Legacy loop: spring edition 2023

BENEFICIARY RIGHTS IN RELATION TO LEGAL COSTS AGREED UPON BY THE EXECUTOR

The recent case of Daniel Kenig –v- Thomson Snell & Passmore LLP [2023] EWHC 181 (SCCO) relates to a beneficiary’s challenge to legal costs that had been approved by the executor.

Philippa Cunnick died in July 2019 leaving an estate of £2.9m to be divided equally between her son (Daniel Kenig) and daughter. The deceased appointed her brother as the executor.

The executor instructed solicitors (Thomson Snell & Passmore LLP) to administer the estate and they estimated their fees would be between £10,000-£15,000 plus VAT and expenses. Probate was granted in January 2020 by which point the solicitors had billed £54,411 plus VAT and expenses.

Kenig requested and was provided with invoices and time ledgers showing the sums billed and subsequently objected to the sums billed on the basis they were excessive and that the administration of the estate was not complex. He later sought an assessment of the invoices as “a person interested in any property out of which the trustee, executor or administrator has paid” under the Solicitors Act 1974.

Kenig’s claim was defended by the solicitors but their arguments, which included that there were no special circumstances justifying assessment and that documents relevant to the case were privileged with that privilege belonging to the executor, were deemed insufficient by the judge who had serious concerns about overcharging.

The judge considered there was a clear and substantial discrepancy between the estimate provided and the costs billed and that generally when this is the case, an explanation from the solicitor is required. The judge said that to his mind a beneficiary should be entitled to seek an assessment of costs and that it would be odd if there could not be proper scrutiny of the costs of solicitors administering an estate. An assessment of all the bills was ordered.

TIMESCALES FOR APPLYING FOR THE GRANT OF REPRESENTATION

The grant of representation if a legal document issued by the probate registry to confirm those who are legally entitled to administer an estate. Every case is different, and the time scales for the length of time that it takes for personal representatives (PRs) to obtain the grant does vary.

PRs can make an application for the grant of representation either online or by post. If the application is complex, then the PRs would need to make a postal application. Probate practitioners must send their postal applications to the Newcastle District Probate Registry, whereas applications made by lay PR’s are sent to the probate registry in Harlow.

The average time that it is taking the probate registry to issue a grant (having made the application online) is approximately 16 weeks. However, one of our matters, which incorporated a foreign element, took approximately five to six months.

The postal application is a much longer process than the online application, with one of our applications taking approximately four months to complete.

It will take even longer if the probate registry requests additional paperwork i.e. an affidavit of plight and condition or due execution (online or postal application).

If you are waiting for an update, the probate registry will not look in to the progress of the application until after the ’16 week period’ has passed.

If any inheritance tax is due on the estate, then the PRs must submit the inheritance tax return in form IHT 400 to HM Revenue & Customs. The PRs must then wait at least 20 working days before they can apply for the grant of representation. HM Revenue & Customs will send an electronic IHT 421 to the probate registry which will allow them to proceed with the application for the grant of representation. On average, HMRC are returning the IHT 421 within this time frame.

It is not advisable to submit the application for the grant of representation before the 20 working days has passed as this may result in the grant application being rejected and put to the ‘back of the queue’.

Read the full Spring edition of Legacy Loop here