Monday, November 13, 2006

How Much Does a Will Cost in B.C.?

I have been working on a memorandum for my clients and for people who are thinking about retaining me explaining how I charge for estate planning. It is not easy.

I do not like the practice of setting out a price list, such as $x for a will, $y for a power of attorney, etc. This approach implies that wills (or powers of attorney, or trusts) are generic documents, and are all pretty much the same. Worst, it could create the impression that lawyers sell forms.

Estate-planning lawyers do not sell stationary. We provide our knowledge, experience, skills, and judgment to assist people in differing circumstances, with differing needs, plan their estates. In one case, an estate plan may require two hours of a lawyer's time, and in another it will take fifteen. In one case, the estate plan may consist of a will with outright gifts to adult beneficiaries, and a power of attorney. In another, the plan may involve complex wills, trusts, transfers of assets, and estate freezes.

A lawyer's legal advice is as important as the documents that a lawyer produces. The lawyer's l advice may concern whom to appoint as executor, or guardian of a minor child, or the rights of a disinherited child. Or, an estate planning lawyer may provide advice about alternate estate plans to save income tax or probate fees.

For example, there are many couples who structure their affairs so that everything passes to the survivor. Each one's will provides that if he or she is the last to die, his or her estate is to be divided equally among the children. This may be an adequate will, but in some cases people can save their surviving spouses, or their children, thousands of dollars in Canadian income tax each year by creating trusts in their wills. I think that an estate planning lawyer should take the time to identify and explain to his or her clients options such as this one (when it is applicable). Some people will decide to stick to the simpler distribution plan, while others decide to opt for a more complex taxed planned will. Whatever choice the client makes, it should be an informed choice.

Some of the price lists I have seen offer incredibly cheap prices.

I don't think that we as a profession do our clients a service if we offer estate planning documents at a low price as a loss leader in the hopes of attracting more lucrative business later, or as an extra for some other legal service. It is not economical to do a thorough job, and to fully advise our clients if the fees do not reflect the time needed to do so. Estate planning is as important as any other area of the law. A client who wants to make sure his or her spouse, or disabled child, or minor children, are financially provided for if the client dies first, is entitled to the same full service when planning his or her estate as when buying a business.

Lawyers who do a significant amount of estate planning work, who take time to keep abreast of legal developments affecting estate planning, cannot do estate planning work as a loss leader.

If a price list isn't the answer, what is?

Quoting an hourly rate is not sufficient either. I keep track of my time, and consider my time when setting my fees. But, I don't think time should be the only factor. If I do something for the first time, it takes me longer than the second time. I don't think it is fair to charge the first client more than the second. Even if fees are based on time, there should be an adjustment made to reflect the value of the work to a client.

I also realize that it may not be helpful to quote an hourly rate to a client or prospective client who wants to know the approximate fees for something. Lawyers are in a better position to estimate the time it will take for an estate-planning matter than their clients.

What I am trying to do in my memorandum is set out in a general way some of the services I provide, and the potential value to my clients. I then set out brief descriptions of some estate plans, with estimated fees for each one. People can then get a general sense of how I charge, and some guidance on my fees before they meet with me.

I would be glad to read your comments.


Jenni Sawday said...

It is hard to explain to clients how important estate planning documents are and how attorneys set their fees in relation to the work product.

I tend to use my hourly rate to assist in setting my fees. It almost invariably takes me the same time to do a simple trust amendment even if it is the same amendment I did for another client. It requires reviewing the existing trust, reviewing what the client intends and making sure the newly typed amendment reflects their wishes.

It's more than just 6 or 12 minutes sometimes. And I look at it from what that time is worth to a client in terms of the value of my service. Since it really does take me an hour to converse with the client, pull the file, generate an amendment, review it again and such I have no hesitation to charge for an hour's worth of my time.

I have to admit that many clients are reluctant to pay the fee. It is just the nature of the beast. Clients are more willing to pay $340 to get new brakes on their car than to pay an attorney $150 to $225 for a trust amendment.

Stan Rule said...

Thanks for your comment Jennifer. I notice that you have renamed and moved your estate planning blog. I will update my link.

Thomas Rockwood said...

Wills and Trusts Most people a will is easy to produce and can be prepared using legal software such as quicken. You can ensure your will is a well-written document and clearly represents your wishes by having it professionally done by an attorney. Most people do not realize that there can be major problems as a result of creating a simple.

Living Wills

Charlie Cory said...

I live in the UK, so perhaps our laws may be different to yours.

However, I am interested in your opinion as to whether trusts are a useful vehicle for avoiding inheritence taxes?