The Gazette 1982

JULY/AUGUS T

1982

GAZETTE

Expediting the Administration of Estates An edited version of a paper by Peter H. Quinlan M.B.A., Solicitor.

S OLICITORS have a growing concern about the increasing complexity of administering estates, the high labour input required and the impact of inflation on the cost of doing the work. Clients are often disappointed by the length of time sometimes taken to complete an administration and exasperated by the real or apparent inactivity of those who are doing the job, as well by a lack of communication. There are times when the client's views are justified and an analysis of the way in which many administrations are conducted yields evidence of the following problems:— 1. Acceptance of work by solicitors without their considering whether it can be carried out by them at levels of reasonable competence and cost, and their ignoring factors that may create undue complexity or volume of work. 2. Administering estates on the basis of single general correspondence files which are allowed to accumulate unstructured, apart from date sequence, and which often become hopelessly unwieldy. Those involved hope that this file, if analysed with sufficient perseverance, will in some way produce the variety ot specific information required for the range ot financial analyses and reports such as cash budgets, tax returns, administration accounts, etc. which will be needed during the administration. 3. Failure to appreciate that administration is no longer primarily a distribution and accounting exercise, centered on computation of the residue, and which a competent book-keeper could handle. Now the additional taxes to be accounted for not merely add an extra limb to the work of administration but greatly complicate the distribution accounting itselt and increase the need for collecting and arranging information systematically. 4. The absence of any overall plan or strategy for the conduct of a particular case. There should always be an overall plan or strategy to take account of the three main aspects of any estate, namely (i) the entitlements and needs of beneficiaries, (11) the type and quantity of assets and liabilities (111) capital tax burdens (if any) so that optimal decisions can be taken for beneficiaries. Such a plan should be formulated as early as possible, because it will involve specifying the main steps to be taken in handling assets, the main financial reports and tax returns that will be required and, accordingly, the structure of information and records. 5. Failure to break down the work into different

types of activity, thus limiting the extent to which activities can be delegated. It is easy to say that the overall objective in the administration of estates should be to distribute as much as possible as quickly as possible, to beneficiaries and to obtain an acceptable level of profit for the solicitor. However, the statement of overall objectives in such terms does not give much help in any particular case: becuase the intervening work activities between the start and finish of a case have not been identified; because such overall objectives are not sufficiently specific to provide guide lines for the intervening work activities — professional, clerical and accounting, that are involved. In order to be helpful they must be restated in terms of the work steps that comprise an administration. Examples of intervening objectives might be: specify what steps are necessary for each case; decide best methods for collecting information efficiently; structure all records to facilitate management of activities and preparation of financial reports. Adopting a Systematic Approach It is suggested that a simple and effective system for the administration of estates can be put into operation without difficulty. The following activities are identifiable as the essential core of administration work. 1. Take instructions. 2. Decide overall strategy. 3. Collect detailed information to ascertaining (a) the title of the persons involved (e.g. Personal Rep., Beneficiary, Creditors) and (b) the amounts and values of assets, debts and legacies. 4. Summarise and arrange this information in (i) the Schedule of Assets (ii) the Administration Record. 5. Prepare tax returns. 6. Obtain Grant of Probate or Administration (or alternative title document e.g. death certificate, or specially negotiated title, where the holder of the asset waives requirement to furnish Grant). 7. Exhibit the Grant (or alternative title docu- ment). 8. Collect assets; record cash in Lodgments File. 9. Review correspondence files. Write up Administration Record. 10. Preparation of cash budget and computation of residue. 11. Discharge of debts, legacies and residue. 12. Review correspondence files and write up

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