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Demand For Pre-Paid Estate Administration

12 June 2002

Demand For Pre-Paid Estate Administration Exceeds Expectations

Public Trust’s pre-paid estate administration service is proving highly successful, with sales far exceeding expectations.

Public Trust Chief Executive Tim Sole said that Public Trust is on target to sell 500 pre-paid estate administration packages to 30 June 2002.

“We are the first trustee company in the world to offer a pre-paid estate administration service,” Mr Sole said, “and we have established that there is a strong need for this type of service throughout New Zealand.

“People tell us they like the service because it gives them control over their own affairs, provides security for their families and is available at a very good price.

“By pre-paying, they know that they have taken care of their estate administration and their family will not be left with a burden. By opting for a pre-paid estate package, they also receive a discount on top of Public Trust’s significantly reduced estate administration fees.”

Pre-paid estate administration is one of the new services that Public Trust introduced when the law was changed on March 1, allowing the company to significantly reduce its fees and change the way it does business.

“Calls to our customer centres have increased by 31% since March 1,” Mr Sole said. “This increase in enquiries has translated into sales, and the resulting increase in volumes has validated our decision to significantly reduce our estate administration fees.

“Our research tells us that people regard Public Trust as being a secure and trustworthy organisation to do business with, but our previous, highly prescriptive legislation gave us little opportunity to be innovative and utilise our expertise.

Established more than 125 years ago, Public Trust is New Zealand’s specialist provider of estate administration and trustee services. Handling some 6,000 estates each year, more than any other provider, has resulted in Public Trust developing institutional experience, complemented by an expert IT system unmatched by any other estate manager or trustee company in this country.

Mr Sole gives the new Public Trust Act, which took effect on 1 March 2002, credit for allowing the organisation to utilise its experience, not only to introduce new services but to significantly reduce its fees.

“We now offer services that are meet the needs of the community at a price that is highly competitive and that combination is helping make the pre-paid estate administration offering so popular,” Mr Sole said.

How pre-paid estate administration works

For a flat fee of only $1,575 including GST, Public Trust will cover the costs of administering an estate, including the handling fees on assets up to $100,000. The value of an estate is worked out by capping the value of any one asset to $50,000. For example, a home worth $150,000 would count as only $50,000 when working out fees.

For estates worth more than $100,000, the fee is $1,575, and on death an additional charge of $562.50 including GST and a 1.125% handling fee on the value of assets over $100,000. With the value of any one asset capped at $50,000, the maximum handling fee on any one asset cannot be more than $562.50.

The following examples illustrate the savings that can be made with Public Trust’s pre-paid estate administration.

Estate example 1
Real value Public Trust’s value
House $150,000 $50,000 (capped)
Savings $25,000 $25,000
Other assets $10,000 $10,000
Total $185,000 $85,000

Pre-paid fee on assets up to $100,000 $1,575 (inc GST)
Public Trust’s fees if not pre-paid $2,278 (inc GST)
Saving $703

Estate example 2
Real value Public Trust’s value
House $150,000 $50,000 (capped)
Holiday home $85,000 $50,000 (capped)
Savings $30,000 $30,000
Total $265,000 $130,000

Pre-paid fee $1,575 (inc GST)
Additional charge $562.50 (inc GST)
1.125% handling fee on the value of assets over $100,000 $337.50 (inc GST)
Total fees $2,475 (inc GST)
Public Trust’s fees if not pre-paid $2,784 (inc GST)
Saving $309

Note: Prepaying does not cover external costs (eg real estate agents’, lawyers’, valuers’ and bank fees if property is sold) and ongoing management fees will be incurred if the assets are held in trust after the will is executed. There may be an extra charge if the administration is complex eg the will is contested or proof of kin is required – or if beneficiaries need more than five hours of their estate manager’s time. The estate pays any extra costs.

ENDS

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