Fees

Fee Schedule in Administration of Estates

Lawyers generally charge a fee based upon the size of the estate. Some lawyers charge estate work on a time basis. If charging on the size of the estate the common formula is 3% of the first $10,000, 2% on the next $90,000, 1.25 % on the next $200,000, 0.5% on the next $400,000. I used to charge on that basis with my formula slightly lower. Some lawyers charge extra for the executor work they do on behalf of the executor. If the lawyer is named as an executor or does a lot or all the executor work, he or she will often charge up to the high 5% of the value of the estate. 5% is what an executor is normally allowed to charge. The amount upon which the fee is calculated is the probate value. Therefore, jointly held assets, life insurance and pensions are not included in determining the fee.

The advantage of having a set fee is that clients know what the cost will be. If it takes more time because of difficulties then the lawyer bears that cost, though usually the lawyer will be allowed to charge more. However the formula is based upon the size of the estate and not upon the time taken or the amount of work done. An estate could be one or two large bank accounts which may produce a large account for little work. Work on joint assets, pensions and life insurance may not be recognized if there were few other assets.

Times have changed as to the lawyer's role and work to be performed. Some clients like to do some of the legal work themselves and some of the executor work lawyers have generally done. Some clients want the lawyer to do a lot of the executor work. The latter is often the case where one child is doing most of the work on behalf of the siblings and does not want to be compensated so it is decided the lawyer might as well do the work.

I believe the fairest way to now set a fee is not based upon the size of the estate but upon the work requested to be done. I therefore have developed an Estate Fee Schedule where I have set out the tasks to be done (it is also a good checklist of what has to be done). I have set out who would be responsible for each task, some of which can be done by either the client or the lawyer. The cost for each task is set out. The cost is not based upon the value of the asset but on the work that generally must be done to complete the task. Therefore, at the beginning of an estate file, my client and I can decide who is doing what and calculate the cost.

The following are the steps.

1. 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 $350 but is subject to an increase if more than an hour consultation, then will be based upon time taken at $275 per hour. (Lawyer's task)

2. 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)

4. 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)

5. Transfer of Real Estate to Beneficiaries: Prepare, sign and register land registry documents: Cost $250 for legal fees plus $72 for disbursements, per property. (Lawyer's task).

6. 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 $125 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)

7. 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).

8. Arrange for Payment of Life Insurance: Write insurance companies advising of death and prepare documentation to obtain payment of life insurance: Cost $100 per institution. (Lawyer's or client's task). Some Insurance companies' agents will help the client with the application.

9. Arrange for Transfer of RRSP's: Write financial institutions advising of death and prepare documents to transfer the funds. Cost $125 per institution. (Lawyer's or client's task).

10. Arrange for Receipt of Pensions and Annuities: Write institutions advising of death and prepare documents to obtain the pension or annuity. Cost $125 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)

11. Sale of Property or Business: This task is done by a real estate or commercial lawyer at the regular fees charged for such services.

12. 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 $75 for lawyer $200 for newspaper. (Lawyer's task).

13. 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 $75 an institution. (Lawyer's or client's task).

14. 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.

15: Income Tax: Arranging and providing accountant with information to prepare the terminal tax return and if required, a trust tax return. Cost $75 (Lawyer's or client's task)

16. Obtaining Final tax Clearance Certificate: Preparing the application for a final tax clearance certificate. Cost $150 (Lawyer's, accountant's or client's task)

17. Keeping the Accounts of the Estate: Recording all the transactions of the estate in proper court form. Calculating the amounts payable to beneficiaries. Cost $225 for the interim distribution to the beneficiaries (if there is one), and $225 for the final distribution to the beneficiares, subject to an increase if complicated. (Lawyer's or client's task)

18. 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)

19. 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 )

20. 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. $100 (except if only initial consultation or transferring property). (Lawyer's task)

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