Grace’s mother died in 2013, leaving her estate in equal portions to Grace and her two siblings. Grace’s mother appointed a trustee company to administer her will.
However, although the terms of the will were simple, the estate itself was complex. Grace’s mother owned several properties, one of which was halfway through a subdivision, another of which was being leased by Grace’s brother. Grace’s sister had felt entitled to more than a third of the estate, and lodged a formal claim against the estate under the Family Protection Act, although Grace and the trustee company were able to successfully settle the claim.
By 2016, 3 years after Grace’s mother passed away, the estate was almost entirely distributed. The subdivision had been completed and the property sold. Grace’s brother had agreed to purchase the property he was renting, and have the price deducted from his share of the estate. And the Family Protection Act claim had been fully resolved. The estate was almost ready to be finalised.
Delays administering the estate
However, the estate administration was not finalised in 2016. In fact, the estate still had not been distributed by the end of 2019, nearly 4 years later.
The trustee company had been through a restructuring in 2016, and the estate had passed to a new manager. This change in management seemed to bring the estate administration to a standstill, and the manager was only very infrequently replying to Grace’s many messages.
Trustee company agrees to write off fees and finalise estate
Grace and her siblings met with the trustee company in 2019. The siblings expressed their dissatisfaction with the trustee company – particularly at the fact that the trustee’s fees had been accumulating for the past 4 years, while no progress was being made.
The trustee acknowledged that the siblings’ concerns were justified, and they agreed to write off $12,000 of the $28,000 they had charged in fees to the estate. They also committed to finalising the estate, including preparing financial statements and tax returns, within the next few months. The siblings were happy with this, and they accepted the offer.
The estate was finalised in 2020, as per the trustee company’s agreement with the siblings. However, when the estate was finalised, the trustee company provided another invoice for $6,000: their costs preparing financial statements and finalising the estate.
Dispute
Grace and her siblings were not pleased with the $6,000 invoice. Grace said that she and her siblings knew that there was some work left to do, and expected to be charged for it. However, they had no idea they could be left with another $6,000 to pay.
The trustee company said that quite a lot of work had gone into finalising the estate, and they considered the $6,000 fee fair.
Grace brought her complaint to FSCL.
Review
We reviewed the work the trustee company’s work administering the estate, and we found that there had been some significant and unjustified delays. As at 2016, the estate was almost totally administered, with the trustee company only needing to prepare tax returns and financial statements, and issue a final distribution to have the estate fully administered. The following four years of delays were not necessary, and we accepted that the delays had caused Grace and her siblings some substantial stress and inconvenience.
However, Grace and her siblings had agreed to accept the $12,000 fee reduction as compensation. We thought this was fair, and we did not think the trustee company should be required to pay any further compensation for the delays.
Next, we turned to look at the trustee company’s final $6,000 invoice. We could see from the trustee company’s file notes that Grace and her siblings had understood that there was going to be a fee for the trustee company’s work finalising the estate. And we could see from the trustee company’s timesheets that their staff had spent $6,000 worth of time working on the estate’s financial statements and tax returns.
However, we agreed with Grace that the $6,000 invoice was excessive. The trustee company needed to prepare 7 years of financial statements and tax returns, and this took a great deal of time. But if it had not been for the trustee company’s own delays, they would only have needed to prepare 3 years of statements and returns. We did not think it was fair for the trustee to charge for work which was only necessary due to their own delays.
Resolution
We suggested that a fair outcome would be for the trustee company to waive 4/7ths of their $6,000 invoice. The trustee company, Grace, and her siblings all agreed, and the complaint was settled.
Insights for participants
Sometimes you will receive a complaint from a client with whom you have an ongoing relationship. When responding to a complaint, it is always worth considering not just how you can get the complaint resolved, but how the complaint and the settlement might affect your relationship going forward. It is worth thinking about what your next interactions with your client are going to be, and whether you might encounter similar issues unless you can come to an understanding.
In this case, the trustee company might have been able to avoid the complaint if they had given a clearer indication of the costs involved in finalising the estate from the outset. The original complaint was about fees and delays – given there was still work to do and fees which the trustee company needed to charge and clear communication about the upcoming fees was always going to be crucial.
