Tag: legal fees
This weekend marks the end of the 105th Tour de France. This year’s race has been full of controversies, first as a result of allegations of doping by pre-race favourite and four-time winner Chris Froome (and a related threatened cyclist strike) and subsequently ranging from disqualification of one cyclist for punching another to the inadvertent tear-gassing of cyclists by French police.
This spring, news surfaced regarding a settlement negotiated in respect of the claims against controversial cycling figure Lance Armstrong. Armstrong’s former teammate, Floyd Landis, had commenced proceedings against him in 2010 under the False Claims Act. The United States government became involved in the fraud proceedings in 2013 after Armstrong admitted to using performance-enhancing drugs after years of public denial.
The litigation commenced by Landis was settled earlier this year. Terms of settlement were reported to involve a payment by Armstrong of $5 million (of the $100 million claimed against him), as well as a payment to Landis of $1.65 million in legal fees. Accordingly, Landis’ one-quarter share in the settlement payment is less than what he will receive in legal fees.
It is not unusual in our work to see settlement terms involving the payment of one or more party’s legal fees as part of or in addition to a settlement payment. Especially where litigation spans the better part of a decade, the legal fees incurred can rival or exceed the quantum of the settlement payment itself and may form an important part of negotiations.
Have a great weekend,
Not every estate requires probate, but it’s a near essential for many. And while lawyers retained to undertake the probate process on behalf of estate trustees are entitled to compensation, it must be fair and reasonable in the circumstances.
The main reason to seek probate is to gain the ability to deal with certain kinds of assets or certain kinds of third parties. In particular, if the estate includes real estate that is not held in joint tenancy, probate is usually necessary to transfer title to the property.
There can be a lot involved. The probate process involves a court application and the verification and valuation of estate assets, amongst other things. While it can be a straightforward process for many estates, it can be a complex undertaking in others. For example, the deceased may have owned property that needs an appraisal, or had multiple bank and investment accounts, or owned assets in foreign jurisdictions.
Legal fees will vary
For this reason, it’s never a “one size fits all” approach when determining a fair and reasonable legal fee for the probate process. Because it’s not always possible at the beginning of a matter to determine how long it’s going to take to do the job, many lawyers charge by the hour. However, others charge from 1.5% to 2% of the estate value to obtain probate. In Ontario, that can equal or exceed the probate fee (estate administration tax). While these amounts might also include fees for some of the estate trustee’s work, they don’t always. The courts have taken notice, and are requiring lawyers to have separate files: one for legal work and one for executor’s work. You can find an excellent discussion of these points and others relating to probate costs here: http://www.makeawillcanada.ca/truth-about-probate/.
Avoiding disagreements with beneficiaries over legal fees is important, not only for the administration of the estate but also as a matter of business – a solicitor would not wish to be seen as unfairly charging excessive fees. The way to avoid such allegation is through accurate docketing and providing a paper trail to justify actions taken – including a decision to incur professional fees in addition to any compensation for estate trustee work.
Thank you for reading.
When a person accepts the role of Estate Trustee, it is a common assumption that they will be indemnified for any expenses incurred as a result of the administration of the Estate. This includes legal fees, which are typically recoverable from the Estate assets and take priority over distributions to beneficiaries. However, this is not always the case.
The denial of legal fees of an Estate Trustee has been ordered when all or a portion of the legal fees has been incurred to protect the personal interest of the Estate Trustee. This was the case in Etobicoke Human Society v. Rinaldi, 2015 CarswellOnt 20495, 14 E.T.R. (4th) 86 (Ont. S.C.J.). In this particular case, the Estate Trustee’s interests in propounding the Will were twofold. Not only did he have a fiduciary duty to propound the Will but also stood to gain a personal financial benefit from the Estate if the Will was successfully propounded.
The Estate and Trusts Reports recently published “Etobicoke Human Society v. Rinaldi: A Case Comment” written by Ian Hull and Suzana Popovic-Montag (the “Case Comment”), which interestingly, addresses the Court’s finding that an Estate Trustee does not have a duty to propound a Will when the testator’s capacity is challenged and therefore is not entitled to indemnification of legal fees.
I encourage you to read the Case Comment as it provides an excellent overview of the common law principles relating to an Estate Trustee’s duty to propound a Will and the underlying purpose for providing indemnification for reasonable legal costs.
You may also be interested to read: Solicitor as Trustee: Indemnification for Legal Fees
Thanks for reading!
Listen to Compensation for work done by estate trustees and solicitors.
This week on Hull on Estates, Paul Trudelle and Diane Vieira discuss compensation for work done by estate trustees and estate solicitors.
Rooney Estate v. Stewart Estate 2007 WL3019262 (Ont. S.C.J.), 2007 CarswellOnt 650
Listen to The Formal Passing of Accounts.
This week on Hull on Estate and Succession Planning, Ian and Suzana talk about the specifics of what happens when you have to go to court to formally pass accounts.
Read the transcribed version of "Tax Considerations for Separated Spouses"
During Hull on Estate and Succession Planning Podcast #57, Ian Hull and Suzana Popovic-Montag discuss tax considerations to keep in mind within the context of separated spouses.
They cover such issues as tax liability, spousal support and child support deductability and the deductability of legal fees.