Probate – do it yourself? or do you use the solicitor who holds the will? or not do it at all, if you hold ‘power of attorney’? (What is ‘probate’, anyway?)

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Registrar John Earles runs the Probate Unit of the High Court. He is not keen on people taking a DIY approach to probate applications.  It’s too easy for them to get things wrong, and they expect advice from his staff which his staff are not allowed to provide.

I learnt this when I phoned to ask him whether the Ministry of Justice had any plans to automate the probate-application system. (I didn’t want to put time and effort into developing my own probate service if it was going to be gazumped by a bureaucratic initiative.)

He thought automation would be too difficult. He knew of no such plans.

Ah well, that’s a consolation.

‘Probate’ is the technical name for the piece of paper issued by the High Court to authorise the executor/s to administer a will, after the will-maker has died.  It comes from the Latin for ‘to prove’. The executor/s have to ‘prove’ to the High Court’s satisfaction that the will is valid, the will-maker is dead, that they are the executor/s named in the will, and that they are willing and able to fulfil their duties as executors.

Once they have located and brought in the assets of the deceased, and paid any debts of the estate, they become ‘trustees’ of the estate until it is finally distributed to the beneficiaries.

Even if an executor holds the ‘power of attorney’ for the person who has died, they will still have to apply for probate (assuming the willmaker owns assets that require probate). The power of attorney lapses when the donor of that power dies.

Back to DIY probate applications….

They are not impossible.

Often the trickiest part of a probate application is the exhibit note that has to be on the will.  Literally ON the will.

Until relatively recently, law firms would still use a typewriter to add the exhibit note, because it had to be typed onto the will itself. The ORIGINAL will. (And you couldn’t unstaple the original will and feed it through a printer, even if you managed to set it up to print the exhibit note in the right place so it would not obscure the text or signatures, because the staple holes would create a separate problem, not to mention the risk of the printer massacring the original will.)

Now a sticky label is acceptable.  Or a handwritten exhibit note.

Registrar Earles told me that it would not be acceptable to staple a separate sheet of paper (bearing the exhibit note) to the original will, even though this is now accepted practice for exhibits to affidavits in general. (I have my doubts about that, and will follow it up a little further down the track.)

The wording of the exhibit note is its own challenge.  Or exhibit notes, if there is more than one executor and those executors won’t be swearing/affirming the affidavit at the same time and place.

Staples, paper clips, file clips, pins…  If they encounter an original will, at ANY time before that will reaches the High Court registry with the probate application, a special affidavit may be needed, to confirm that no extra document was ever attached to the will.

There are plenty of other possible complications, with changes of address or name, or executors no longer available, willing or eligible to act, or lost original wills, or indeed if no body was ever found.

It’s those possible complications, and technical details, that make it advisable to use an expert to prepare the application for probate.

That expert does not have to be the solicitor who holds the will.  If a more cost-effective option exists, it is okay to use it.

It was traditional that the solicitor (or firm) who held the will would have the ‘right’ to administer the estate, and to charge significant legal fees for doing so.  It was impolite for anyone to suggest otherwise.

That was why law firms often provided a ‘free wills’ service, as too did the Public Trust. Drafting the will was free, but recompensed when the willpayer died and the firm was able to charge for the estate administration.

It was better still if the solicitor or law firm was named as an executor. That pretty well guaranteed that the firm would get the fees for the estate administration (including probate).

And the fees were significant. A generation or two ago, they were set by a standard scale, and increased according to the value of the estate.  (Alas, that was before I entered legal practice. Older colleagues reminisced fondly about the days of ‘the scale’. I think the scale was abolished in the 1970s, but have not checked. If you know, please comment.)

Times have changed.

There is no such ‘right’ to administer a will because the firm holds it.  (There never was.)

The executor/s have a duty to be financially prudent, and businesslike, in obtaining probate, getting in the estate’s assets, paying the estate’s debts, doing any other necessary administration, making distribution/s to beneficiaries, and (if required) providing full accounts to the High Court.

So, if the executor/s can reasonably do some of this work themselves, they may. (If they are lawyers or accountants, they may also charge fees for doing so.)

If the executor/s need assistance, they are free to choose who to use.

A solicitor should be able to provide information about likely fees for different aspects of estate administration. Executors may wish to compare that pricing information with the fees charged by the Public Trust or Perpetual Guardian, two major trustee companies. And, of course, – for the application for probate (which is just one part of the ‘estate administration’) – with Kiwilaw’s service

In many instances, it makes sense to stay with the solicitor who prepared the will, holds the will, knows the family, and knows what the will-maker wanted and intended.

Except, perhaps, for the application for probate itself. That does not require knowledge of the family or the will-maker, only straight-forward factual information from the executors.

Check the fees first.  If they cannot match Kiwilaw, email us. 

Cheryl Simes

26 June 2018

 

Reduce the family friction – put controls in your EPA (enduring power of attorney) – to protect your attorney from attack by other members of the family

mental-health-2313428_1280If you become incapable of making decisions, or of communicating decisions, who will do this for you?

The cheapest answer is to appoint an ‘attorney’ beforehand, by a document known as an ‘enduring power of attorney’ (‘EPA’). 

You do not have to be ‘old’. Young people have car crashes and other experiences that can leave them alive but mentally incapable. A well-drafted EPA can last a lifetime if it includes appropriate successor attorneys; although usually EPAs should be reviewed when you review your will.

There are two types of EPA: (a) for property; (b) for personal care and welfare.

An EPA for personal care and welfare does not come into effect until you lose mental capacity. It may never be needed; but it’s too late if you wait until the need arises. (Then, instead of an EPA, someone will have to apply to the Family Court for an order appointing a welfare guardian. That is more complicated and expensive and also involves regular reviews.)

An EPA for property comes into effect whenever you choose.  If you lose mental capacity before making an EPA, someone will have to apply to the Family Court for an order appointing one or more property managers. That is more complicated and expensive and requires formal accounts to be prepared and regular reviews.

You can revoke (cancel) or suspend the appointment of an ‘attorney’. If you do, you must given written notice to the attorney.

You can appoint anyone to act as your ‘attorney’, as long as they are over 20, not bankrupt, and not mentally incapable themselves. You can also appoint one or more ‘successor’ attorneys, who become your attorney if the first-named attorney cannot act.

People often appoint (a) their spouse; (b) if there is no spouse, or as a ‘successor attorney’, an adult child.  In many families, that can create avoidable issues.

Family conflict can arise if other family members mistrust the appointed ‘attorney’, or indeed if the appointed ‘attorney’ abuses the trust that has been placed in them.

Your preferred attorney may also be doubtful whether they want sole responsibility.

You can reduce such issues by (a) including a clause requiring the attorney to consult another named person before making decisions; and/or (b) requiring the attorney to provide information to a named person (‘supervisor’). These options are available on the standard forms. The named person is not required to sign the EPA; however, it is wise to obtain written confirmation of their willingness to perform this role.

Information. Option (b) (a ‘supervisor’ – to whom the attorney must provide information) requires you to specify in the EPA what information must be provided, and when. For an EPA (personal care and welfare), examples could include: ‘Two-monthly email updates on donor’s circumstances’; or ‘information about decisions about residential care’; or ‘copies of medical notes within 48 hours of medical attention’. For an EPA (property), examples could include: ‘Monthly bank statements’; or ‘Within 48 hours, details about any financial transaction exceeding $200’; or ‘Statements and management reports from donor’s investments.’  For any EPA, there could also be a general clause: ‘Any other information as requested, within 7 days of request.’

The ‘attorney’ can then rely on the other named person to act as a visible check on the attorney’s decisions. The other person can potentially raise early concerns with other family members or the Family Court if the attorney exceeds their authority or abuses their position and will not correct their error. They can also answer speculative but unfounded concerns raised by other family members.

Keep records. For this to work, there needs to be an accessible record of the attorney consulting or informing the other person. Therefore the attorney should keep a ‘paper trail’ (or at least an email trail), to prove that everything has been above board. Keep a paper file or electronic file of decisions made and the communications about them.

Resisting challenges. A disgruntled relative may still try to challenge the attorney’s actions; but they will need solid grounds, and they risk having to pay the attorney’s costs of defending any such challenge. It will be much easier to resist any such challenge if two people are involved when decisions are made, and if the decisions are systematically and accurately recorded.

For property matters only (not available for a personal-care-and-welfare EPA), another option is to appoint two concurrent attorneys, and require them to act jointly. You can still also include consultation and/or supervision requirements as well.

Depending on your circumstances, you may want to include professionals such as lawyers or accountants as attorneys, consultants, or supervisors. This will incur ongoing fees.  In many circumstances it is not necessary.

However, an independent professional legal adviser is required when you first make the EPA: to advise you about the EPA, witness your signature, and certify to their belief that you are acting voluntarily and with full understanding of the EPA.  This is a legal requirement, put in place by Parliament. That adviser must be a lawyer, qualified legal executive, or representative of a trustee corporation.

Resources about EPAs:

Main government website: http://superseniors.msd.govt.nz/finance-planning/enduring-power-of-attorney/

Family Court involvement in EPAs: https://www.justice.govt.nz/family/powers-to-make-decisions/the-court-and-enduring-power-of-attorney-epa/

Legislation: Protection of Personal and Property Rights Act 1988 Part 9

Informative videos:

When should you set up an EPA?

Can a younger person get an EPA?

Who can you name as your attorney?

Can I instruct my attorney to consult other people?

If I don’t have an EPA, and if decisions need to be made about my property and/or my personal care and welfare after I become mentally incapable, what happens? 

What are the main barriers to getting an EPA?

What triggers an EPA to come into effect?

How do I get an EPA?

What happens to my EPA if I move to another country?

Forms:

EPA – Property (new form March 2017)

EPA – Personal care and welfare (new form March 2017)

Remember – although you may download these forms and complete them yourself, they are not legally valid unless they are witnessed and certified by a professional legal adviser.  You may reduce your legal fees by downloading and completing these yourself before you meet with the legal adviser. Ask your legal adviser about this.

At Kiwilaw you will pay less if you download and complete the forms yourself, as long as they are clear and legible.

 

Cheryl Simes

26 October 2017