Are you acting in the best interests of your clients?

Essential reading for solicitors dealing with wills was issued by the SRA on 6 May 2014, ‘reminding’ us of our professional duties and the need to exercise judgement in deciding how to achieve the right outcomes for clients.

Four areas offered specific guidance that solicitors should ignore at their peril (two are discussed below; the other two will be in another issue). This is in response to consumer research, revealing areas in which we are effectively being told that our profession needs to smarten up.

The guidance is to help achieve the outcomes in chapter 1 (client care) of the SRA code of conduct, especially regarding the advice and information given to clients.

Core duty

Acting in our client’s best interests, a core duty means we must not encourage clients to appoint us (whether individual or firm) as executors unless clearly in their best interests and must not lead them to believe it’s essential ‘or indeed the norm’.

Are there circumstances that may make it beneficial to have an independent professional, given that it is ‘likely to be more expensive’ than a lay executor? Examples given: complex estates, potential disputes in the family or all minor beneficiaries (see bullets).

If a client is considering an appointment, we must explain the options, ensure they understand that executors don’t have to be professionals, that a family member or beneficiary can act and could then choose to appoint a solicitor, then keep a good record of the advice
and conclusions.

• Complexity may include a reasonable share portfolio in a taxable estate. Would lay people understand the options for using loss relief, appropriations and different capital gains tax exemptions to deal with mixed gains and losses? Or tax due from instalment option assets? Or the potential of post-death variations?
• Trusts with any flexible powers: up-to-date letters of wishes – an essential starting point – still need strong trustees to ensure the testator’s wishes are carried out in practice. If so, cover the need for independence in the separate note.
• Potential disputes could include a mix of strong personalities with quiet siblings who’d settle  for anything ‘to avoid unpleasantness’. An independent could protecta ‘nice’ child from their own good nature, especially in the division of chattels.
• Do document what your client says, as far as possible in their own words, ideally getting them to sign a statement to keep with the will giving reasons for a professional executor.

Giving gifts

You are likely to be at risk under O(1.1) (treating clients fairly) if you draft a will making a gift of ‘significant value’ to you or a member of your firm or family, unless the client has had independent advice first. If they won’t take that advice, it’s usual to cease acting. ‘Significance’ may be in relation to the size of the estate or the value in itself.

Some may feel able to continue, for example with parents leaving an estate equally between all the siblings, but consider the whole picture and whether you are able to give impartial advice. Say a sibling had greater need, possibly for a larger share, or one had received a lifetime gift, would the parents tell you and would you advise it should be taken into account? 

SJ

John Bunker is head of private client knowledge management at Thomas Eggar