Estate Administration, in general, can be a lengthy and complicated process. The size of the Estate, number of Beneficiaries and other factors, such as claims being made against the Estate, can all affect its progression.
Therefore, it’s unfortunate that many people are unaware of the costs involved, who pays Executor’s legal fees, as well as the difficulties of acting as Executor of an Estate. An Executor is not only required to administer the Estate according to the wishes of the deceased or Testator but also to defend the Estate against any claims, such as those contesting the Will.
Moreover, the costs and typical expenses involved in administering an Estate go beyond making funeral arrangements and paying the Probate application fee, and they sometimes need to be paid upfront by the Executor until reimbursed from the estate funds once collected.
In this post, we will answer the question: Who pays for the executor’s legal fees?
We will cover Estate disputes and the parties who may be liable to shoulder estate legal fees, depending on the outcome of such disagreements. We will also discuss the legal fees for administering an estate and expenses that come with using the services of a probate lawyer in the administration of an Estate.
Note: this article only applies to legal costs associated directly to the Estate and does not apply where an Executor or Administrator defends themselves for personal liability if they did not complete the deceased estate administration according to the rules and legislation.
Table of Contents
1. Who Are the Parties in Estate Disputes?
One would think that with a valid Will, the process of administering an Estate would be a simple and straightforward one.
However, complications can and do arise during the process of administering an Estate. Such disputes can come about for a variety of reasons, such as when:
- The appointed Executor (or Administrator) is considered unfit for the task.
- The Executor (or Administrator) is not performing their role properly or efficiently.
- The Beneficiaries do not agree with the decisions of the Executor (or Administrator), such as regarding the manner of disposition of the Estate.
- The Beneficiaries disagree with the Executor’s interpretation of the Will.
- The Beneficiaries find the terms of the Will unfair.
- There are interested parties who believe they have been disregarded or treated unfairly in the Will.
- The Beneficiaries do not receive any updates or information about the Estate, or they do not receive their entitlement from the Executor (or Administrator) for months or years.
Executors facing legal dilemmas or disputes involving the Estate and requiring the advice of solicitors may be discouraged by the thought of having to pay thousands of dollars in legal fees for estate administration. This is why sometimes, an Executor can end up feeling helpless and immobilised, stressing over expenses they are personally unable to pay should access to Estate funds be not available yet and the lawyer doesn’t agree for payment once the funds are available.
And, more often than not, there are misconceptions and misunderstandings regarding who is responsible for paying lawyers or solicitors. These can cause Executors unnecessary stress. They might feel they can’t afford to get legal help because the Estate Administration process hasn’t progressed sufficiently for them to have access to estate funds and pay the bills.
2. Who Pays for Legal Fees for Administering an Estate?
Whether there are disputes regarding an Estate or the Executor deems the need to get the professional legal advice of probate lawyers in Melbourne (or city and state the Estate assets are located in), engaging the help of solicitors makes sense.
If you are the Executor (or Administrator) of an Estate, working with a solicitor or a probate lawyer can mean getting valuable assistance in the following ways:
- The solicitor can provide detailed information regarding your rights and responsibilities.
- They can assist you in obtaining legal documents and complying with all the requirements needed to apply for Probate.
- They can help you with identifying, collecting and cataloguing the deceased person’s assets.
- They can provide advice on the legal order of debts or how you should prioritise and pay off debts of the Estate, as well as how you should distribute the remaining assets.
- In the absence of a Will, they can explain the legal order of distribution of the Estate.
- They can assist you with the preparation of the report and statement of account for presentation to the Beneficiaries.
- They can help you deal with disputes or claims regarding the Estate.
The type of legal assistance you will receive as the Executor (or Administrator) of an Estate can prove invaluable, especially if you want to efficiently and properly carry out your tasks.
Unfortunately, Executors and Administrators often consider solicitor fees an unnecessary expense. In fact, it is their duty to ensure the Estate is administered correctly under the law and, hence, should be considered a normal part of the administration costs to do a good job, so long as it is within reason. This means that the Estate itself will be responsible for shouldering any payments to the solicitor – whether it is the probate lawyer’s flat fee or retainer fee – plus all other fees and costs related to its administration.
Other costs involved in administering an Estate include the following:
- Unpaid bills of the deceased, such as utilities, insurance, internet, phone, body corporate or strata fees, water rates, and others.
- Funeral expenses, which need to be arranged immediately and can cost anywhere between $5,000 and $15,000.
- Ongoing costs and fees, which depend on what types of assets are included in the Estate. If there is rental property, these include cleaning costs, ongoing property maintenance and repairs.
- Taxes and liaising with the ATO, as the Executor is tasked to finalise the tax affairs of the deceased.
Aside from taking care of the above payments, an Executor may have to take time off managing their business or working to be able to deal with the tasks of administering an Estate and overseeing the deceased’s personal and financial affairs. The Executor may also need to factor in transport costs if they live elsewhere and need to drive or commute to undertake their role.
Moreover, if there is a property that needs to be sold, the Executor must pay for conveyancing and contract preparation fees, agency commissions and marketing expenses.
Add to these the Probate application fee, Executor’s expenses and all other payments that need to be made to benefit the Estate. In most cases, these expenses are paid directly by the Estate. Else, the Executor or Beneficiary makes the payments and is later reimbursed by the Estate once there are funds available.
3. Who May End Up Paying the Other Party’s Legal Bill and in What Situations?
If there is a dispute or a claim is made against an Estate, or the validity of a Will is the issue, ascertaining who will pay the estate lawyer fees and disbursements of the court case is a primary concern.
In general, each party would have to pay for their own legal fees — that is, the other party will pay for theirs and the Estate will pay for its own.
If the matter is brought to court, the court is left to make a decision as to who pays for legal fees and costs of the proceedings. The general rule here is that if the other party’s legal case is successful, then the Estate may likely need to pay for all or part of the other party’s legal expenses.
However, if the Estate’s case is successful, the other party may be required by the court to pay a substantial share of the Estate’s legal costs. The unsuccessful party would also have to pay for their own solicitor’s fees.
If either party enters into a ‘no-win, no fee’ arrangement with their solicitor, they have the assurance that they will only pay for their legal fees if their claim is successful and the settlement funds they receive are adequate to cover the fees.
4. How Much Do Estate Lawyers Charge?
As the Executor (or Administrator) of an Estate, you may feel more confident in performing your role with the help of a solicitor or probate lawyer in Perth, Sydney, Melbourne, Brisbane or your city.
Below are estimated fees and other estate lawyer costs when getting a probate lawyer on board in New South Wales, Queensland, Victoria and Western Australia.
- New South Wales: Probate lawyer fees depend on the disclosed value of assets. You also need to factor in the goods and sales tax (GST) to the cost. For example, if the disclosed value of assets does not exceed $30,000, the cost payable is $560 plus $13.33 for each $1,000 up to $30,000 plus the GST.
- Queensland and Victoria: Some lawyers charge hourly rates, including phone calls, document printing and postage costs. Others take a percentage of the Estate, whilst some solicitors charge fees depending on the complexity of the matter.
- Western Australia: Just like in other states, the ways fees are charged by solicitors varies depending on the firm you are dealing with. Some probate lawyers charge fixed fees when it comes to Probate applications. Others bill by the hour or adjust their rates based on the simplicity or complexity of the undertaking.
When choosing a probate lawyer to work with, ensure that you are clear about what tasks they are expected to help you with. The Probate application is one task; however, getting them involved in other Estate matters will incur additional fees.
Also, note that if the lawyer also performs the role of Executor, they might be entitled to claim an Executor’s commission, which might be equivalent to around 3% to 5% of the total value of the Estate.
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Conclusion
Although the intent behind creating a valid Will is to ensure the smooth and easy disposition of assets, the Estate Administration process itself can be fraught with conflict or complications.
Therefore, getting a legal advisor to guide you at various stages when administering an Estate makes perfect sense. However, you also need to be aware of the costs and fees that come with enlisting professional legal help.
To discuss your situation before contacting an Estate Lawyer, you can book a free phone appointment with simplyEstate.
For detailed information on Estate Administration, you might want to take a look at Australia’s most comprehensive Executor Guide and use our online Checklists & Tools to save some time and money.