Enticing offers of discount or even free will-writing services may sound harmless enough, but many families who take this route risk paying dearly when it comes to sorting out the eventual estate. Will-writing companies, banks and solicitors may be taking consumers for a ride by appointing themselves as executors in the will and charging over the odds for taking an estate through probate.
Some banks and will-writers can offer their services as a loss leader; they can recoup their money tenfold by ensuring they are included in the will as executors, then levying bumper fees when the testator passes away. After death, it is difficult to remove executors from a will; as a result, estates can be hit with unspecified charges of as much as 4.5 per cent, or £22,500 on a £500,000 estate.
"Wills are now also being written by unqualified people who have no professional ethics whatsoever," says Adam Walker, the director of Final Duties, an independent probate broker.
Will-writing firms are able to offer discounted services for as little as £50, or even free as in the case of Barclays which includes it as part of its monthly fee-charging packaged current account. But they can then charge an executor's fees. An executor's role is to ensure that all the legal formalities are completed after the death, with typical duties including evaluating the value of the deceased's assets, clearing any outstanding debts and taxes, then distributing the assets in accordance with the will.
Barclays has been labelled as one of the worst culprits and accused of failing to explain to its customers the true consequences of writing itself in as executor. Mr Walker says that, in his experience, Barclays is by far the most aggressive about refusing to renounce its position as executor and uses forceful sales tactics to persuade customers to appoint it in the first place. "Their game plan is to get you into the branch to talk to the business manager, who really is just a salesman," says Mr Walker.
We took this accusation to Barclays, which said that it acts as executor in only a minority of cases and its policy is to step down when asked to do so by a beneficiary.
"Appointing us to act as the executor of the estate is a decision that clients positively make to help their estate in a difficult time, and in full awareness of our fees. It is certainly not a pre-requisite for clients to use the executor service," said Barclays. The bank also defended its fees, which can be as much as 4.5 per cent of the estate, as being fair considering the amount and quality of work involved.
But a fee of 4.5 per cent seems very high when compared with that of even the most experienced solicitors, which do the same work at a fee of less than a quarter of what Barclays is charging. What's more, Barclays outsources some probate work to ITC Legal Services, an unregulated firm which charges clients with a larger estate only 1 per cent if instructed directly. "Barclays is potentially charging a mark-up of 300 per cent. This is obscene," Mr Walker said.
Barclays is by no means alone, however, and this is quickly becoming a problem across the whole industry. Solicitors obtained 189,000 grants of probate last year. Final Duties estimates that the bank or solicitor named itself as an executor in about half of these cases, equal to around 95,000 people. Consumers should also be aware that some will-writing companies and banks can be insistent about writing themselves in as a joint or sole executor.
"It is hugely important to pay close attention to the executor clause in the will and to ensure the person or company named is your choice," says Peter McCarthy from the legal services department at consumer group Which?.
"What disturbs us so much about the sort of fees being levied is that there may be very little probate work to do. For example, is it right that a bank closing a savings account with a balance of £100,000 will be earning itself a fee of up to £4,500? Some estates are complex, but when engaging a probate professional instead of agreeing a percentage fee, try to negotiate an hourly rate or a flat fee for the work being done."
There are also concerns that on some occasions the will-writing process is tilted in favour of the bank, will-writing firm or solicitor being named as executor. For example, Irwin Mitchell, the solicitors running the will-writing service offered by the AA and Age Concern, has an online service in which it automatically appoints itself as executor unless the testator chooses otherwise. In three of the five options it presents, Irwin Mitchell is included, as sole executor, as joint executor with a spouse and as joint executor with another person. Only the final two options exclude it from the role. It's a similar story with the Barclays online application form, which offers eight options, the first four of which include Barclays as sole executor, joint executor or reserve executor (if the chosen executor is unable or unwilling to act).
The law states that if a bank, solicitor or will-drafter is named as an executor or joint executor in a will, they have the absolute right to act and can be removed only by making an application to the High Court, which would incur fees well beyond most people. In theory, anyone is able to renounce an executor appointment, whether solicitor, bank or otherwise, yet there is no legal obligation to do so. If they can get away with overcharging for their services, it's easy to see that why many executors simply refuse to step down.
Disturbingly, will-writing firms are unregulated, leaving consumers without a body to turn to should the worst happen. In the case of solicitors, the Law Society gives guidance on fees and provides an avenue for client complaints should things go wrong.
Anyone with an existing will is urged to check who is named as executor and demand to know their charges. If necessary, they should be removed. It is for you to decide who administers your estate and failure to use this right could be unnecessarily costly. "Some solicitors or will-writing companies will add themselves in the first draft as executors in the hope of getting the fees for doing the estate work. But if the testator does not want them to be involved he should ask for them to be taken out before signing the will," says Charlotte Asbury, a senior paralegal at MTA Solicitors.
A legal document known as a codicil can be added to an existing will which enables unwanted executors to be removed. If you do this, remember that you will have to find a replacement executor. However, a codicil works only if the person drawing up the will is still alive.
For those with a relatively simple estate, family members and close friends are often appointed as the executors. Solicitors can then be used and paid for separately if any complications arise.
"Just because solicitors have not been appointed does not mean that the executors cannot instruct them if it becomes complex or they find they are unable to cope with the matter," says Ms Asbury. This is a course of action also recommended by Mr McCarthy. "Appoint someone you know and trust as your executor and talk through what is expected of them. Make clear that if they find something too complex or simply are too busy, they are free to appoint a solicitor at the time and agree the fees for carrying out the work."
Will power: Shock over unexpected fees
David Khan, 69, a retired civil servant from south London, is currently battling to have an unwanted executor removed from the will of his stepfather, Dennis, who died aged 92 in October last year. "We didn't locate a copy of my stepfather's will until February, and this was the first time that we saw that the company which had helped Dennis write the will – Will Drafters – had been installed as sole executors. This was a shock as we had already put in a lot of work to trace my father's accounts."
David was in for a bigger shock when he estimated Will Drafter's fees. "For the size of the estate I worked out that they stood to gain about £18,000. I was absolutely horrified that this should happen at such a time when, as a family, we are coping with a bereavement." David then used probate firm Final Duties and found a quote for only £3,250, but Will Drafters would not stand down as executors. "The best they offered was to drop their fees to 1.75 per cent of the estate " So David is taking Will Drafters to the High Court, with the support of Final Duties, with the first hearing due later this month.
In response, Will Drafters said that it had only ever quoted David a fee of 1.75 per cent of the estate and the £18,000 figure was untrue. In addition, the firm says that it made clear to David's stepfather the fees that it charges and that to step aside now as executor would be an "insult" to the memory of the deceased.