The Society of Trust and Estate Practitioners (STEP) has taken the unusual step of issuing guidance to 6,000 of its UK members on the risks associated with percentage fees (or ‘contingency’ fees) charged by heir hunters.
The guidance follows a long running ‘Fairness Campaign’ by probate genealogy firm, Title Research, a Legal Futures Associate, calling for an end to excessive percentage fees charged by so called ‘heir hunters’. The campaign has over 40 expressions of support from solicitors on the Title Research website.
Whilst the STEP guidance sets out advantages and disadvantages to different charging methods used by probate genealogists, the briefing note highlights that “the appropriateness of the contingency charging structure is not accepted by some commentators and there has been much comment on the contingent fee basis in both the professional and general press”.
The guidance urges trust and estate practitioners and personal representatives (PRs) to familiarise themselves with the legal arguments for and against such fees in order to protect themselves from claims made by heirs who may feel they have been overcharged.
The guidance advises that PRs should not enter into any agreement that deducts fees from each beneficiary’s individual share rather than the estate as a whole “without careful consideration”. Costs incurred to administer an estate, including probate solicitor fees, are usually paid out of the estate as a whole.
The guidance concludes by advising that a PR should be satisfied that any charges agreed with the heir locator firm are clear and represent good value for money.
David Harvey, CEO of STEP, said: “There has been a significant amount of debate amongst advisers regarding the efficacy of genealogists fee arrangements and we hope this new STEP briefing note will help those personal representatives looking for lost beneficiaries.”
David de Menezes, head of communications at Title Research said: “Title Research welcomes this briefing note from STEP. Most people reading this guidance will draw the conclusion that ‘contingency’ fees carry far more risk than any other charging method.
‘We have received some shocking complaints about percentage fees, including one case where the heir hunter charged 33% amounting to £65,000 to find three heirs, plus £12,000 in expenses.
‘We don’t think it’s fair that missing heirs should receive less than their legal entitlement because the deceased lost touch with them.”