Regulatory watch | Making will writing a reserved activity is not the right approach

At the end of September the Legal Services Board published a report on will writing, probate and the administration of estates. The report recommends that will-writing and estate administration should become reserved legal activities.

A reserved legal activity is an activity which can only be performed by an authorised ?person under the Legal Services Act 2007. At present, the only reserved legal activities ?relating to wills and estates are probate activities. Probate activities are defined by the Act to be the preparation of papers on which to found or oppose grants of probate or letters ?of administration.

That means that anyone can set up a business administering estates provided that their business does not involve the extraction of grants or the opposition to grants. The work involved in the administration of an estate before and after the grant, and will writing, are totally unregulated.

The recommendations are made for ?consumer protection. The report found that “unacceptable levels of consumer harm” are caused by unregulated businesses. The main areas of harm highlighted in the report are ?the low level of skill in some will-writing ?services and the risk of fraud in unregulated estate administration.

Will-writing services receive particular criticism for poor quality wills which are unclear or fail to deliver the testator’s intended outcome. The report highlights the fact that those criticisms are not identified by the consumers who lack the knowledge to be able to identify the failings, and in fact express high customer satisfaction levels. The failings are presumably identified by solicitors after the testator’s death when presented with instructions to ?administer a bewilderingly defective will.

No specialist qualifications

If the report’s recommendations are implemented in full the reserved legal activities will be extensive. For will-writing, they will include taking instructions, advising on tax and wealth management, drafting and execution of the will. For estate administration, they will include the collection, realisation and distribution of estate assets.

Probate practitioners should not however relax in the expectation that outside competition will miraculously disappear. The report is still at the consultation stage (and practitioners can comment on the recommendations until 8 November 2012). If they are implemented, the LSB proposes that it will take at least two years for the reservations to take effect and it is proposed that that two year period will be used for the development of an approved regulator with the ability to regulate all providers currently active in the market. That could increase competition from outside the profession as regulation will increase the public confidence in outside providers.

Remarkably, the LSB also proposes that approved regulators should not require members to obtain specialist qualifications to administer most estates or complete probate applications. The emphasis on regulation will in fact be on the business entities rather than the members of staff carrying out the work within the entities. Personal specialist qualifications are said to be unnecessary as the LSB considers that thousands of lay people successfully complete the administration of estates on their own every year.

Competing for services

The move away from specialist qualifications for the administration of estates may well ring alarm bells with many solicitors. Although many estates are straightforward, there are always exceptions and some apparently simple estates raise complicated questions of law. A solicitor with the advantages of a legal education, an LPC course on probate, six months of training in estate administration and supervision during the early years after admission is able to identify the difficult estates and administer them smoothly in accordance with the law.

Those alarm bells may not ring elsewhere. In June 2012 the ICAEW made an application to become an approved regulator for probate activities so that accountants can administer estates. The application proposes that members wishing to carry out probate work should undergo a period of training lasting three and a half days. The application may be altered to take account of the proposal to extend reserved legal activities to administration as well as probate, but that is unlikely to result in any significant variation to the training proposals. Lengthy training is unlikely to be seen as a stumbling block to authorisation from a Legal Services Board which regards specialist qualifications as unnecessary.

The legal profession will therefore face future competition from accountants and others who provide a consumer service with the seal of approval from a regulator but no specialist qualification. Estates will be administered by staff who have no specialist knowledge of ademption, chains of executors and the doctrine of dependent revocation, let alone more archaic sounding concepts like donatio mortis causa.

Unchecked mistakes

It is wrong to assume that the lack of complaints on estates administered by lay people means that mistakes will not be made. The mistakes of will drafting services are well known because solicitors check their work on a testator’s death. There is no similar mechanism for checking estates administered by lay people. Their mistakes go unrecognised. That will also happen with the LSB’s proposals. Consumers will never know whether they have placed their trust in a regulated provider whose lack of specialist qualifications has led to an unfair and unsafe distribution of an estate.