To trust a professional

The dispute regarding the administration of the estate of Mrs Kathleen Lilley has highlighted an uncomfortable risk. The appointment of a professional executor should, in principle, foster a sense of trust and reliability among beneficiaries but unfortunately in this case, the opposite took place.

In The Law Society v Elsdon & Ors [2015] EWHC 1326 (Ch), the High Court upheld the SRA's decision to intervene in a solicitor's involvement in the administration of a number of estates. The solicitor, Mr Elsdon, was found to have overcharged for his services on a substantial level, and was ultimately seen by the court to have 'lost his ethical compass'.

The appointment of executors

The executors of an estate are responsible for collecting all assets which form part of the estate and administering the estate, in accordance with the law. The process involves settling all debts and liabilities and accounting to the beneficiaries for what is owed to them. The executors are also under an obligation to comply with various statutory duties under the Trustees Act 2000.

Do you need a professional?

It is by no means essential to appoint a legal professional to act as an executor. The Law Society states that all legal professionals 'should take into account the size and complexity of the estate before promoting their firm instead of
a lay executor.'

It is also important to note that if the executors do have concerns about their ability to manage the estate, they may instruct a legal professional to assist them. The executors can request as much or as little assistance as they wish, and are entitled to claim the costs of obtaining legal advice from the estate.

In some cases, seeking professional assistance will be advisable. Complex estates containing foreign property and/or on which inheritance tax is payable, can be particularly demanding. Similarly, where there are minor beneficiaries
or if there is likely to be a dispute between the beneficiaries, consideration should be given to seeking advice from
a legal professional.

Appointing a professional to assist with the winding up of the estate can have many advantages. Executors will often find that the process of administration requires significant time and effort, which can be difficult after bereavement. An experienced professional can significantly ease this burden. It also avoids the need for the executors to attend an interview at the probate registry in person.

There is a risk that the executors may be held personally liable where the administration of the estate is not carried out correctly. They may be subject to claims by dissatisfied beneficiaries, as well as creditors of the estate. Additionally the executors may be responsible for settling any penalties due to HMRC for late payments of inheritance tax. Instructing a professional gives the executors the opportunity to pass on these responsibilities to an expert.

Costs of advice

If the testator appoints a professional executor or if the executors themselves seek legal advice, this will come at some cost to the estate. The costs of instructing a professional are however often much lower than anticipated and the benefits are often thought to outweigh the costs.

Professional executors will have different charging structures in place, which must be made clear to the client. Fees will often be calculated based on the time spent on the matter, alternatively, a fixed percentage of the estate may be charged.

Testators and executors alike should ensure that they obtain as much information as possible about the charging structure, and the likely fees before appointing a professional executor, or engaging a professional to assist with the administration of
the estate. This enables them to consider the likely costs to the estate, the impact that this will have upon the beneficiaries' inheritance, and ultimately to make a well informed decision about the instruction.

Disputing professional fees

Legal professionals' costs must be fair and reasonable. If an individual suspects that a practitioner has overcharged for their services in administering the estate, there are a number of options of recourse available.

It may be most appropriate to first raise the concerns with the practitioner, which may involve requesting full details of the time they have spent on the matter. Regulated firms will have a procedure in place for handling complaints and the dispute may well be resolved at this level.

In some circumstances, the help of the Legal Ombudsman may be sought. The ombudsman may ask the service provider to take various steps to
resolve the dispute, including making payment of compensation and/or reducing legal fees.

Furthermore, if the Legal Ombudsman thinks that that the practitioner has failed to meet his or her professional obligations, then it has the power to pass the matter on to the SRA for consideration.

Complaints can also be made directly to the SRA, who can take regulatory action against a solicitor or firm, and has the power to suspend practising certificates.

Individuals can also apply to the court for assessment of a bill, issued by a legal professional. The court may examine the whole or part of the bill and has the power to reduce the bill (as in the above case of Kathleen Lilley). Legal advice should be sought before taking the option as the applicant
may be responsible for the costs of
the assessment.

There are various time limits and conditions which must be complied with before exercising the above options.

Moving forward

The conduct of Mr Elsdon in the above case was described by the court as 'extraordinary and disturbing.' While the case is helpful in highlighting the potential risks associated with appointing a legal professional, it should be noted that this is a very exceptional case.

In most cases seeking the involvement of professionals can make the administration process a significantly less demanding task. n

Catherine Robson is a solicitor at SA Law