What happens when business partner dies?

[Shazzzbat]

Hi

 

So, the above email has been sent to the (probate) solicitors, and responded to. Most notably, it caused them to attempt to revise their fee, but my friend had contracted for a "full estate service" at a 1.5% of the estate fee. She challenged this and sent them a copy of the contract she had signed. I can upload a redacted copy if anyone wants me to (tomorrow).

 

My friend responded with: "paralegalX had informed me that the price you had quoted for the full estate administration service for Probate covered all aspects of K's Estate including "dealing with the business". I checked with her twice and clarified both times that the fee (percentage of the estate) would cover all legal advice and dealing with the sale of the café, the sale of the Lotus (it had not at that time been written off), and that this meant I would have no need to speak to LM direct. ParalegalX agreed twice that there would be no extra fees other than conveyancy costs and estate agents costs and that their firm were able to advise on all issues and aspects of the Estate. We also confirmed that the Estate included the fact that K and I had a house, that he had the Lotus car with LM acting as guarantor on the finance, and a 50% share in a business. At no time did paralegalX indicate that there would be any extra costs incurred by liaising with other departments within your organisation. She also confirmed that it would be in your best interests to gather as many assets into the Estate as this had a direct effect on your fees. I, therefore, would expect there to be no extra costs from yourselves, especially as I have managed to provide information on the matter that your corporate department purely need to verify. On appointing a Solicitor I do not expect to spend hours and hours seeking out legal information on your behalf and then to be given a revised fee rate"

 

Friends solicitors replied that "I have passed the relevant documents, including the loan agreement, the sales receipt and the business valuation to our corporate department for their consideration. I can confirm that our corporate team will charge their own fees as distinct from our fees for their advice on dealing with the business. This is because their specialist knowledge is required to work out the value of the business and how much might be due to the estate".

 

The concerns are:

 

1. That my friend is to be charged an additional fee without that having been made clear in advance

2. Very little (if any) progress has been made in the 9 months since K's death

3. How can their corporate department value a business, 9 months after the date on which the valuation should be based? LM could have devalued the business or concealed income (although yes, she might have increased the vale)

 

How should we reply? It's point 3 that could have the most impact on my friend.

[unclebulgaria67]

I suspect the Solicitors probate service only related to funds that are private, not any business issues such as the Partnership.

 

If the Paralegal has promised a full service including the business, then your friend should hold them to this.

 

The Solicitor i know ( no longer in practice in the UK) would have assessed the whole situation and dealt with everything. Most Solicitors are quite capable of dealing with all aspects, as they have qualified in all aspects and have access to libaries of information they need. The trouble with these large corporate type Solicitors, is that they have Paralegals/legal executives dealing with most enquiries and then Solicitors specialising in different things. The old fashioned Solicitors from smaller companies tend to deal with lots of different things and can handle it all, unless it is massively complex, which i don't think your friend case is.

[Shazzzbat]

Given that this corporate probate factory has done nothing to date that we can see, is that grounds enough to say we've lost confidence and will look elsewhere?

[unclebulgaria67]

Given that this corporate probate factory has done nothing to date that we can see, is that grounds enough to say we've lost confidence and will look elsewhere?

 

That would just let them off the hook. They would still want paying for the work they have done.

 

Suggest a written complaint to their senior partner. If you visit the Law Society website, you might be able to obtain details of the Solicitors in charge of the company and can complain.

[Shazzzbat]

OK. I'll speak to my friend tomorrow and investigate. What a womble you are!

[Shazzzbat]

Ah - but before we contact the solicitors again - what is the position with regards to "How can their corporate department value a business, 9 months after the date on which the valuation should be based? LM could have devalued the business or concealed income (although yes, she might have increased the sale)"?

[BazzaS]

They would ask an expert to give their opinion of the business's value at that point in time.

It is hard to value a business for the current date, easier to value it in retrospect as more information is available.

[Shazzzbat]

Ok. Thanks. Do you have any idea, ballpark, what the fee for this should be?

[Shazzzbat]

Hi. Apologies for the above Q. There's no way anyone would or could answer that.

[Shazzzbat]

I have a question about the insurance for the car whose ownership is in dispute. It was insured for £37,000 (insurer's valuation) - the car value had increased as it was very specialist.

 

Purchase price: £32,995

KR paid a deposit of £6599.00.

KR then borrowed £26,396 + £7604.20 (cost of credit – interest/fees etc) = £34,000.20.

 

He was to pay 59 instalments of £564.92, commencing Jan 2013 - £33,330.28 and a final instalment of £669.92, making the total repaid £34,000.20. The 2 totals balance so that’s correct.

 

KR made 16 or 17 repayments when he died. Let’s say 16 – so he’d repaid £9038.72. That leaves outstanding finance of £24,961.48 at the time he died. The insurer sold the car (for scrap) for £26,000 – so the proceeds of the sale were £1038.52.

 

My question is would the insurer simply pay out the proceeds of the sale ie £26,000 minus outstanding finance of £24,961 - £1038 or

the full insured value of the car £37,000 minus the outstanding finance of £24,961 - £12,039

 

Thanks

[Shazzzbat]

.....or as KR died, would the finance have been written off and not repaid by the insurer?

[unclebulgaria67]

.....or as KR died, would the finance have been written off and not repaid by the insurer?

 

Insurance would normally pay the write off value, which would be the market value according to guides such as glass.co.uk at the time. Although on Insurance you state a value to give the Insurers an idea of value, the insurance policy would state that the cover was the market value at time of any loss. I don't think it was an actual write off, if the salvage value was £26000 compared to a market value of £37000. The Insurers would only pay out the repair cost, verified by an engineers inspection report.

 

Insurers would not involve themselves in the finance. I suspect what has happened here is that following the accident, the Insurers have simply paid the cost of the repair to the finance company and the finance company took the car back, as your friend did not want it. The finance company have then worked out what money was left after paying off the finance and sent this to the Solicitors.

 

This car was not a write off, if it still had a value of £26000, compared to market value of £37000. If there was major stuctural damage, then the salvage value would not be anywhere near £26000. The salvage value suggest the the car was repairable and in the end as your friend did not want to deal with it, the finance company dealt with if, taking the car back as it was owned by them.

 

Your friend should have had full details from the finance company stating exactly what happened, with a breakdown calculation of the amount left to her husbands estate.