Bereaved families paying too much for basic paperwork
Bereaved families paying too much for basic paperwork - lawyer
Thursday, 31 January 2019
Press release: Kiwilaw
Every year, bereaved New Zealand families are paying lawyers between $4.25 and $8.5 million more than they need to, for basic paperwork after a loved one dies.
Cheryl Simes, a lawyer in Canterbury, is urging families to ask the cost before they allow any law firm to prepare probate documents.
Probate is granted by the High Court to say a will is valid and the executors may act on it.
According to Ministry of Justice figures cited by the New Zealand Law Society, and updated figures obtained by Simes under the Official Information Act, there are about 15,500-16,000 applications each year for probate, and about 1200-1500 applications for letters of administration (where there is no will, or a will but no executor). Of those, 98% are made through a lawyer or trustee company.
Simes believes most families will be paying between $400 and $2000 more than they should, for those documents, adding up to millions of dollars every year.
‘Recently I used a researcher to phone 26 firms. I found just 5 who would charge $1000 or less. Four of those were in South Canterbury or Otago. At the other end of the scale, I found 5 who would charge between $2500 and $3500 – all in the North Island. Most were between $1100 and $2150.’
‘I recently heard of someone needing letters of administration who was quoted $3500. Someone else was apparently told $5000. They were both in Auckland.’
‘These are in straight-forward cases, with no legal complications.’
‘I would consider a fee between $500-$1000 as fair, using standard law-office technology. I don’t understand why so many firms are charging so much.’
‘If half of those 17,000 applicants are using lawyers who charge fees of $1500 or more (plus GST and disbursements), and if $1000 is the limit of a standard reasonable fee, New Zealand families are being overcharged at least $4.25 million per year.
‘If 25% of applicants are being charged $2000 for what should cost no more than $1000, and another 25% are being charged $1500, New Zealand families are being overcharged by $8.5 million per year.
‘This does not even include any who are charged more than $2000.’
‘I know it’s hard for an executor to challenge the lawyer who holds the will. However, they have an obligation to the beneficiaries to use estate funds prudently. If the lawyer who holds the will is going to charge too much, the executors should think again.’
Simes’ practice, Kiwilaw, uses the New Zealand-developed document-creation software Automio to ‘interview’ clients nationwide, identify and address likely complications, and produce draft probate documents, which Simes then edits and checks before sending to clients with full instructions. The usual fee is $400 (plus GST).
The clients make their own arrangements for getting the documents signed and witnessed, photocopied, and sent to the High Court.
‘I help people to act for themselves. It’s called “unbundled services”, which is relatively new in New Zealand although well known in the United States and elsewhere. It doesn’t suit everybody. People can save a lot of money if they are willing to follow written instructions and basically be their own secretaries.’
‘It took me months, part time, to write the Automio flow for a probate application,’ Simes says. ‘The High Court requirements made it tricky and there are still some quirks that I have to fix manually. It means I can usually do the work in less than half an hour, instead of maybe 2 hours in most firms.’
For more information, see Kiwilaw’s website: https://kiwilaw.co.nz/probate