The money we leave to our loved ones will be eroded by two main things: taxes & legal fees. Lawyers are another class of ‘Grown ups’ that we are trained to trust, and defer to. The safest thing is to start with the understanding that lawyers, like investment managers, are well paid professional whose interests are not necessarily aligned with yours (or those of your descendants).
I learned extreme cynicism about lawyers & probate when, in 1991, I bumped into Thomas Matthew [Further, comprehensive, details are available to anyone dropping into The French House pub on Dean Street, off Shaftesbury Avenue. ], the colourful husband of Princess Olga Romanoff, and brother to Theobald Matthew (deceased) whose estate had been looted by lawyers in a modern day version of Bleak House’s Jarndice Vs Jarndice. Even without seeing papers chronicling the chicanery practiced by a cast of learned & noble players in the matter of Theo Mathews’ estate, the public domain offers no shortage of cautionary tales. Marc Bolan, the rockstar, lead singer of 1970s supergroup T Rex was persuaded by his advisors to sign his assets (including the royalties on epic songs ‘Bang a gong (get it on)’, ‘children of the revolution’, etc) into a Trust as part of tax (& estate ?) planning. When, in 1977, Bolan died in a car crash, age 29, his young son, Rolan, and wife Gloria, saw nothing of the money. They were saved, and Rolan’s school fees paid, by David Bowie’s extreme generosity. All those royalties? Disappeared into thin air? I don’t expect that the record companies got a free pass from paying royalties to the trust, but the trust then did nothing to benefit Bolan’s family. While I can’t prove anything, my guess is that the trust used those royalties to pay fees to lawyers/trustees. For all I know the money is rolling up in the trust, and the lawyers have handed on to their own children their positions as trustees of the Marc Bolan trust, so that another generation can benefit from the wealth created by the musical genius of the late Mr Bolan.
If one is to use a lawyer or an accountant when will-writing, to have any chance of success, one needs to prevent the lawyer/accountant having interests that conflict with those of your descendants. This will mean pushing back against their standard advice which is to have them as an executor, and to have a ‘charging clause’ which allows a solicitor or other professional executor to do work for your estate, and then pay themselves from the estate. If asked ‘Do you want to give your solicitor the ability to write cheques to themselves, from your money, when you have gone?’, most people would say ‘No’. But that is what the standard charging clause permits. While your family is grieving, they are particularly likely to be overly trusting of, possibly avuncular, possibly quite smart, ‘professionals’ to handle the details. Even if they wise up, once a solicitor is your executor and armed with a charging clause, there is often little that your beneficiaries can do. The Theo Matthew estate litigation threw up a letter in which a solicitor wrote that “There is a tendency to under charge for the drafting of wills, in anticipation of goodies to come’. If your estate is to be protected from morphing into ‘goodies to come’ for your solicitor, you must must must must avoid making your solicitor (or accountant, or other ‘grown up’) your executor unless it is without the charging clause that most will try to include in your will and/or trust document.
Unfortunately, administering a will & obtaining probate is a bureaucratic and time consuming job. If you don’t have any better options, arm yourself with the knowledge that administering an estate can take hundreds of hours, and that a solicitor will probably charge from c£350+/hr (partner at a provincial firm) to £850+ per hour (for a ‘magic circle’ or prestigious London firm). The vast majority of the work is likely to be administrative rather than requiring legal brilliance, so you may as well specify that the solicitor should delegate each task to the most junior of their associates competent to perform the task. Probably more important for damage (fee) limitation is to make it explicit (by writing it into the will) that the solicitor cannot authorise any payment to themselves / their firm. A solicitor, or any other human being who is not a candidate for canonisation, when writing cheques to themselves, from an account that may not be scrutinised too carefully by anyone else, will have a tendency to err on the side of generosity. You can help keep them a bit more honest by stipulating that, rather than paying themselves, they need to present a detailed itemised bill to your beneficiaries (at least one of whom will probably be an executor, unless all your beneficiaries are young children), for approval and payment.
A trust can seem like a frightfully good idea, most firms of solicitors have trust departments (or at least a trust specialist) whose expertise is not only in the law of trusts, but in selling to their clients the idea that they need a trust. They may be very polished, and even more persistent, so, when you say that you don’t want or need a trust, if they persist, it is best to end the conversation. As humorist H.L.Mencken (or maybe it was Upton Sinclair, authorities disagree) observed ‘’It is difficult to get a man to understand something, when his salary depends upon his not understanding it’.
In some cases a trust may be a good idea, if you are leaving significant assets to young children, or the mentally incompetent. Unfortunately, over time, even the best trustees tend to start seeing the trust’s money as their own. Even when this does not cause them to ransack the trust, and divert the treasure therein to paying their fees, it often results in the most absurd attempts to micro manage the affairs of the beneficiaries. I have friends who, while undergraduates, were funded by family trusts, and ended up corresponding [This was the 1980s-90s when people wrote hardcopy letters as a standard method of communication] with the trustees at length over relatively trivial purchases that they wanted to make, or trips they wanted to take. The trustees came across as slightly fussy, avuncular, and risk averse types. Dealing with them seemed like a bit of an annoyance, but a liveable one (I had no such trust to tap for funds). A few years later, when I realised that the Trustees were usually family solicitors, and would have been charging (in 2019 terms) hundreds of pounds an hour for their correspondence, so that the cost of their time dwarfed the sum eventually shelled out to the beneficiary, my blood ran cold.
It may be much easier to avoid creating a trust than to invent a reliable way to make the trustees do what you want. As with investments while you are alive, so it is with estates/trusts when you die: be aware that smooth sounding professionals are not altruistic servants of your wishes, and, if their interests diverge from yours (or those your descendants/beneficiaries), it may not be enough to rely on their goodwill, or your hope/prayers, to ensure that they do the right thing. And, of course, the individual solicitor that you know may themselves die, leaving their role to be taken by someone from a later generation of their law firm’s intake.