People who appoint a professional executor, such as a solicitor or bank, are at risk of paying unexpectedly high fees, potentially running into the tens of thousands of pounds.
Recent research from Saga Legal Services found one third of Britons with a Will have already appointed a professional executor, and may be unaware of the substantial costs involved. This is because some professional executors charge not only an hourly fee, but also a percentage of the estate – often around 1.8% but in some cases as much as 4.5%.
Charging a percentage means that the fee is calculated based on the size of the estate, not how much work is needed to administer it.
The research also found that four in ten people would consider appointing a professional executor, yet only a tiny fraction (6%) realise they could end up paying both an hourly rate and a fixed percentage. Appointing a professional is a tempting option in helping to ease the burden for loved ones yet just 24% of people would be willing to receive a smaller inheritance for the estate to be dealt with by a professional.
To avoid overpaying, a better option is often to appoint a loved one as your executor, and make them aware they can seek a professional to support the process when it comes to probate. This allows a much greater degree of control over costs, while significantly easing the administrative burden. Helping to empower consumers, Saga Legal Services has released a free guide setting out the different options available, and includes expert advice so beneficiaries are not left out of pocket.
Professional executors can pose other challenges, and those who have already appointed one may be surprised to learn that the professional is under no obligation to renounce their role even if requested to do so by family or the named beneficiaries. Despite this, almost three-quarters (74%) of people believe it is "essential" or "quite important" that loved ones have flexibility when their settling affairs when they die. If a professional refuses to step down, the only recourse available is costly, stressful and time-consuming legal action.
Emma Myers, Head of Wills, Probate and Lifetime Planning for Saga Legal Services stated:
"Our research has shone a light on the fact that many of us do not understand the potential costs of appointing a professional executor. While it does not apply to all professionals, the practice of charging twice for being an executor is something which is worryingly common. Rather than appointing a professional, it can make more sense to appoint a family member or friend and tell them that they can seek professional help if needed. This not only significantly reduces costs, it allows them to maintain a much higher degree of control".
Emma Myers' advice on what to do if you have already appointed a professional executor:
1. Review your Will to find out how you will be charged. Based on your current net worth, work out how much the total fee would be.
2. If this is too high, it is probably worth having a new Will made, appointing a new executor. Alternatively, you could get a codicil which only changes that part of the Will.
3. If you are concerned about how much time it may take for a loved one to be an executor, consider telling them to find legal assistance to help with the administration when the time comes. That means they'll still have control, but much of the hard work will be done for them.
4. Never agree to purchase a legal service until you fully understand the implications and possible costs. If that means taking your time to research, then feel empowered to do so
5. Where possible, agree a fixed price up front to avoid escalating costs. Most professionals will give you a copy of their terms for you to approve and sign up front. Do not be afraid to request this.