YOU PAY THE PIPER, YOU CALL THE TUNE

“If I can’t take it with me, I’m not going…”

Variously attributed to George Burns, and a host of other comedians, there is something about this old adage that chimes with those of us professionally involved in estate administration. The corollary is, presumably, “As long as I’m solvent, I’ll survive.” Would that it were so. Either way, as consumers, all of us tend to look for an attractive deal, whatever we’re buying, including estate administration services.

In general, people don’t mind paying for estate administration services. In general, people absolutely do mind open-ended fees and not knowing what a transaction is going to cost them. Increasingly, consumers look for a fixed-price service and prefer to know – to the penny – what they are going to be asked to pay for it, before instructing their service provider.

The status quo

The traditional model requires consumers to put faith in their service provider to (a) deliver the service to a high professional standard and (b) deliver value for money – although consumers are unlikely to know whether they’ve received value for money until after the final invoice arrives, if then. Although the days of calculating the fee by weighing the file are, thankfully, long behind us, many service providers resolutely prefer to offer a fee estimate, based on an hourly rate and / or a percentage of the estate’s value, notwithstanding increasing consumer demand for binding, fixed-fee quotations.

Who’s in charge? The consumer!

If you accept the proposition that The Consumer Calls The Tune (and if you don’t, you should probably stop reading here…), it makes perfect sense to offer a pricing model that provides a straightforward, transparent price quotation, guaranteed not to increase.

Estate administration lends itself well to a fixed-fee approach. Although each estate will differ from others on its facts, its administration will comprise a number of discrete tasks, all of which must be completed before the file can be closed.

Varying degrees of complexity

Some estates will be very straightforward to administer – perhaps the consumer will only require assistance with the extraction of the grant of representation. Others will be highly complex and may present a welcome challenge to the most experienced estate administration professional. Whichever, it’s easy enough to quote the correct price for administering either, as well as for every other on the spectrum of complexity.

A modern approach

It’s straightforward enough to establish the composition of the estate – a face-to-face conversation with properly briefed executors and / or family of the deceased will reveal the work necessary to administer the estate from top to bottom and give the service provider enough information to price the assignment accurately. Where possible, the discussion can take place on the phone, which ought to keep the cost down. In any event, the quotation will include the service provider’s professional fee for dealing with each discrete task, VAT on the fee and the cost of any disbursements (obvious ones being the Court fee and office copies of the grant).

Swings and roundabouts - blind pricing

Experience shows that some service providers will apparently happily price the administration of a particular estate without knowing what and how much work will be necessary to administer it. Some service providers may take the view that as long as what is lost on the swings is more than recouped on the roundabouts and a profit is made overall, everybody will be happy. However, is it fair that the roundabouter, who has paid too much for estate administration should subsidise not only the service provider’s business model but also the swinger, who has paid too little?

In practice, the prices offered in such blind pricing tend not to be fully inclusive: they are unlikely to include VAT on the fee, charges for dealing with anything remotely out of the ordinary (e.g. the gathering in and sale of overseas assets, setting up of trusts contained in the will etc) and any third party costs.

Timescale

Very few service providers will commit firmly to a fixed end-date for the administration of anything but the most straightforward estate. As a rule it is very difficult to predict how long some tasks will take to complete. Some providers, however, will agree to a clause in their terms of engagement such that they will refund a certain amount of their fee for every month by which they exceed the end date agreed at the point of their taking instructions.

Advice to the consumer

Here are some tips for the consumer:

• Remember – YOU call the tune
• Estate administration can be complex – find a service provider you like and trust
• Shop around – but be wary of hourly rates and / or fees based on the value of the estate or parts of it (e.g. the deceased’s home)
• Ask for a fixed fee quotation, not estimate
• Ask what the price you’ve been given excludes – if the fee you’ve been given is truly fixed and transparent, the correct answer will be “Nothing”
• Look for as firm a commitment as possible to completing the administration within a given timeframe

And finally, to quote Yogi Berra:

• “Always go to other people's funerals, otherwise they won't go to yours.”

Happy New Year from all of us at Kings Court.

Nicholas Beetham is Manager, Alliances, at Kings Court Trust Corporation. You can reach him on 01225 750275 or at nicholas.beetham@trustcorporation.com.