Fees - Estate Administration
I believe the fairest way to set legal fees is not simply upon the size of the estate (which was primarily done in the past by lawyers and still is used by some lawyers and the Ontario government’s Public Guardian and Trustee), but upon the work required to administer the estate. I therefore have developed an Estate Fee Schedule where I have set out the tasks to be completed (it is also a good checklist of what has to be done).
For larger estates (over $500,000) I often charge an extra amount based upon the size of the estate because of my higher liability involved and the ability to pay. The Estate Fee Schedule sets out who could be responsible for each task, either the client or the lawyer, as well as the cost for each task. The cost is based upon the work that generally must be done to complete the task. Therefore, at the beginning of an estate file, the client and I will decide who is responsible for each task, and from that the fee will be calculated. Some stated tasks will incur extra costs for additional work above and beyond what is normally required, for example when additional advice and time is required at the initial consultation.
A client who wants to do some of the work him or herself can therefore save money by having me do certain portions of the administration, such as gather the general information and apply for probate. The client can then take the administration from there.
The following are the steps involved:
Initial Contact and Consultation
Obtain information, answer questions and advise as to all the tasks that must be done to administer the estate and advise of compensation issues. Determine whether an application to the court is necessary (this might not be known at this time). Assign which tasks will be done by the client and which tasks will be done by the lawyer. The initial consultation usually takes one hour or more (but less if the client comes prepared with the information and documents requested in the Estate Packet). Cost is $475 but is subject to an increase if more than an hour consultation, then will be based upon time taken at $375 per hour (excluding HST). (Lawyer’s task)
Setting up the Estate Bank Account
Either changing an existing bank account to an estate bank account or setting up a new one to receive estate assets and pay estate bills. The estate trustee, not the lawyer, should be the person controlling the payment of all estate monies. (Client’s task)
Letters to Government Departments
To ensure that there is no possibility for identity theft, a number of governments departments should be advised of the testator’s death. They include Ministry of Health, Passport Canada, Social Insurance registration, and Ministry of Transportation. The Administration of Estates Manual provides samples of these letters with addresses. The Estate Trustee usually performs this task, but if the Estate Trustee wants the Lawyer to do it, he will, but at a charge of $40 per letter.
Application for Appointment of Estate Trustee
Involves making a list of assets and their values that are subject to the probate fee; preparing the documents to apply for appointment; preparing and sending the notices required by law to the beneficiaries. Cost is $1,000 but subject to increase if there are more than five beneficiaries or estate trustees to deal with, if a guarantee bond needs to be obtained or dispensed with, or there are changes to the estate trustees originally appointed. There will be a charge of $75 for each beneficiary over five. If there is no Will, the cost of applying is $1,100. because of the extra work involved. Hourly rate of $375 applies if unusual problems obtaining the appointment. (Lawyer’s task).
Completing the Estate Administration Tax Form
Cost $200. (Lawyer’s or Client’s Task)
Application for Canada Pension Plan Benefits
Complete the forms with required documents to obtain CPP Death benefit and survivor’s benefit. Cost $100. The Department of Human Resources responsible for CPP will help client complete the application. (Lawyer’s or Client’s task)
Transfer of Real Estate to Estate Trustee Beneficiary or Joint Survivor
Prepare, sign and register land registry documents, notify municipality: Cost $125 for legal fees plus approximately $475 for disbursements, which includes real estate lawyer’s fees and disbursements. (Lawyer’s task).
Transfer of Monetary Assets
Write banks, credit unions, investment companies, Bank of Canada (Savings Bonds), to advise of death, to confirm amount held in deceased’s name and to obtain procedure to transfer the asset to the estate bank account or to a beneficiary. Prepare, sign and arrange to transfer the assets. Cost $250 per institution, $25 for each notarial copy made if client is dealing with the bank. (Lawyer’s or Client’s task though some forms to transfer may need to be done by the lawyer)
Transfer of Automobile
Advise client as to how to transfer the registration of an automobile. No charge except $25 for each notarial copy made if client is dealing with car transfer. (Client’s task to attend at Motor Vehicle Licence Bureau)
Arrange for Payment of Life Insurance
Write insurance companies advising of death and prepare documentation to obtain payment of life insurance: Cost $150 per institution. (Lawyer’s or client’s task). Some Insurance companies’ agents will help the client with the application.
Arrange for Transfer of RRSP’s
Write financial institutions advising of death and prepare documents to transfer the funds. Cost $250 per institution. (Lawyer’s or client’s task).
Arrange for Receipt of Pensions and Annuities
Write institutions advising of death and prepare documents to obtain the pension or annuity. Cost $250 per institution. Most employers and institutions will help the client with the application and provide a letter explaining all the benefits the surviving spouse has. (Lawyer’s or client’s task)
Sale of Property or Business
This task is done by a real estate or commercial lawyer at the regular fees charged for such services
Advertise for Creditors
Arrange for the a creditor’s notice to be placed in a local newspaper. This is generally only necessary when the executor is concerned there are unknown debts and wants to protect him or herself from being personally liable. Cost $150 for lawyer plus for newspaper cost which is anywhere from $600 – $1,200. (Lawyer’s task).
Payment of Debts
Write all financial institutions and persons to whom money is owed to ascertain amount owed and whether debt was life insured, and then arrange to pay the debt. Cost $100 an institution. (Lawyer’s or client’s task).
Defending a Claim against the Estate
If the estate is sued by a person claiming to be a dependant under the Succession Law Reform Act, a spouse under the Family law Act or anyone contesting the validity of the will the cost would be based upon the normal costs of a litigation lawyer defending a law suit.
Arranging and providing accountant with information to prepare the terminal tax return and if required, a trust tax return. (Client’s task)
Obtaining Final tax Clearance Certificate
Preparing the application for a final tax clearance certificate. (Accountant’s or Client’s task)
Keeping the Accounts of the Estate
Recording all the transactions of the estate in proper court form. Calculating the amounts payable to beneficiaries. Cost $300 for the interim distribution to the beneficiaries (if there is one), and $300 for the final distribution to the beneficiares, subject to an increase if complicated. (Lawyer’s or Client’s task)
Reporting and Obtaining Releases from the Beneficiaries
Advising the beneficiaries of the accounting and distribution scheme of the estate, drafting and obtaining from the beneficiaries a Release of the Estate Trustee and indemnification in case of further income tax. Cost $100 per beneficiary, and extra on a time basis if I have to deal with a beneficiary contesting the amount of their payment. There will also be an extra charge if there is an interim distribution of $100 per beneficiary.(Lawyer’s task)
Passing The Accounts Before the Court
If required by law (beneficiaries are minor children), or a beneficiary requests the estate trustee to have the estate accounts approved by the court, a “passing of accounts” must take place. Cost is charged on a regular hourly basis. (Lawyer’s task)
Value of Estate
If the estate’s value is greater than $500,000, legal fees may be increased due to extra liability and the estate’s ability to pay by charging 0.5 of a percent of the value over $500,000 to $1,000,000, and then a maximum of 0.2 of a percent thereafter. Additional fees are not always charged but are subject to review with the client.
If the secretary has to spend time above and beyond the normal time spent on items as set out in the above list, then the time is recorded and charged at $100 an hour. Examples of this might be dealing with government agencies, handling unforeseen issues with asset holders, etc.
Reporting to the Client
Confirming with the client in writing after the first consultation as to what has to be done to administer the estate and who will do it. Advising the client in writing at various stages of the administration of the estate of the results of all the tasks performed. $150 (except if only initial consultation or transferring property). (Lawyer’s task)