ones facing massive probate fees there are a few precautions you can take.
Make a Will
Your first step is to make a will. It may seem like a morbid thing to think about, especially if you are still quite young. But one of the biggest factors that increase probate fees is having no will at all, because whoever is dealing with probate will have to find all your assets, debts, money owing to you etc, which may take considerable time. They will also have to work out who is entitled to the proceeds of your estate, according the law.
If you die intestate, it is the law that decides who is entitled to what, not you. Do you really want to give the government total control over your finances after you’ve gone? Also, if you don’t make a will, it is not just huge probate fees you will need to worry about, but also higher inheritance taxes.
So do make a will but get it drawn up by an expert. You can buy DIY kits at a stationery shop but you put yourself at risk of making mistakes. For example, if you miss assets off your will, you will be deemed to have died partially intestate and your will could take years to sort out. And the longer it takes, the higher the probate fees will be. An expert doesn’t charge a huge amount to help you make your will and they will make sure that nothing is left out.
Take Expert Advice
Proper planning can reduce probate fees and inheritance taxes. So make sure you take expert advice on matters such as how to ensure that your partner, spouse or children do not end up paying inheritance tax on your personal property.
Make Sure Your Will States How to Contact Your Benefactors
If your surviving relatives do not live with you, it is important to state in your will how they can be contacted. If you don’t do this, it will take far longer for a probate service to track the down the benefactors and this will increase probate fees considerably. Complications like this are all the more reason to use an expert to help you write your will. They already know the things that may cause complications and they can ensure that you don’t make any serious mistakes.
The 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 service 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-
For further reading check out the following posts –
If you’re trying to decide whether to appoint someone to deal with probate on your behalf, you may be wondering what the average probate fees are. That way at least you will have some idea of the cost, before you begin.
Obviously, averages can be misleading and the sum you pay will depend upon the size of the estate and how complicated the deceased’s financial affairs are. But it is still useful to have some ballpark figures, so that you know what you are up against.
According to a survey by Sun Life the average probate fees in 2011 were £2292 and the Legal Services Consumer Panel stated that the average minimum fees on an estate valued at £270,000 is £5199.
Of course these are just average figures but they do give you some idea of what fees you might face. And while you may not want to think about legal fees when you are grieving the death of a loved one, it is important that you have at least some idea of the costs involved.
But just knowing these average figures does not take away the worry of probate fees. If you appoint a solicitor to deal with probate on your behalf, it is unlikely that you will know how much the final costs are until the process is complete. They usually charge a percentage of the estate, fixed costs for each activity they carry out, or an hourly rate.
The trouble is, without knowing exactly how much work needs to be carried out, it is impossible to know what your solicitor is going to charge you in advance. Hourly rates can soon mount up, with many solicitors charging as much as £350 per hour for dealing with probate. And if you are paying per activity, a simple letter could cost you as much as £100 and a phone call £30. If the financial institutions you are dealing with are not on the ball, and don’t respond to letters promptly, the probate fees could mount up incredibly quickly.
According to an article in the Guardian, the cost of dying had risen to £7248 in 2011. Worrying about probate fees on top of other costs, such as funeral expenses is not something you want to be faced with while you are dealing with the death of a loved one. That is why so many people now opt to use a fixed fee probate service. That way they have the piece of mind of knowing how much probate fees are going to be in advance.
You’ve probably seen or heard of the BBC program Heir Hunters, however, all’s not as it seems. There has been frequent media coverage of the extortionate probate fees or finder’s fees charged. Here’s a more in depth look.
The Scale of the Problem
Some 2 thirds of British people die without making a will. There are approximately 60,000 missing heirs in the UK each year. Around half a million Brits benefit from an inheritance through heir hunting firms every year. This means there’s plenty to go off in this lucrative industry.
It is a highly competitive field – in fact – the process is often described as a race to find the heir. This race is to reach heirs before rival companies and thus secure their fee. Not – as they’d have you believe – a race to find the heir before the Government gets the lot.
The average amount charged by heir locators is 20% of the inheritance. The average estate value is £67,500, therefore probate fees are £13,500 at 20%.
Which.co.uk mentions one firm charging as much as 40% plus VAT. “This equates to £120,000 of a £250,000 estate. Yet, the work might have only cost a few thousand pounds if based on the time spent.”
Title Research; a firm which tracks down beneficiaries but only on the instruction of solicitors, revealed some shocking truths, “We have received some shocking complaints about probate fees, including one case where the heir hunter charged 33% amounting to £65,000 to find three heirs, plus £12,000 in expenses. We don't think it's fair that missing heirs should receive less than their legal entitlement because the Deceased lost touch with them.”
The Use of Scare Tactics
40% of those people found by heir hunters, felt under pressure to pay – Opinium Poll
They may also use scare tactics, `the government will take the money if it is not claimed.` There is some truth in this – the Crown does take possession of the estate – however, this is not until 30 years have passed. It is more than likely that the person has only recently passed away. So there is no need to be rushed.
Some firms will withhold any details of the long-lost relative and amount of inheritance until the beneficiary has signed an agreement. The small print in this agreement means they’re legally obliged to hand over a massive portion of their inheritance – without even knowing how much the fees will be until it's too late.
Case Studies in the News
Jessica Ellacott was owed a share of £145,000 inheritance from the estate of a distant cousin twice removed. She was contacted by heir hunters and subsequently left reeling when they informed her that a third of her entitlement would go towards covering the cost of probate fees.
Valerie Challis was coaxed into signing away a third of her inheritance before she was even informed how much she stood to gain. After contacting the Treasury directly she discovered the estate was worth £37,000 – the probate fees would have been at least £10,000. She then discovered that this was to be shared between 24 other relatives.
What to do if you’ve been Contacted
If you get a knock at the door one day – don’t sign anything until you find out what’s what! Some less reputable companies will force you to sign a contract giving away anything up to 30% of your inheritance. You are not obligated to use the heir hunter’s services. After all – it is probably the case that they found details of this lost relative on a publicly accessible government website.
Don`t act in haste, a little research may save you thousands; IWC can probably handle your claim for a much lower fee; call us free on 0800 612 6105 to find out more.
The news is littered with appalling stories of vulnerable, recently bereaved families who are charged exorbitant probate fees by banks and solicitors. Here’s a collection of news snippets that make interesting reading; highlighting the importance to always use a fixed fee service from a reputable company.
An article from the Guardian titled “The £600m RIP-off” describes that £600 million of the £1.25bn a year probate market is made up of shameful over-charging by high street banks.
Prompted by concerns that consumers did not understand the probate process the Office of Fair Trading approached 4 leading banks in 2010 and reported “For an average estate, consumers can pay between £3,000 and £9,000, failing to shop around for executor services could be costing UK consumers around £40 million a year.”
Consumer review publication Which? reported that some bank charges were around double the cost quoted by specialist practitioners in 2009. They obtained quotes from 4 different banks and found that on a £350,000 estate, the difference in fees was a shocking £8750.
Candidmoney .com cites a case involving a man that died leaving £1m in a savings account. That bank wanted almost £50,000 in probate fees. This is despite the fact it was a straight forward case of paying the inheritance tax and equally dividing the money between the grandchildren.
The Daily Mail owned website; ThisisMoney .co.uk, featured a case in 2010 where a company added almost £3000 in “extra charges” to the final bill of Mrs Stevenson from West Yorkshire.
Another article by This is Money titled “Banks that prey on the bereaved” in June of the same year, described the experiences of Mr & Mrs Berryman. After their aunt passed away, the family discovered a high street bank had been named as executor in the will and wanted to charge probate fees of 4% of the estate value. This worked out at £25000. When they complained, the bank agreed to halve the fee immediately. Next, when presented with a quote from another firm for some £8000 less the £12500 quoted, they agreed to renounce their executorship.
43% of people in the UK opt to use professional executors. In August 2010 Panorama investigated 2 cases of ‘baiting,’ in a program titled “Wills-The Final Rip Off?” Baiting is the name given to companies that charge a very competitive price to write a will as a loss leader. They then write themselves in as professional executors and make exorbitant charges for probate services.
In 2009, the BBC’s Rip-Off Britain highlighted another 2 cases where a bank and a solicitor tried to charge beneficiaries nearly 10 times the appropriate amount for probate services. In both cases they were appointed in the will as executors by the deceased and refused to renounce their positions when the requested to do so by the family.