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Are Cheap Wills the Best Option? Don’t Bank On It!

Last week an article in the Daily Mail highlighted how some banks have historically charged low prices to offer wills on behalf of their customers, only to make huge sums when it comes to administering those customers’ estates by encouraging that the bank be appointed as executors in the will.

This appointment enables the bank to claim a percentage of the value of the deceased’s estate on death in return for administering their estate.

What does an executor do?

An executors responsibilities are, broadly speaking, to establish the assets and liabilities of a person’s estate and apply for a Grant of Probate, gather in the assets of the estate, pay of the liabilities of the estate and then distribute the remaining assets of the estate.

Why would you appoint a professional?

Appointing a professional can be extremely beneficial, particularly if a person’s estate is complex, of high value and thus likely to create an inheritance tax liability, or if the terms of the will include complicated provisions such as a trust.

Sometimes a professional is appointed where a person does not believe they have a friend or family member who would be able to carry out the role of administering the estate effectively.

So, what is the controversy with appointing banks?

The controversy can be broken down into two parts:

  1. The size of the percentage being charged by the banks; and
  2. Whether their appointment is appropriate

The Consumer group Which? found that Barclays had historically charged as much as 4.5% of the first £100,000 of an estate, a further 3.5% of the next £400,000, and 1.5% on anything over and above that sum together with £400 for each beneficiary included in the will.

So, for example, in a simple estate consisting of, say, one bank account containing £30,000 and a London based property worth £550,000, and everything passed from husband to wife, they would potentially be able to charge a fee in excess of £20,000. A huge sum for what could be a minimal amount of work.

Where a client is considering appointing a solicitor under a will, rather than a bank, the solicitor has a responsibility when discussing acting to consider with the client whether this is in their best interests, and also to give an approximate estimate to the person creating the will as to what they anticipate their fees would be. As such, whilst it is not uncommon for a person to appoint a solicitor in their will to carry out the role of administering a person’s estate, there is no requirement to do so and if they do the person making the will is fully aware of the charges that will be incurred.

Where an estate is uncomplicated, there is rarely a need for a solicitor to be appointed in the will, as non-professional executors will still be able to seek professional advice on administering the estate if they require it.

I’m a beneficiary of a will which appoints a bank as the executor. What can I do?

You can ask the bank to step down from their role as executor voluntarily. However, they are not obligated to do so and may consider that their appointment was appropriate based on the circumstances in which the person made the will, and they may be able to provide evidence that they provided the terms of their appointment when the will was made. If they do agree to step down, be prepared that they may ask for a fee to do so. 

If they refuse to step down, in some circumstances it may be possible to bring an action at court requesting that the court use its discretion to remove them as executors

In the case of Re Loftus (2005) it was suggested that it is reasonable for the court to take a pragmatic approach, considering the views of the beneficiaries and the interests of the estate as a whole, when considering the removal of representatives of an estate, so where the costs charged by a bank following their appointment in a will appear disproportionate to the complexity of administering an estate the court may decide it is appropriate to remove them.  However each case will be tried on its own merits there is no guarantee that the court will do so.

I’ve made a will with the bank. What can I do?

It is worth checking your will to see whether you have appointed the bank as your executors, and whether in the context of your estate their appointment is appropriate, as you could be depriving your beneficiaries of a large chunk of their inheritance unnecessarily. If you don’t think their appointment is appropriate you can simple make a new will appointing different executors.

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