Should will writing be the 'loss leader' in your private client services chain?

The decision by the lord chancellor not to make will writing a reserved activity means that the fees for preparing wills are likely to remain low, so that fee earners who specialise in private client work need to find other ways to generate income.

The traditional method has been to suggest that one or more partners in the firm should act as executors and trustees when the estate is administered. The obvious benefits, if such a suggestion is accepted, are (i) the fees that it generates in administering the estate and (ii) the contact with the next generation of the family, who may themselves become clients.

But fee earners who specialise in private client work are more frequently facing disputes over wills they have drafted. So how should the partners of a firm handle a situation where they are executors administering an estate where the will is contested?

Unenviable position

Often it will seem that the grounds of the person contesting a will are based on little more than a belief that they should have received all of the deceased's estate, or a far greater proportion than was actually provided. Often, although not exclusively, the person concerned will be a child or other member of the deceased's family.

There are several factors that have made such challenges more likely in recent years, from the rise in the value of property to pressure on individual finances (see box)

A solicitor's first indication that the will of a former client is to be disputed may be a letter requesting a Larke v Nugus statement. If the request is made by a solicitor then it is likely that a caveat will have been entered at one of the probate registries, to prevent the executors from obtaining the grant (the person contesting the will, and on whose behalf such a caveat is lodged, is usually referred to as the "caveator").

The executors then find themselves in an unenviable position. The beneficiaries will want the estate administered promptly, but to do that the executors will need to remove the caveat, by serving a warning on the caveator. If the caveator does not respond, the caveat will be dismissed and a grant will be issued.

The caveator may, however, enter an appearance to the warning, which will set out (usually in very broad terms) the grounds of opposition. The increase in litigants in person means that the appearance may not, however, contain particularly coherent allegations.

The process of gathering and considering evidence is expensive and can be particularly difficult where the caveator's appearance is ambiguous, incomplete or simply wrong. In such cases, it may be appropriate to apply to the Probate Registry for an order dismissing the caveat, which may be granted if the court is satisfied that it has no basis; otherwise the caveator may be required to bring probate proceedings within a limited time or lose the protection of the caveat. If it is not possible to have the caveat removed in this way, then proceedings in the High Court are unavoidable.

In many cases there are evidential presumptions in favour of due execution, capacity, and knowledge and approval. However, if the executors commence proceedings asking the court to pronounce for the will in solemn form, it is still necessary to satisfy the court on all of these elements, even where the main allegation made by the caveator is of undue influence or fraud.

The formal validity of the will is usually easily established. However, cases do arise where the will was professionally drafted but executed by the testator without the solicitor being present, such that the rules in respect of witnesses may not have been correctly followed.

In many cases the capacity of the deceased at the time the will was executed will be clear but still has to be considered. The will draftsman's attendance note should contain a contemporaneous assessment of capacity. Even so, it may be necessary to conduct a detailed review of the deceased's GP notes and hospital records as well as obtaining evidence from the deceased's family, and others who knew them at the relevant time. In some cases - particularly where the deceased was suffering from medical conditions or taking medication which might have affected their capacity - the report of a medical expert may be useful.

Lastly, the evidence in favour of knowledge and approval should be considered. Often, the fact that a testator was of sound mind and signed a formally valid will is enough, but in cases where the testator gave instructions through, or in the presence of, someone else who benefits under the will, it will be necessary to bring clear evidence to prove what is known as "the righteousness of the transaction."

Where the caveator relies on other grounds, such as undue influence or fraud, detailed statements will need to be obtained from witnesses to address those grounds for contesting the will.

Costs liability

Where a will is disputed, the executors need to address their minds to costs issues immediately - and before they take any step in the administration of the estate which might constitute intermeddling. The executors were appointed as a result of their professional capacity, and may never have known the deceased. However, the role of executor is personal so that if the proceedings to prove the will are unsuccessful then the executors face potential personal liability for the other side's costs. Costs usually follow the event in probate proceedings.

As such, the executors need to establish who will fund any proceedings as soon as possible. The executors can ask the beneficiaries who will benefit under the challenged will to agree to pay, on the basis that they will inherit once the grant has been obtained. However, some beneficiaries may only have the funds to pay if the case succeeds so they inherit under the terms of the will. Where executors approach the beneficiaries for funding in this way, the beneficiaries must be advised to take independent advice. Some charities have a general policy of declining to provide funding even if they are residuary beneficiaries.

Since the firm prepared the will, and one or more of the partners are appointed as executors, it might seem logical for the firm to fund the proceedings. However, the firm is unlikely to be paid if the will cannot be proved. Further the executors should ensure that they have an indemnity from their firm, if it agrees to fund the litigation, in the event of an adverse costs liability.

An ATE insurance policy could be obtained to cover the costs liability, but since 1 April 2013 the premium cannot be recovered from the other side even if the case succeeds. Given the level of some premiums, it would be sensible, if possible, to obtain the beneficiaries' agreement to the amount of the premium.

Masterly inactivity

Executors are not obliged to take proceedings if a caveat has been lodged and an appearance has been entered by the caveator so that an ordinary grant in common form is not available. They can simply wait to see what other people will do.

If the beneficiaries under the will cite the executors to accept or refuse a grant, the executors can (if they have not intermeddled) simply renounce their right to take a grant unless they have agreed acceptable funding arrangements with the beneficiaries.

If the executors have intermeddled in the estate, the court might compel them to start proceedings, but they could in those proceedings adopt an essentially neutral stance asking the court to determine whether the will was valid without actually taking sides. They would join the various beneficiaries as defendants, and the defendants would actually argue the case between themselves and the caveator. The executors would then hope to avoid liability for anyone else's costs, and to keep their own to a minimum.

Loss leader

The decision not to make will writing a reserved activity is disappointing, not least for those individuals who lose out when a will is not professionally drafted or executed. The fact remains that too many potential clients are not aware of the benefits of instructing a solicitor and so choose on price alone. This leaves most law firms with little alternative other than to treat will drafting as a loss leader.

However, solicitors' firms can still earn good fees from administering estates. If the client agrees that one or more partners in the firm can act as executors when the will is drafted, then the likelihood of the firm acting in the administration is far higher. That said, the role of executor is an onerous one. Solicitors acting as executors need to remind themselves regularly that the role is personal and not without risk.

 

MORE CHALLENGES Factors making challenges to wills more likely in recent years include: - members of the public are more willing to challenge solicitors than was the case in the past;   - despite recent stagnation in the housing market, the value of residential properties is still at historically very high levels, meaning that there is a significant amount of money at stake even in otherwise modest estates;  - pressure on family finances leads some individuals to challenge wills in cases when they might otherwise have merely shrugged their shoulders and taken no action; and - the geographical spread of families, whereby a child may live some distance away from his/her parents, such that care of that person can fall on another child, or neighbour, who benefits under the terms of the will to an extent that surprises the first child.