Solicitor's fees during Probate

[AndyPandy]

My father died in February and as my mother is not financially savvy and my sister and I could deal with it but are both busy in our own lives we have agreed to appoint a Solicitor to manage the Probate process. This is what we have decided and I am not looking for suggestions that we can do this ourselves, we are not going to.

I have just received the Terms of engagement and as well as the scale of fees (plus estimated cost), there is also a 'value element' charge based on the value of the estate.

It is charged at 0.5% of the home plus 1% of the Gross value of the rest of the estate.

1. Why is this charged, is it common practice and is it negotiable? It seems to be an unwarranted fee for, as far as I can see, no additional benefit.

2. The property is in my parents' joint names and will revert to my mother, so will the 'value element' still apply and, if so, will it be 0.5% of his share, or of the whole property? There is a bit of work as it is leasehold and we need to find out if it is a Joint Tenancy or tenants in common, but that should be covered by the fees.

Thank you.

[pochisoldi]

There is a bit of work as it is leasehold and we need to find out if it is a Joint Tenancy or tenants in common, but that should be covered by the fees.

Easily done by a layman:
Paying the Land Registry for a copy of the title. (https://www.gov.uk/search-property-info ... d-registry)
Check to see if there is a mention of a trust document, and/or a "Form A restriction" which is worded "No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court."
A Form A restriction means tenants-in-common.

If it turns out that it's a Joint Tenancy, then the name of the deceased can be removed from the register by completing form DJP (free of charge).

[dionaeamuscipula]

My father died in February and as my mother is not financially savvy and my sister and I could deal with it but are both busy in our own lives we have agreed to appoint a Solicitor to manage the Probate process. This is what we have decided and I am not looking for suggestions that we can do this ourselves, we are not going to.

I have just received the Terms of engagement and as well as the scale of fees (plus estimated cost), there is also a 'value element' charge based on the value of the estate.

It is charged at 0.5% of the home plus 1% of the Gross value of the rest of the estate.

1. Why is this charged, is it common practice and is it negotiable? It seems to be an unwarranted fee for, as far as I can see, no additional benefit.

2. The property is in my parents' joint names and will revert to my mother, so will the 'value element' still apply and, if so, will it be 0.5% of his share, or of the whole property? There is a bit of work as it is leasehold and we need to find out if it is a Joint Tenancy or tenants in common, but that should be covered by the fees.

Thank you.

We didn't have any such fee when we we assisted for my mother's probate. So I would expect it to be negotiable in full. Understand you are busy, but getting an alternative quote would seem sensible under the circumstances.

DM

[Dod101]

Do not accept an ad valorem fee. They or another solicitor will be able to give you a quote either a flat fee (if the estate is simple and straightforward) or at an hourly rate. Might come to the same thing in the end though.

Dod

[Clitheroekid]

I have just received the Terms of engagement and as well as the scale of fees (plus estimated cost), there is also a 'value element' charge based on the value of the estate.

It is charged at 0.5% of the home plus 1% of the Gross value of the rest of the estate.

1. Why is this charged, is it common practice and is it negotiable? It seems to be an unwarranted fee for, as far as I can see, no additional benefit.

Yes, it probably is still common practice - where the solicitors think they can get away with it!

In the `good old days', when people were suitably in awe of solicitors, and were never so insolent as to ask about such vulgar matters as charges, the Law Society published guidelines on charges for dealing with an estate. Believe it or not these date back to the Supreme Court (Non-Contentious Probate Costs) Order 1956.

These charges did include a `value element', and where (as here) the solicitor was not acting as an executor the suggested value element was 0.5% of the value of the residence and 1% of the value of the rest of the estate.

2. The property is in my parents' joint names and will revert to my mother, so will the 'value element' still apply and, if so, will it be 0.5% of his share, or of the whole property? There is a bit of work as it is leasehold and we need to find out if it is a Joint Tenancy or tenants in common, but that should be covered by the fees.

The guidelines referred to above state:

If the property is jointly owned the percentage will apply to only a quarter of the value of the property.

So if the value element is charged the 0.5% should only be applied to your father’s half of the property, not the whole property.

But you have to bear in mind that in 1956, when these guidelines were first drafted, people’s estates were much smaller in real terms than they are today. In particular, the value of property was not so ludicrously out of line with people’s incomes as it is now, especially in London. Consequently, applying the guidelines nowadays would often result in a huge windfall for solicitors.

For example, it’s not unusual for a house to be worth £1m. In your case their proposed charge would mean an additional charge of £5,000 (+ VAT) and even at 0.25% it’d still be £2,500, when as you’ll see there is almost no work at all involved with the house. Nice work if you can get it!

So, as I said earlier, the value element is nowadays only charged where the solicitors think they can get away with it. Unfortunately for solicitors (and no doubt other professionals) clients are nowadays nothing like as deferential as they used to be, and most people - especially younger people – do, quite rightly, ask about charges before instructing the solicitor.

The result has been that the value element has gradually died out, as it was impossible to be competitive against the increasing number of firms who didn’t charge it and merely worked for either a flat fee or an agreed hourly rate.

So if it's a very simple estate then you should be able to have it dealt with for a flat fee. These are usually charged according to whether you just want the solicitor to obtain the Grant of Probate, and then deal with administration of the estate yourself, or whether you want them to also deal with the administration.

However, if it's a more complex estate, particularly if it involves having to file an IHT400 (full Inheritance Tax Account) it's really quite difficult to quote a flat fee as the amount of work is less predictable. In those circumstances you should seek a quote based on an hourly rate plus a time estimate.

Be careful on the hourly rate though. Assuming you're outside London you shouldn't really be agreeing to pay more than around £275 per hour for a partner and £150 per hour for the junior staff who will be doing the large majority of the work (all charges + VAT of course).

The reason you should also request an estimate of the total amount of time involved is so you can work out the likely overall cost. There's no point in agreeing a rate of £100 per hour if they then take 100 hours to do the work!

Where there’s an IHT400 involved a reasonable estimate would be 15 - 20 hours to deal with the whole administration of an average estate. Of course, there are many estates which do involve significant issues or lots of different assets, and therefore absorb more time, but in my experience these are in a fairly small minority.

So to sum up if it's a very simple estate - just a couple of bank accounts and maybe a couple of shareholdings but no property to be sold, and everything going to the spouse and/or children I'd say you should be able to get it done for around £750 - £1,000 + VAT. If an IHT400 is needed for a simple estate then a reasonable charge would probably be around twice that.

If it's a more complicated estate, with a significant number of individual assets, legacies to pay, and especially if Inheritance Tax would be payable so that exemptions have to be claimed then you could probably expect a minimum charge of around £2,000 + VAT. However, it would be an unusual case where the overall charge should exceed about £3,500 + VAT.

I've obviously no idea what the proposed charges would work out at in your own case, or how complex the estate is. However, I'd bet that the house was held as joint tenants, so passes automatically to your mother. As there is virtually no work at all involved with transferring it into her sole name the house can effectively be disregarded entirely.

Also, assuming it's a house on a long lease (typically 999 years) and not a flat or on a short lease (99 years or less) there is hardly any additional work involved just because it's leasehold.

So I'd recommend that you work out the probable bill based on what they've told you, compare it to the figures I've quoted and if there’s a big difference do some shopping around. Probate of a straightforward estate is not complex work, so you don't need to use a big (and therefore expensive) firm with a specialised probate department. This sort of work is bread and butter to most High Street firms, and you'll get just as good - often better - service from such a firm than from a large firm.

[Dod101]

I agree with all that CK has said and that is also the way Scottish solicitors will work. Many years ago, my first wife had a fairly complex estate and I got my family solicitor to do the work. In these days they did not routinely send a cost estimate beforehand (they do now) and I remember being taken aback at the fee and complained. My solicitor explained that it used to be case that they 'weighed' the file and charged accordingly! I got a rebate and of course paid immediately.

Never be afraid to challenge costs and no need to be deferential; just respectful and acknowledge that they know better than you, that is why the solicitor is there.

Dod

[yorkshirelad1]

My father died in February and as my mother is not financially savvy and my sister and I could deal with it but are both busy in our own lives we have agreed to appoint a Solicitor to manage the Probate process. This is what we have decided and I am not looking for suggestions that we can do this ourselves, we are not going to.

I have just received the Terms of engagement and as well as the scale of fees (plus estimated cost), there is also a 'value element' charge based on the value of the estate.

It is charged at 0.5% of the home plus 1% of the Gross value of the rest of the estate.

1. Why is this charged, is it common practice and is it negotiable? It seems to be an unwarranted fee for, as far as I can see, no additional benefit.

2. The property is in my parents' joint names and will revert to my mother, so will the 'value element' still apply and, if so, will it be 0.5% of his share, or of the whole property? There is a bit of work as it is leasehold and we need to find out if it is a Joint Tenancy or tenants in common, but that should be covered by the fees.

Thank you.

FWIW, I've done two estates as a lay exor. In both cases, I did most of the footslogging and used the solr for advice and tricky bits (and to cover myself as an exor having taken professional advice)
One straightforward estate, the solr gave a fixed fee quote which was acceptable
On the other more complex estate, I paid an hourly rate (but it still ended up being a tiny percentage of the overall estate and money well spent IMHO)

[AndyPandy]

Thank you everyone. I've emailed the Solicitor (who is away this week according to her email autoresponder) and will update you in due course. I've asked for effectively a 70% reduction in costs (allowing for the ad valorem to be dropped and a reconsideration of the actual fees) so wait my turn in court....well email negotiation anyway...

Watch this space...

[AndyPandy]

So, yesterday I received a reply from the Solicitor effectively saying "Thank you for your email and I note your comments. Those are our charges and we believe they are competitive locally.". A solicitor local to me described them as 'Outrageous' when asking him for a quote.

Today I picked up everything from the Solicitors and we are going with a Specialist Probate Co. recommended by my parents' Financial Adviser (who is part of St James' Place, so we can trust the recommendation). Fixed price quotation, even if unknowns are unearthed, coming in at about 40% of the first Solicitor's overall quote.

Thanks to all and once Probate is sorted, I'll make a donation to this website.

[didds]

So, yesterday I received a reply from the Solicitor effectively saying "Thank you for your email and I note your comments. Those are our charges and we believe they are competitive locally."

Mandy Rice-Davies moment really!

didds

[AndyPandy]

So, yesterday I received a reply from the Solicitor effectively saying "Thank you for your email and I note your comments. Those are our charges and we believe they are competitive locally."

Mandy Rice-Davies moment really!

didds

Indeed, but if it makes them think twice the next time then it might stop them doing to the next widow(er) what Christine Keeler did to John Profumo