What will the fees be to administer a high value estate?

There are a number of factors in the calculation of a fee to administer all estates, but particularly high value estates. These can include the number, location and type of assets as well as the way in which they are held if co-owned. The deceased may also have held interests in trusts or made numerous and varying gifts during their lifetime. There is also the fact that some estates are just plain complicated whether due to valuation of private companies, tax, because of a lack of information or the personalities involved.

In all cases, whether high value or otherwise, the terms upon which the solicitor is acting need to be clear and agreed at outset with those giving the instructions and all the residuary beneficiaries, i.e. those entitled to a share of the estate as opposed to a fixed sum or asset.

The end result must be fair taking into account all the factors above, among others. For example, if you save the beneficiaries millions of pounds in tax through application of expertise then the fee can take into account the value of that expertise.

The key case in relation to the fees chargeable for high value estates is Jemma Trust Co Ltd v Liptrott & others.

A firm of solicitors was instructed by executors to undertake the administration of a deceased's multi-million pound estate. There was no express agreement as to the basis on which the firm would charge the estate for its work. Fees were charged based on the time actually spent by its solicitors and also on the value of the estate. In the detailed assessment of the costs charged (namely the beneficiaries challenged the basis of the proposed fees), the firm claimed to be entitled to charge 1.5% of the value of the estate in addition to the time spent and 0.75% of the value of the deceased's residence.

It was decided in the Court of Appeal that it was still open to make such charges by way of combination of hourly rates and value provided that the remuneration overall remained fair and reasonable.

In relation to the value of the estate the Court determined that it would usually be right to reduce the value element percentage by reference to a regressive scale.

The applicable bands in high value cases should be:

1.5 per cent for up to £750,000;
0.5 per cent for £750,000 to £3 million;
one-sixth of a percent for £3 million to £6 million and
one-twelfth of a percent for over £6 million.

There a time limits for challenging invoices and so if you have concerns you should take advice as soon as possible; call Rod Smith on 020 7288 4732.