The Estate lawyer cost us big

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

The Estate lawyer cost us big

Post by bru » Fri Feb 21, 2014 11:34 am

My father named my cousin as executor of his Estate. Why exactly he did it we aren't sure. Cousin is a high powered Real Estate lawyer, not an Estate lawyer.

I'm sure when my father did this he didn't envision my cousin and his firm charing us almost six figures when all is said and done. Knowing how frugal my father was in life he is probably rolling over in his grave.

AFAICT my state has no limitations on what an Estate/Probate lawyer can charge so we are stuck.

The estate was somewhat complicated but nothing that I couldn't have handled except for the few court filings for which I would have hired a lawyer. The money we lost would have paid a nice chunk of my father's grandson's college. I think he would have preferred that rather than my cousin's firm getting richer.

My cousin clearly took it as an opportuinty to nickel and dime us, get others at his firm involved, etc. When the final distributions are made I will let him know how he screwed his family. I don't dare do it now since he will charge me for the phone call or email.

User avatar
rob
Posts: 3053
Joined: Mon Feb 19, 2007 6:49 pm
Location: Here

Re: The Estate lawyer cost us big

Post by rob » Fri Feb 21, 2014 11:41 am

Talk to a high level manager in the firm and talk about the fees.... kinda depends if it's out of line or justifiable from their normal procedures.
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

Retread
Posts: 703
Joined: Mon Apr 08, 2013 6:29 pm
Location: Southwest Florida

Re: The Estate lawyer cost us big

Post by Retread » Fri Feb 21, 2014 11:42 am

A six figure fee should not automatically be considered excessive until you know the size of the estate and the amount of work for the attorney in its administration. If you feel the fee is excessive, file an objection with the probate court. Don't wait until the estate is settled and the personal representative discharged.
Bruce
absit iniuria verbis

TSR
Posts: 818
Joined: Thu Apr 19, 2012 9:08 am

Re: The Estate lawyer cost us big

Post by TSR » Fri Feb 21, 2014 11:56 am

All attorneys have an ethical duty to charge fees that are "reasonable." If, as you say, this estate was not one where six-figure fees ought to have been reasonable, you have a legitimate ethics complaint that this firm will want to avoid. (At first blush, that amount certainly seems high.) The cost of probate in your state is something that will be familiar to many lawyers in your area, so it should not be difficult to determine whether this was within reason. If you have not done so already, you should request all billing records from the firm.

Best of luck.

bsteiner
Posts: 4399
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: The Estate lawyer cost us big

Post by bsteiner » Fri Feb 21, 2014 12:06 pm

Since you said "almost six figures" I'll assume it was $99,000. That could be about right, or far too high, or far too low, in any given case. Our fees for estate administrations have varied between far less than $99,000 to far more than $99,000. It would help to know the state, the size of the estate, and more about the nature of the estate and any unusual circumstances.

The executor is entitled to a commission (fee) for acting as executor. In some states, such as New York, the executor's commission is fixed by statute as a percentage of the estate. In some states, there's a statutory percentage, but the court can increase or decrease it based on the particular facts. In other states, if the executor and the beneficiaries can't agree, the court will fix the executor's fee based on the particular facts. A statutory schedule provides certainty and reduces disputes, but can end up being too high or too low (in relation to the work involved) in any given case.

If the spouse is the executor, he/she usually won't take commissions. If the children are the executors, they'll usually take or not take commissions based on tax considerations.

Even though the executor was himself a lawyer, he had the right to hire a lawyer to represent him. Since he was a real estate lawyer, it was reasonable for him to hire a lawyer to represent him. If his firm has a trusts and estates practice, it was reasonable for him to hire his firm.

Most lawyers handle estates on a time basis. In Florida, there is a statutory schedule of presumed reasonable attorneys' fees (which is about the same as the schedule of personal representative's (executor's) commissions), though the court can adjust it upward or downward depending on the particular facts. Notwithstanding that schedule, we handle Florida estates on a time basis. In most if not all states, the court can review the attorneys' fees in an estate at the request of the beneficiaries.

You didn't say whether the $99,000 included both the executor's commission and the attorneys' fees. In any event, without knowing more about the estate, there's no way to say whether the fees were reasonable.

User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

Re: The Estate lawyer cost us big

Post by bru » Fri Feb 21, 2014 12:36 pm

State is IL. I believe there are no fixed fees in this state.

Estate left for distribution is ~$600K. Fees are about $90K. No detailed explanation of fees only amounts paid to the firm by the estate.
There was a Trust which the cousin administered. There were also parts of the estate that needed to go through probate. Residence (outside of trust) had to be sold.

With this additional info any thoughts if the fees seem "reasonable"? I have no doubt they can account for every penny and the law firm is a big one so I doubt they did anything unethical. I'm sure my father thought his nephew wouldn't charge him the rack rate.

Other beneficiary has no desire to challenge anything so I would be on my own.

User avatar
Random Musings
Posts: 5551
Joined: Thu Feb 22, 2007 4:24 pm
Location: Pennsylvania

Re: The Estate lawyer cost us big

Post by Random Musings » Fri Feb 21, 2014 12:49 pm

bru wrote:State is IL. I believe there are no fixed fees in this state.

Estate left for distribution is ~$600K. Fees are about $90K. No detailed explanation of fees only amounts paid to the firm by the estate.
There was a Trust which the cousin administered. There were also parts of the estate that needed to go through probate. Residence (outside of trust) had to be sold.

With this additional info any thoughts if the fees seem "reasonable"? I have no doubt they can account for every penny and the law firm is a big one so I doubt they did anything unethical. I'm sure my father thought his nephew wouldn't charge him the rack rate.

Other beneficiary has no desire to challenge anything so I would be on my own.
That's a pretty hefty cut for fees. No details with respect to billable hours? That's unsettling.

Had a similar estate to deal in terms of valuation that included probate and selling real estate. Even including the real estate commission of 5%, we were under $20K in fees.

RM
I figure the odds be fifty-fifty I just might have something to say. FZ

Mitchell777
Posts: 1082
Joined: Mon May 21, 2007 6:32 am

Re: The Estate lawyer cost us big

Post by Mitchell777 » Fri Feb 21, 2014 12:51 pm

I have an interest in this topic. Help me understand how the size of the estate is a major factor. I understand the complexity being a major factor. If someone has $1M in one Vanguard fixed income fund, or a CD, and another person has 5K it seems the attorney's work is somewhat similar. I have thought about this in the past when I heard of the costs being based on a % of assets. just trying to understand as a layperson

manwithnoname
Posts: 1584
Joined: Mon Jul 22, 2013 7:52 pm

Re: The Estate lawyer cost us big

Post by manwithnoname » Fri Feb 21, 2014 1:03 pm

bru wrote:My father named my cousin as executor of his Estate. Why exactly he did it we aren't sure. Cousin is a high powered Real Estate lawyer, not an Estate lawyer.

I'm sure when my father did this he didn't envision my cousin and his firm charing us almost six figures when all is said and done. Knowing how frugal my father was in life he is probably rolling over in his grave.

AFAICT my state has no limitations on what an Estate/Probate lawyer can charge so we are stuck.

The estate was somewhat complicated but nothing that I couldn't have handled except for the few court filings for which I would have hired a lawyer. The money we lost would have paid a nice chunk of my father's grandson's college. I think he would have preferred that rather than my cousin's firm getting richer.

My cousin clearly took it as an opportuinty to nickel and dime us, get others at his firm involved, etc. When the final distributions are made I will let him know how he screwed his family. I don't dare do it now since he will charge me for the phone call or email.
Since you are a beneficiary you should consult an attorney to see what your rights are regarding fees paid by the executor. You may be able to get a detailed bill describing the services.

Its not unusual for estates to generate complex questions such as claims by persons who were disinherited, estate and income tax issues, valuations of business interests and RE, lawsuit and claims pending at death, etc.

chaz
Posts: 13604
Joined: Tue Feb 27, 2007 2:44 pm

Re: The Estate lawyer cost us big

Post by chaz » Fri Feb 21, 2014 1:10 pm

If upset by a lawyer's fee, you can file a complaint with the State Bar Assn. and/or a civil lawsuit against the lawyer.
Chaz | | “Money is better than poverty, if only for financial reasons." Woody Allen | | http://www.bogleheads.org/wiki/index.php/Main_Page

stan1
Posts: 7707
Joined: Mon Oct 08, 2007 4:35 pm

Re: The Estate lawyer cost us big

Post by stan1 » Fri Feb 21, 2014 1:12 pm

chaz wrote:If upset by a lawyer's fee, you can file a complaint with the State Bar Assn. and/or a civil lawsuit against the lawyer.
Yeah, this might impact family relations with the cousin, aunts, and uncles.

Longdog
Posts: 1368
Joined: Sun Feb 09, 2014 6:56 pm
Location: Philadelphia

Re: The Estate lawyer cost us big

Post by Longdog » Fri Feb 21, 2014 1:15 pm

stan1 wrote:
chaz wrote:If upset by a lawyer's fee, you can file a complaint with the State Bar Assn. and/or a civil lawsuit against the lawyer.
Yeah, this might impact family relations with the cousin, aunts, and uncles.
That damage has apparently already been done.
Steve

manwithnoname
Posts: 1584
Joined: Mon Jul 22, 2013 7:52 pm

Re: The Estate lawyer cost us big

Post by manwithnoname » Fri Feb 21, 2014 1:19 pm

chaz wrote:If upset by a lawyer's fee, you can file a complaint with the State Bar Assn. and/or a civil lawsuit against the lawyer.
and who is going to take the case?

Be very careful about what you say in a complaint to the Stat Bar association/lawsuit because you could be opening yourself up to a defamation suit which will cost you more than 90k in legal fees or damages.

soccerdad12
Posts: 370
Joined: Thu Jan 19, 2012 8:52 am

Re: The Estate lawyer cost us big

Post by soccerdad12 » Fri Feb 21, 2014 1:21 pm

Mitchell777 wrote:I have an interest in this topic. Help me understand how the size of the estate is a major factor. I understand the complexity being a major factor. If someone has $1M in one Vanguard fixed income fund, or a CD, and another person has 5K it seems the attorney's work is somewhat similar. I have thought about this in the past when I heard of the costs being based on a % of assets. just trying to understand as a layperson
I wonder this same thing.

I am the trustee of a trust that has about $3M in it. I use my CPA firm each year to do the taxes and they charge me about $1200. There is only 1 item each year on the tax return (it is all in 1 mutual fund) and that is the dividends generated by that fund; nothing is ever sold or distributed. The tax return is 2 pages long. I am sure that I can do them myself, but I am reluctant to because I don't want any mistakes for a trust that I didn't put the money into.

I am 100% sure that they are charging so much due to the value of the trust, but it would take the same time to them if the trust had only $10k in it. Every year it bothers me.

Professor Emeritus
Posts: 2628
Joined: Mon Aug 13, 2012 6:43 am

Re: The Estate lawyer cost us big

Post by Professor Emeritus » Fri Feb 21, 2014 1:24 pm

manwithnoname wrote:
chaz wrote:If upset by a lawyer's fee, you can file a complaint with the State Bar Assn. and/or a civil lawsuit against the lawyer.
and who is going to take the case?

Be very careful about what you say in a complaint to the Stat Bar association/lawsuit because you could be opening yourself up to a defamation suit which will cost you more than 90k in legal fees or damages.

This is not correct. Complaints are privileged. Its what you say outside the court house that can be defamation

stan1
Posts: 7707
Joined: Mon Oct 08, 2007 4:35 pm

Re: The Estate lawyer cost us big

Post by stan1 » Fri Feb 21, 2014 1:28 pm

SteveM wrote:
stan1 wrote:
chaz wrote:If upset by a lawyer's fee, you can file a complaint with the State Bar Assn. and/or a civil lawsuit against the lawyer.
Yeah, this might impact family relations with the cousin, aunts, and uncles.
That damage has apparently already been done.
From OP's perspective, perhaps. I can see cousin's perspective that this is a business transaction (especially if he's not a named heir). He is not an estate attorney so he hired qualified people to do it. Cousin would probably be very surprised (and likely indignant) if he read this thread and realized OP was upset. Dad made a mistake; up to OP to decide whether he's going to hold that mistake against his cousin and family members for the rest of their lives.

User avatar
Blue
Posts: 1161
Joined: Sat Jul 12, 2008 10:18 pm

Re: The Estate lawyer cost us big

Post by Blue » Fri Feb 21, 2014 1:30 pm

Placing myself in your situation, I'd be inclined to ask for clarification of the bill with the comment that it was much higher than you anticipated. Perhaps the firm will retroactively apply "a family discount"? I'd also be inclined to spend a few hundred dollars talking to a unaffiliated estate attorney once I had the billing detail to see if this seemed reasonable or egregious.

Good luck.

MathWizard
Posts: 3633
Joined: Tue Jul 26, 2011 1:35 pm

Re: The Estate lawyer cost us big

Post by MathWizard » Fri Feb 21, 2014 1:39 pm

My condolences on the death of your father.

You should be able to get an accounting of what money was spent from the estate from the executor.

The estate should have paid the outstanding bills, funeral expenses, any real estate fees for sale
of property, and any taxes due (capital gains can be big here) and any estate tax (given the amount
there should not have been any) and any lawyer fees for probate.

If the $90K includes some costs other than the lawyer fees, then it may be reasonable.
For example, selling a home is usually about 7% here, so if an estate was just a house or farm
which sold for $750K, then 7% realtor fees would be $52.5K all by itself. Add in 5% probate fee
and you have $90K.

5-8% probate fees are usual around here.

This may not reflect your situation, but when fees are added to other fees, on numbers approaxching a million dollars,
the fees seem very large.

pshonore
Posts: 6666
Joined: Sun Jun 28, 2009 2:21 pm

Re: The Estate lawyer cost us big

Post by pshonore » Fri Feb 21, 2014 2:02 pm

8% for a probate fee??? Outrageous! in CT it tops out at $12500 on an estate of 4,750,000 and up (that's the adminstrative fee paid to the Probate Court, not including attorney's fees) and there are discounts for a surviving spouse. And as an aside the same fee is charged for an RLT.

bsteiner
Posts: 4399
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: The Estate lawyer cost us big

Post by bsteiner » Fri Feb 21, 2014 2:20 pm

bru wrote:State is IL. I believe there are no fixed fees in this state.

Estate left for distribution is ~$600K. Fees are about $90K. No detailed explanation of fees only amounts paid to the firm by the estate.
There was a Trust which the cousin administered. There were also parts of the estate that needed to go through probate. Residence (outside of trust) had to be sold.

With this additional info any thoughts if the fees seem "reasonable"? I have no doubt they can account for every penny and the law firm is a big one so I doubt they did anything unethical. I'm sure my father thought his nephew wouldn't charge him the rack rate. ...
A quick look turned up this case in Illinois: http://www.state.il.us/court/opinions/a ... 100338.pdf. I didn't read it closely or check any of the citations, or check to see if there are other cases that are different, but it may give you a starting point.

You said there was also a trust. If it was a revocable trust, you would have to take that into account. The work is about the same regardless of whether assets pass under a revocable trust or under a Will. What was the size of the estate for tax purposes, including the trust if it was a revocable trust? What was the nature of the assets? All liquid assets except for the house? Or other real estate, business interests, etc. Any retirement benefits? Did they have to do Federal and state estate tax returns?
Mitchell777 wrote:I have an interest in this topic. Help me understand how the size of the estate is a major factor. I understand the complexity being a major factor. If someone has $1M in one Vanguard fixed income fund, or a CD, and another person has 5K it seems the attorney's work is somewhat similar. I have thought about this in the past when I heard of the costs being based on a % of assets. just trying to understand as a layperson
In some states, such as New York, executors' commissions are based on the size of the estate. In other states, they're based on all of the facts and circumstances.

We handle estates on a time basis, for the reason you point out, among others. We can have a small estate that's complicated, or a large estate that's simple. We've had small estates that were contested. We had a small estate where there was no Will and no relatives closer than cousins, where we had to (i) prove there was no one closer than a cousin, (ii) prove that everyone claiming to be a cousin was in fact a cousin, and (iii) prove that those persons were in fact all of the cousins.

However, larger estates often have complicated assets, and more complicated tax issues. Also, in larger estates, the stakes are higher, so we'll spend more time pinning down tax issues. For example, in a larger estate, we may spend more time on the choice of a taxable year for the estate than we might in a smaller estate.

Calm Man
Posts: 2917
Joined: Wed Sep 19, 2012 9:35 am

Re: The Estate lawyer cost us big

Post by Calm Man » Fri Feb 21, 2014 4:37 pm

To attorneys here, is it not at least a significant conflict of interest for the cousin to have given this matter over to his own law firm without consulting the family involved? Or is he free to do whatever he wants?

OP, please don't misinterpret this. Your father was a good man and cared about his family a lot. And he trusted somebody he shouldn't have. It sounds like you would have been a fine executor. I would feel of great service if I could give you my perspective. It is only that of one person. First and foremost, you want to get this finalized as quickly as possible whatever the outcome. Because then it will be over and you will move on. If you paid $90,000, I would figure that even under the best of circumstances, it will cost you no less than $30,000 or more. I do not know if you fell comfortable appealing to the cousin or discussing it with him. Or, as might have happened with me here, I would have written this guy off already for not discussing these high costs with you beforehand to at least get a go no-go on approval. If you are not and you fell really wronged, I would simply consult a good estates attorney like bsteiner (PM him if you are in his jurisdiction which I think is NY and are), have it reviewed and go with his decision on how to proceed. Good luck...

User avatar
desertbandit442
Posts: 159
Joined: Mon Feb 20, 2012 8:41 am

Re: The Estate lawyer cost us big

Post by desertbandit442 » Fri Feb 21, 2014 4:44 pm

There seems to be things getting crossed here in the post and some responses. There can be both legal fees and an executor fee in handling an estate. The executor fee alone may be up to 7 percent of the estate, in the state where I live, and then the legal fees are on top of that. Your cousin may be including the executor fee and legal fees in the cost the OP talked about. You should get a breakdown of the costs from your executor/cousin and I think a good part of that cost will be an executor fee alone. The fee may sound high to you, but what the executor did was probably perfectly legal. I don't think you should hold a grudge against your cousin/executor/lawyer, all wrapped up into one.

This is an issue in drawing up your will and naming an executor of the estate. I was the executor for my dad's estate and in the will he stipulated an executor's fee of one percent of the estate. I could have passed on being the executor, if I thought that wasn't enough. The estate was complicated in the number of investments, investment companies, individual stocks, and two properties involved. It took about 18 months to transfer/liquidate investments, close the estate and file taxes; so there was a lot of work involved.

Lesson learned for drawing up a will - stipulate the executor's fee in your will. The executor can take the job or pass. Also doing this, rather than leaving the executor fee "open ended'," will help reduce friction/hard feelings like is going on in the OP 's case. Remember the executor fee and legal fees are two separate fees.

User avatar
InvestorNewb
Posts: 1611
Joined: Mon Sep 03, 2012 11:27 am

Re: The Estate lawyer cost us big

Post by InvestorNewb » Fri Feb 21, 2014 5:13 pm

Fees of 100k on a 600k estate are outrageous.
My Portfolio: VTI [US], VXUS [Int'l], VNQ [REIT], VCN [Canada] (largest to smallest)

User avatar
prudent
Moderator
Posts: 6882
Joined: Fri May 20, 2011 2:50 pm

Re: The Estate lawyer cost us big

Post by prudent » Fri Feb 21, 2014 5:25 pm

I don't know about specifying a fixed low executor fee. What if nobody wants to handle the duties responsibly for that amount?

Here's an example. Years ago, a relative had a very large collection of buttons, and passed away. Her executor, her daughter, knew the buttons were collectible and had value at some level but knew nothing about them. She spent a couple hundred hours researching them, making contacts with people in the (very narrow) field, and sold them off through some direct sales and auction sales over about a year. She got $40,000 for the buttons due to her efforts. She told me that shortly after after her mom died, she was contacted by a collector who knew her mother asking if she wanted to sell the buttons and what the asking price was. She said she was very tempted to ask for $100 just to get rid of them, but as executor she thought she ought to put some time into researching since she was being paid a fee to settle the estate, so told the collector they weren't for sale at that time. Her executor fee was 5% of the estate, and her two siblings gave her another 20% of the button proceeds because they would have sold them to the first person who asked at whatever was offered.

If the executor fee was specified at 1%, how much work would someone be willing to put in to maximizing the estate value? And what could that cost the heirs? I imagine an heir being quite upset at seeing an executor just go through the motions because it wasn't worth the time to put in more effort.

aude
Posts: 261
Joined: Sat Feb 11, 2012 11:06 pm

Re: The Estate lawyer cost us big

Post by aude » Fri Feb 21, 2014 5:41 pm

The fees look high as a percentage of the net distribution, of course. I practice in a different area but have had estate planning clients (handled by my partners) and have seen a wide range of fees. Conceivably the "high" fees could be influenced by:

--disputes among the beneficiaries that needed to be sorted out
--illiquid assets like commercial real estate or partnerships that needed to be liquidated prior to making distributions
--unusual trust provisions that took a lot of attorney / court time to sort out

There may be conflicts issues here, but a large law firm likely was especially careful to make the proper disclosures, etc.

It's really difficult to say much more without more information, and the vast majority of lawyers that I have met in 15 years of practice are ethical. Most of the rest are not stupid enough to rip off an estate in violation of the ethical rules that govern our profession.

Rupert
Posts: 4122
Joined: Fri Aug 17, 2012 12:01 pm

Re: The Estate lawyer cost us big

Post by Rupert » Fri Feb 21, 2014 5:50 pm

Regardless of what the fee was and whether it was reasonable under the circumstances, you are absolutely entitled as a beneficiary of the estate to a line-item accounting. You should know why the fee was charged. So ask, quickly. Too many people stew over such things for so long they let the statute of limitations run on challenging them. If after having your questions answered you are still troubled by the size of the fee, then take it to the Bar Association. Are you in Chicago? If so, check out this attorney fee dispute group with the Chicago Bar Association: http://www.chicagobar.org/AM/Template.c ... entID=2424. The Illinois Bar probably offers a similar service. Most state bars do.

J295
Posts: 2166
Joined: Sun Jan 01, 2012 11:40 pm

Re: The Estate lawyer cost us big

Post by J295 » Fri Feb 21, 2014 6:15 pm

Note: I am a lawyer.

To the OP: Have you considered an in person meeting to discuss your perceptions and fee concerns with legal counsel? For a number of reasons I'd recommend doing so.

Best of luck.

User avatar
desertbandit442
Posts: 159
Joined: Mon Feb 20, 2012 8:41 am

Re: The Estate lawyer cost us big

Post by desertbandit442 » Fri Feb 21, 2014 6:41 pm

prudent wrote:I don't know about specifying a fixed low executor fee. What if nobody wants to handle the duties responsibly for that amount?

Here's an example. Years ago, a relative had a very large collection of buttons, and passed away. Her executor, her daughter, knew the buttons were collectible and had value at some level but knew nothing about them. She spent a couple hundred hours researching them, making contacts with people in the (very narrow) field, and sold them off through some direct sales and auction sales over about a year. She got $40,000 for the buttons due to her efforts. She told me that shortly after after her mom died, she was contacted by a collector who knew her mother asking if she wanted to sell the buttons and what the asking price was. She said she was very tempted to ask for $100 just to get rid of them, but as executor she thought she ought to put some time into researching since she was being paid a fee to settle the estate, so told the collector they weren't for sale at that time. Her executor fee was 5% of the estate, and her two siblings gave her another 20% of the button proceeds because they would have sold them to the first person who asked at whatever was offered.

If the executor fee was specified at 1%, how much work would someone be willing to put in to maximizing the estate value? And what could that cost the heirs? I imagine an heir being quite upset at seeing an executor just go through the motions because it wasn't worth the time to put in more effort.
Oh I agree. Smaller estates could have more than one percent to make it worthwhile/fair for the executor.

The point is to come to an agreement with the executor and put the executor fee percent/agreement in the will, so there is no feeling of being ripped off by family members.

manwithnoname
Posts: 1584
Joined: Mon Jul 22, 2013 7:52 pm

Re: The Estate lawyer cost us big

Post by manwithnoname » Fri Feb 21, 2014 7:30 pm

desertbandit442 wrote:
prudent wrote:I don't know about specifying a fixed low executor fee. What if nobody wants to handle the duties responsibly for that amount?

Here's an example. Years ago, a relative had a very large collection of buttons, and passed away. Her executor, her daughter, knew the buttons were collectible and had value at some level but knew nothing about them. She spent a couple hundred hours researching them, making contacts with people in the (very narrow) field, and sold them off through some direct sales and auction sales over about a year. She got $40,000 for the buttons due to her efforts. She told me that shortly after after her mom died, she was contacted by a collector who knew her mother asking if she wanted to sell the buttons and what the asking price was. She said she was very tempted to ask for $100 just to get rid of them, but as executor she thought she ought to put some time into researching since she was being paid a fee to settle the estate, so told the collector they weren't for sale at that time. Her executor fee was 5% of the estate, and her two siblings gave her another 20% of the button proceeds because they would have sold them to the first person who asked at whatever was offered.

If the executor fee was specified at 1%, how much work would someone be willing to put in to maximizing the estate value? And what could that cost the heirs? I imagine an heir being quite upset at seeing an executor just go through the motions because it wasn't worth the time to put in more effort.
Oh I agree. Smaller estates could have more than one percent to make it worthwhile/fair for the executor.

The point is to come to an agreement with the executor and put the executor fee percent/agreement in the will, so there is no feeling of being ripped off by family members.
How are you going to do that if you don't know how much work will be involved before the estate is probated? Executor can decline appointment if the compensation is insufficient. There can be unforeseen problems such as law suits by disinherited parties, ex spouses, or acquiring title to property or valuation of an asset that can drag on and cost time and money in using professionals. Some posters seem to believe that administering an estate is like having your car repaired - the mechanic checks your diagnostic system, tells you what is wrong and quotes you a fixed price and a time when your car will be ready. I am in the middle of an estate where I have two different estimates of the amount of state estate tax- one by the accountant the other by the attorney that are 25k apart. I am spending a lot of time determining who is correct so as not to breach any fiduciary responsibility. How do you value this responsibility?

Outer Marker
Posts: 354
Joined: Sun Mar 08, 2009 8:01 am

Re: The Estate lawyer cost us big

Post by Outer Marker » Fri Feb 21, 2014 7:33 pm

Suggest you (1) write a letter requesting a detailed explanation of the fees and charges, stating that you believe they are unreasonable, and (2) indicate that you intend to refer the matter to the state bar disciplinary committee for investigation if the fees are unreasonable.

User avatar
LowER
Posts: 677
Joined: Sat Sep 29, 2012 12:43 pm

Re: The Estate lawyer cost us big

Post by LowER » Fri Feb 21, 2014 8:00 pm

Aren't executors held to a fiduciary standard? If so, then I guess he would be okay with another lawyer charging $90K on his $600K estate after he dies. I'm not a lawyer or a tax person so I have no concrete basis for my probably inaccurate recollection. But, am I wrong?

User avatar
Steelersfan
Posts: 3744
Joined: Thu Jun 19, 2008 8:47 pm

Re: The Estate lawyer cost us big

Post by Steelersfan » Fri Feb 21, 2014 10:17 pm

MathWizard wrote:My condolences on the death of your father.

You should be able to get an accounting of what money was spent from the estate from the executor.

The estate should have paid the outstanding bills, funeral expenses, any real estate fees for sale
of property, and any taxes due (capital gains can be big here) and any estate tax (given the amount
there should not have been any) and any lawyer fees for probate.

If the $90K includes some costs other than the lawyer fees, then it may be reasonable.
For example, selling a home is usually about 7% here, so if an estate was just a house or farm
which sold for $750K, then 7% realtor fees would be $52.5K all by itself. Add in 5% probate fee
and you have $90K.

5-8% probate fees are usual around here.

This may not reflect your situation, but when fees are added to other fees, on numbers approaching a million dollars,
the fees seem very large.
+1 one about the costs of selling the real estate and whether or not they're included in the cost of administrating the estate. They likely are.

That makes finding out a break down of the total cost very important.

User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

Re: The Estate lawyer cost us big

Post by bru » Fri Feb 21, 2014 10:17 pm

It's even worse than I thought. $101,349 in fees.

I have an extremely sick wife in the hospital and a young son I am essentially raising alone, this is the last thing I need to deal with but I think I have to somehow.
But I don't know where to even start.

I am being pressured to sign papers to receive the distribution by Feb. 28 for tax reasons. By signing these papers I absolve the executor and the law firm of everything related to the estate. I don't think I should sign but like I said I don't know what to do. I don't even want to speak to my cousin as all previous correspondence (limited) has been unpleasant. But I will ask for a detailed breakdown of expenses.

edit: I previously had asked for a breakdown of costs. They provided me with a breakdown totalling $51K through 11/30/13.. Upon further review expenses to that point totalled almost $80K so they did not give me a complete accounting to that point. I wonder why?

Another $21K in expenses were accrued between 12/1/13 and 2/14/14 which seems curious since I was under the assumption that the estate was essentially settled by 12/1/13 with only a few items left outstanding. Like I said above I have asked for a complete breakdown of costs but I fear while I may not like them they are all legitimate and not excessive for a major international law firm.

User avatar
desertbandit442
Posts: 159
Joined: Mon Feb 20, 2012 8:41 am

Re: The Estate lawyer cost us big

Post by desertbandit442 » Sat Feb 22, 2014 12:47 am

bru wrote:It's even worse than I thought. $101,349 in fees.

I have an extremely sick wife in the hospital and a young son I am essentially raising alone, this is the last thing I need to deal with but I think I have to somehow.
But I don't know where to even start.

I am being pressured to sign papers to receive the distribution by Feb. 28 for tax reasons. By signing these papers I absolve the executor and the law firm of everything related to the estate. I don't think I should sign but like I said I don't know what to do. I don't even want to speak to my cousin as all previous correspondence (limited) has been unpleasant. But I will ask for a detailed breakdown of expenses.

edit: I previously had asked for a breakdown of costs. They provided me with a breakdown totalling $51K through 11/30/13.. Upon further review expenses to that point totalled almost $80K so they did not give me a complete accounting to that point. I wonder why?

Another $21K in expenses were accrued between 12/1/13 and 2/14/14 which seems curious since I was under the assumption that the estate was essentially settled by 12/1/13 with only a few items left outstanding. Like I said above I have asked for a complete breakdown of costs but I fear while I may not like them they are all legitimate and not excessive for a major international law firm.
I am sorry for your situation and all the stresses, but I wouldn't sign until I received a complete breakdown of expenses. He should have to give an accounting of expenses to the probate court before the estate can be closed. It is important to see which are legal expenses and then what he took for an executor fee. Did your breakdown of expenses show an executor fee? Also there is a probate fee that is paid to the probate court.

I don't think all the cost are fees, per say. Some of the cost may be to pay off debts like credit cards and loans, and to pay off other bills. Was there a car to pay off and/or mortgage loan to pay off?

User avatar
OnFire
Posts: 363
Joined: Sat Feb 16, 2008 11:48 pm

Re: The Estate lawyer cost us big

Post by OnFire » Sat Feb 22, 2014 1:12 am

Cripes. I hope that I raise my son well enough that I trust him with my estate. I am so sorry for your stress added to sickness added to loss. My father left no will and my stepmother (who my father was on the verge of a divorce with) got the $600K primary residence, $500K vacation residence, and $1M in business and real estate. I got an eight year old Jeep. I think my father would roll over in his grave if he knew the fruit of his life's work went not to his children, but to his second wife and her children. My condolences, and I hope your cousin rots.
Last edited by OnFire on Sat Feb 22, 2014 7:57 am, edited 1 time in total.
Where are all the customers yachts? | | “The most powerful force in the Universe is compound interest.” -Albert Einstein

Longdog
Posts: 1368
Joined: Sun Feb 09, 2014 6:56 pm
Location: Philadelphia

Re: The Estate lawyer cost us big

Post by Longdog » Sat Feb 22, 2014 6:36 am

bru wrote:It's even worse than I thought. $101,349 in fees.

I have an extremely sick wife in the hospital and a young son I am essentially raising alone, this is the last thing I need to deal with but I think I have to somehow.
But I don't know where to even start.

I am being pressured to sign papers to receive the distribution by Feb. 28 for tax reasons. By signing these papers I absolve the executor and the law firm of everything related to the estate. I don't think I should sign but like I said I don't know what to do. I don't even want to speak to my cousin as all previous correspondence (limited) has been unpleasant. But I will ask for a detailed breakdown of expenses.

edit: I previously had asked for a breakdown of costs. They provided me with a breakdown totalling $51K through 11/30/13.. Upon further review expenses to that point totalled almost $80K so they did not give me a complete accounting to that point. I wonder why?

Another $21K in expenses were accrued between 12/1/13 and 2/14/14 which seems curious since I was under the assumption that the estate was essentially settled by 12/1/13 with only a few items left outstanding. Like I said above I have asked for a complete breakdown of costs but I fear while I may not like them they are all legitimate and not excessive for a major international law firm.
I am so sorry for your loss and the stress you are under. Was there anything on that original breakdown that seemed suspicious, unclear, or unreasonable to you? Did it include paying final bills such as credit cards, mortgage, auto loans, medical expenses, ambulance services, funeral expenses, or was it just hourly legal fees?
Steve

User avatar
frugaltype
Posts: 1952
Joined: Wed Apr 24, 2013 9:07 am

Re: The Estate lawyer cost us big

Post by frugaltype » Sat Feb 22, 2014 7:53 am

bru wrote:It's even worse than I thought. $101,349 in fees.

I have an extremely sick wife in the hospital and a young son I am essentially raising alone, this is the last thing I need to deal with but I think I have to somehow.
But I don't know where to even start.

I am being pressured to sign papers to receive the distribution by Feb. 28 for tax reasons. By signing these papers I absolve the executor and the law firm of everything related to the estate. I don't think I should sign but like I said I don't know what to do. I don't even want to speak to my cousin as all previous correspondence (limited) has been unpleasant. But I will ask for a detailed breakdown of expenses.

edit: I previously had asked for a breakdown of costs. They provided me with a breakdown totalling $51K through 11/30/13.. Upon further review expenses to that point totalled almost $80K so they did not give me a complete accounting to that point. I wonder why?

Another $21K in expenses were accrued between 12/1/13 and 2/14/14 which seems curious since I was under the assumption that the estate was essentially settled by 12/1/13 with only a few items left outstanding. Like I said above I have asked for a complete breakdown of costs but I fear while I may not like them they are all legitimate and not excessive for a major international law firm.
I am so sorry for your situation.

I would not sign that paperwork.

I don't know what the right thing is to do here. Getting an attorney for yourself would open you up to even more legal fees that you might not be able to afford. Myself, I would write a letter to the probate court judge, detailing your concerns about the fees, and see what happens as a result of that.

The fact that your cousin is being "unpleasant" reinforces my belief that something is wrong here.

I was executor/trustee for my Mom. What my time totaled is probably not comparable, because I was a replacement and needed to clean up a mess. I had a CPA and my (honest) cousin an attorney for their part of the work. If I recall correctly, the attorney charged about $7000 (he handled the real estate transactions as well as giving advice), and the CPA, who had to prepare returns for the 2-3 years it took to clean up the mess and the closing returns, probably charged about the same.

Mom had everything in the trust, so there was little to do with the probate court. Her house ($300K) and a vacant lot, a car, and about $300K-$400K in stocks, funds, cash had to be dealt with. There were four beneficiaries.

However, I did talk to the probate clerk a couple of times, and she was very nice. I know this is just one example, but you may find the probate court very helpful. Then again, they may be crooks themselves and hand in glove with the law firm, who knows.

Update: I just remembered that when I took over, the previous executor/trustee had a law firm that was charging an outrageous amount and was not communicative. I fired their behinds immediately in writing by registered letter.

User avatar
Index Fan
Posts: 2569
Joined: Wed Mar 07, 2007 12:13 pm
Location: The great Midwest

Re: The Estate lawyer cost us big

Post by Index Fan » Sat Feb 22, 2014 8:01 am

Shakespeare had a rather famous line in regards to this topic. Some things never change.
"Optimum est pati quod emendare non possis." | -Seneca

User avatar
frugaltype
Posts: 1952
Joined: Wed Apr 24, 2013 9:07 am

Re: The Estate lawyer cost us big

Post by frugaltype » Sat Feb 22, 2014 8:26 am

OnFire wrote:Cripes. I hope that I raise my son well enough that I trust him with my estate. I am so sorry for your stress added to sickness added to loss. My father left no will and my stepmother (who my father was on the verge of a divorce with) got the $600K primary residence, $500K vacation residence, and $1M in business and real estate. I got an eight year old Jeep. I think my father would roll over in his grave if he knew the fruit of his life's work went not to his children, but to his second wife and her children. My condolences, and I hope your cousin rots.
Those of us cynics in the romantic threads would have said a second (or third...) marriage is a reason to redo a will and trust immediately.

YttriumNitrate
Posts: 1093
Joined: Tue Mar 26, 2013 12:13 pm

Re: The Estate lawyer cost us big

Post by YttriumNitrate » Sat Feb 22, 2014 9:14 am

Bru, do you happen to have a couple siblings who were constantly calling up the attorney? At $400+ an hour at "a major international law firm" it's quite easy to rack up those type of fees.

Diogenes
Posts: 602
Joined: Sat Mar 03, 2012 3:58 pm

Re: The Estate lawyer cost us big

Post by Diogenes » Sat Feb 22, 2014 10:19 am

Note: I am _not_ a lawyer.
However, I deal with many of them.

Sadly there is a cottage industry in some States with firms running up probate fees. I have seen this happen even if a trust exists that front loaded costs(funding problems, and other issues). Best thing is not to die in a state that allows a 'percent of the estate' big carrot and use a trusted family lawyer with someone in the family as executor watching them like a hawk. Keep as much of the estate as possible non-probate assets such as tax sheltered accounts.

It is surprising (I guess) to see some here say that $100k on a $600k estate, that is not contested, may be OK. If no real estate fees or special issues are in the mix, my guess is that somebody is running the meter.
Find out the average for your State, as a starting point. Next get every bill itemized.
Truth and clarity are important in all things...

User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

Re: The Estate lawyer cost us big

Post by bru » Sat Feb 22, 2014 10:49 am

I truly appreciate the responses so far. I will try to address some of the questions and comments. If I miss something please ask again and I will do my best to answer.

All payment of bills like credit cards, HELOC etc. related to my father's estate were were deducted from the trust. The law firms expenses and executors fee do not include any of them. The sale of my fathers residence and the fees/expenses also were paid out of the trust. All expenses related to settling the estate came out of the trust. The firms and executors expenses/fees are solely for their work.

Looking at the breakdown I received so far do they seem "suspicious, unclear or unreasonable"? To me of course they seem unreasonable but this is a high powered law firm and the fees to go along with that. There were some phone conferences and emails with the beneficiaries but not a huge amount. I know I stopped calling and emailing many months ago when I realized what was going on.

My concern with not signing the papers is that more fees will accrue. I think that is a certainty since I believe another tax return will need to be filed and who knows what else they'll come up with if things are delayed. I think they charged $16K just to do last years taxes.

I am hesistant to contact a lawyer on my own for the reasons stated, it will cost me. To find a lawyer other than Googling I would have no clue as to who to use. The other beneficiary has accepted all terms and will not join me in challenging any of this.

I am at such a loss as what to do. To be frank, the money I will get is needed, now. If the fees were reduced somehow (a huge if) I will get a larger distribution but I just don't know if it is worth the fight.

User avatar
desertbandit442
Posts: 159
Joined: Mon Feb 20, 2012 8:41 am

Re: The Estate lawyer cost us big

Post by desertbandit442 » Sat Feb 22, 2014 10:58 am

What I am not sure about, is if you are talking only about legal fees, or legal fees, executor fees and probate fees, or all those fees and costs to close the estate like paying off debts. Could you clarify what is involved in that 100,000 plus in expenses?

User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

Re: The Estate lawyer cost us big

Post by bru » Sat Feb 22, 2014 11:18 am

desertbandit442 wrote:What I am not sure about, is if you are talking only about legal fees, or legal fees, executor fees and probate fees, or all those fees and costs to close the estate like paying off debts. Could you clarify what is involved in that 100,000 plus in expenses?
From what I can tell the fees the executor and his firm are charging are for their work, legal fees. I believe they also would include executor fees and probate fees as I don't see those being deducted from the estate separately. It is a 37 page document of just transactions so I may have missed something.

As mentioned all fees and costs associated with closing the estate are not included in the law firms/executor's fees. They were paid out of the estate/trust and I see all those transactions.

stan1
Posts: 7707
Joined: Mon Oct 08, 2007 4:35 pm

Re: The Estate lawyer cost us big

Post by stan1 » Sat Feb 22, 2014 11:20 am

bru wrote:
desertbandit442 wrote:What I am not sure about, is if you are talking only about legal fees, or legal fees, executor fees and probate fees, or all those fees and costs to close the estate like paying off debts. Could you clarify what is involved in that 100,000 plus in expenses?
From what I can tell the fees the executor and his firm are charging are for their work, legal fees. I believe they also would include executor fees and probate fees as I don't see those being deducted from the state separately. As mentioned all fees and costs associated with closing the estate are not included in the law fimrs/executor's fees. They were paid out of the estate/trust.
What about costs associated with selling the house? Was new carpet or paint required? Did the law firm charge for managing projects like that?

harrylime
Posts: 112
Joined: Sun May 24, 2009 8:08 am
Location: Vienna

Re: The Estate lawyer cost us big

Post by harrylime » Sat Feb 22, 2014 11:22 am

What was the value of the assets in the trust? What was the value of the assets in the probate estate?

And are you saying all compensation for the trustee and executor and all attorney fees are being paid out of trust funds?

User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

Re: The Estate lawyer cost us big

Post by bru » Sat Feb 22, 2014 11:35 am

stan1 wrote:
What about costs associated with selling the house? Was new carpet or paint required? Did the law firm charge for managing projects like that?
I think this is getting hard to follow. I mentioned a couple of times, fees associated with selling the house were deducted from the trust. What is ironic is that I did a lot of the work as we sold the house (the house was very inexpensice if it matters) to a neighbor. I must have made half a dozen trips back and forth. I should have charged for my time. Though it isn't nearly as valuable as the lawyers'.
harrylime wrote:What was the value of the assets in the trust? What was the value of the assets in the probate estate? And are you saying all compensation for the trustee and executor and all attorney fees are being paid out of trust funds?
Yes everything is coming out of the trust. The trust included everything but his house and a few other holdings. So those items were considered the "estate" which needed to go through probate. They break it down to assets in the estate and trust.
Last edited by bru on Sat Feb 22, 2014 11:36 am, edited 1 time in total.

User avatar
desertbandit442
Posts: 159
Joined: Mon Feb 20, 2012 8:41 am

Re: The Estate lawyer cost us big

Post by desertbandit442 » Sat Feb 22, 2014 11:36 am

bru wrote:
desertbandit442 wrote:What I am not sure about, is if you are talking only about legal fees, or legal fees, executor fees and probate fees, or all those fees and costs to close the estate like paying off debts. Could you clarify what is involved in that 100,000 plus in expenses?
From what I can tell the fees the executor and his firm are charging are for their work, legal fees. I believe they also would include executor fees and probate fees as I don't see those being deducted from the estate separately. It is a 37 page document of just transactions so I may have missed something.

As mentioned all fees and costs associated with closing the estate are not included in the law firms/executor's fees. They were paid out of the estate/trust and I see all those transactions.
I would not sign anything yet and take that 37 page document of transactions to an estate lawyer to look over and give you his/her take on if it seems reasonable. I don't think it should take more than an hour to go through and cost no more than $150 - $250 for the consult.

User avatar
Topic Author
bru
Posts: 1001
Joined: Fri Jul 23, 2010 6:32 pm

Re: The Estate lawyer cost us big

Post by bru » Sat Feb 22, 2014 11:38 am

desertbandit442 wrote: I would not sign anything yet and take that 37 page document of transactions to an estate lawyer to look over and give you his/her take on if it seems reasonable. I don't think it should take more than an hour to go through and cost no more than $150 - $250 for the consult.
The 37 page document is just transactions (Transaction Register). They are all things like selling a stock and transferring it to the cash reserve fund, paying the electric bill, etc. Those I know are legitimate. The Transaction Register includes "expenses" for the law firm. I still need to get the actual breakdown of these "expenses".

User avatar
desertbandit442
Posts: 159
Joined: Mon Feb 20, 2012 8:41 am

Re: The Estate lawyer cost us big

Post by desertbandit442 » Sat Feb 22, 2014 11:47 am

bru wrote:
desertbandit442 wrote: I would not sign anything yet and take that 37 page document of transactions to an estate lawyer to look over and give you his/her take on if it seems reasonable. I don't think it should take more than an hour to go through and cost no more than $150 - $250 for the consult.
The 37 page document is just transactions (Transaction Register). They are all things like selling a stock and transferring it to the cash reserve fund, paying the electric bill, etc. Those I know are legitimate. The Transaction Register includes "expenses" for the law firm. I still need to get the actual breakdown of these "expenses".
OK, sounds like that should be your plan before you sign. That is a reasonable request on your part, to get a breakdown of legal expenses, before signing the probate court paperwork he needs to close the estate. However, he sounds like a $400 - $500 an hour kinda guy and I suppose your request will increase the legal expense?

Post Reply