I received a call from a friend of mine a few weeks back. He said “Matt, I have an idea for a column. You should talk about all those attorneys who rip off estates and trusts. You may not be popular with your fellow attorneys, but it would be good information.”
I started to think about it and I agree that if I start talking about these things, it wouldn’t endear me to some attorneys. However, as in most walks of life, the 90/10 rule seems to apply to estate and trust administration. With the 90/10 rule, 90% of the problems are caused by 10% of the group. So if 10% of the attorneys are not happy with me, that’s ok because it will be the 10% who are causing 90% of the problems. So here goes.
When attorneys are representing estates and trusts they typically charge on an hourly basis. The rates that I typically see in St. Clair County range between $150 and $250 per hour. I occasionally see rates higher and lower. The rates charged by attorneys usually vary based upon the skill and experience of the attorney in probate or trust matters and where the attorney’s office is located. Attorneys in larger metropolitan areas tend to charge higher fees than attorneys in rural areas. Rates in St. Clair County are generally lower than they are in the Detroit area.
So what fees can you expect? When my office probates what I consider a simple estate, which is an estate with a home and a few bank accounts, it would take a better part of a year to complete and the legal fees would be around $2,000 to $3,000.
If there is any fighting, it is a completely different story altogether. When there are any hearings that need to be held or if there are objections to the will or trust, or to what the personal representative or trustee is doing, the fees could be much higher. I have seen legal fees in the tens-of-thousands of dollars and even the hundreds-of-thousands of dollars.
If you are a personal representative or trustee who is super organized and comes into the initial meeting with a copy of the will and/or trust together with listing of all the assets, all of the debts and how they are titled with documentation, I may quote a fixed fee for the administration of the estate or trust. The reason I can do this is that I would know what I am dealing with and I have done enough estate and trust administrations to know how much work is involved and how long it will take to accomplish that work.
When you are a personal representative of an estate or the trustee of a trust, I will try to get you to do as much work as possible. Basically there are three reasons for this. The first reason is I do not particularly like doing administrative type work; I would rather do the legal work. The second reason is that you can generally have more time to get the estate or trust administration accomplished much faster when you have only one estate or trust to administer.
The third reason is to keep fees and costs down, which is one of the goals of estate planning. My rates are typically higher than a personal representative’s or trustee’s. By keeping fees down, there is more available for distribution to the beneficiaries. On occasion, the personal representative or the trustee does not have the time or the skill to administer the estate or trust; we are happy to assist – for a fee.
When you are preparing your estate plan, keep a watchful eye on attorneys who want to do all the administration of your estate or trust and volunteer to be personal representatives of your estate or successor trustees of your trust. Total fees will be higher. Similarly with attorneys who do not fund or re-title your assets into your trust during your lifetime. Your assets must then go through the probate court process to get into your trust after your death. More legal fees. These attorneys typically are looking for a big pay day after your death.
Beware of the five-fee estate planner. These attorneys typically will draft a trust based estate plan which includes financial and healthcare powers of attorney, a will and a trust. These attorneys also typically will not fund or re-title your assets into your trust during your lifetime because you could do it yourself or it could be funded after your death. What you usually are not told is that to fund your trust after your death, your assets must go through the probate court process. The five-fee estate planner will name himself as the personal representative in your will and the successor trustee in your trust. And then comes the fees.
- The attorney charges a fee for preparing your estate planning documents.
- Because your assets have not been funded or titled into your trust during your lifetime, they have to be probated. Since the attorney has been named as the personal representative in your will, the attorney is entitled to a personal representative fee.
- The personal representative is entitled to legal counsel and will hire his own law firm which will then charge legal fees.
- Once your assets are in your trust, the attorney as trustee gets a trustee fee for administering the trust.
- The trustee of course is also entitled to legal counsel and will hire his own law firm which will then charge legal fees.
If you are a beneficiary of an estate or trust and the attorney is the personal representative or trustee, ask to see the bills. I had one case in which the attorney personal representative charged $175 per hour to clean out the refrigerator and bag trash. Be able to , not necessarily based upon the amount of work that was involved. And have the estate or trust administered by the attorney or one fee, instead of two.
By: Matthew M. Wallace, CPA, JD
Published edited May 1, 2011 in The Times Herald newspaper, Port Huron, Michigan as: Lawyers guide to hiring a lawyer