FOOL’S RUSH IN
“My uncle recently passed away, Mr. Callinan, and I have a few questions,” says the man who’s come to see me this morning. “He left his house to my wife and me – it’s worth about $400,000 – and he had about $300,000 in bank and stock accounts that he left in varying percentages to some nieces, nephews, and friends. What are my responsibilities as executor?”
“Well, I begin…” knowing that anything I say is going to spawn ten more questions, “in short, you need to probate your Uncle’s Will, file the appropriate tax returns, pay his debts, accounts to the beneficiaries, then make distributions to the beneficiaries. Given the value of your Uncle’s estate and the persons to whom he left his estate (that is, distant relatives and friends), you’ll need to prepare a number of tax returns. You’d be well served if you retained an attorney – I recommend me – to assist you with your obligations as executor.”
“Probate is easy,” he interjects. “My Uncle probated his wife’s Will. I went with him. It was simple. I don’t need an attorney.”
We all have obstacles that we face at work. For me, one of the biggest obstacles is the fact that people perceive lawyers at money-hungry individuals who charge far more for their services then they’re worth. If you tell a prospective client that you charge $120 an hour, the first thing he thinks is that the lawyer’s fees are going to be exorbitant.
Many of my client’s mention the estate litigation that is currently taking place in Monmouth County over the Madeline Stockdale estate, the eccentric Spring Lake resident who was befriended by a neighbor. Personally, I don’t follow the case too closely, but recently, I read an article in a local paper that read “legal fees and taxes may consume most of estate.” A lawyer involved in the case was quoted as saying that legal fees might be in the millions.
Such statements do little to dispel the misconception that most people have about the value of a lawyer’s services or the amount most lawyers charge for those services. For instance, for most of the services I provide, I charge a flat fee, so the client knows exactly how much he will pay before he retains my services.
When it comes to estate administration, some lawyers charge a flat-fee based upon a percentage of the estate. In other words, a lawyer might say – okay, the estate is worth $700,000, my fee is 3%, or $21,000. I think that’s outrageous and does harm to the legal community. Because the exact amount of work that a lawyer has to perform in any given estate varies, I find it necessary to charge an hourly rate, and in my opinion, it is inappropriate to charge a high flat-fee to just be say.
A $700,000 estate may be quite easy to administer. In fact, an estate worth $100,000 could be far harder to administer because of various issues than an estate worth $700,000.
But when people hear these type of stories – whether they read it in a newspaper or hear it from a friend – it is easy to see why people think they should forego legal advice. The truth is, if I thought something was going to cost me “millions of dollars” or a percentage of something to which I thought I was entitled without any correlation to the mount of work that need to be performed, I’d have to take a pass on it, too.
Such horror stories are, however, the exception, rather than the rule. Like the news, such stories make for great coffee-table conversation, but the story bears little resemblance to what most lawyers charge.
A typical legal bill for estate administration might range between several hundred to a few thousand dollars, depending upon the complexity of the estate. The amount of money and worry that an executor can save by retaining the services of a lawyer are worth much more than that.
For instance, the gentleman in the hypothetical at the beginning of this column will find himself in a virtual quagmire of legal issues. A multitude of tax returns will have to be filed and he, as executor, is liable to the beneficiaries for failing to carry-out his duties properly.
Probate may be simple. In fact, the Surrogate will walk you through the process. What follows the probating of the Will – which is the meat and bones of estate administration – can be, and in some case is, very difficult.
As with all things in life, be wary, be informed, know your limitations, but don’t let fear overcome commonsense.