Estate Planning Costs Agreements: A Guide to Protecting Your Firm
Every estate planning lawyer has a story of an estate planning file going pear-shaped due to something unexpected.
While it is not always possible to avoid things going wrong on your matter, it is possible to help protect your firm’s position and set a clear upfront expectation for your clients by specifically addressing the issues which commonly arise on estate planning matters in your costs agreement.
For this reason, at The Art of Estate Planning, we have developed a specific set of clauses that we recommend be included in the costs agreement for every estate planning matter.
Prefer to listen instead? Check out Episode #22 of The Art of Estate Planning Podcast, where we discuss what every estate planning lawyer needs to include in an airtight costs agreement.
Here are five essential issues you should be covering in your estate planning costs agreement:
1. Acting for Couples and Managing Conflicts of Interest Between Them
It is common practice to act for two clients at once when preparing estate planning documents, but we do not always turn our mind to the ethical issues that can arise when their interests stop being aligned.
For instance, when couples start giving inconsistent instructions, or reveal information to you that they want to be kept secret from their spouse.
Things can get messy fast, and you essentially have to stop acting for both parties. Ouch! Clients rarely like being ‘sacked’ and then there is the harder conversation about how to manage your fees for the work to date.
While this scenario might only arise once in a blue moon, this is where your costs agreement shines. Having protections in your costs agreement giving you the right to immediately cease your engagement and charge for your work to date protects your firm from the unexpected and gives you a clear protocol to follow.
Our Estate Planning Pricing Toolkit includes costs agreement clauses that protect estate planning lawyers when things go south. You can drag and drop The Art of Estate Planning’s costs agreement clauses into your existing compliant templates.
Start NowOur toolkit includes clauses specifying that when acting for a couple, there must be total transparency of communication and alignment of instructions, setting out the expectation for clients at the beginning of the engagement.
2. Secure Storage Obligations, Terms, and Release Protocols
In our costs agreement precedent, we include detailed clauses about secure storage. Secure storage represents a long-term commitment to the client and should answer:
-
What is the process and cost for release of documents, including to attorneys, executors and when transferring the file to another firm?
-
Who is responsible for checking death notices and contacting executors?
-
How long will storage be free, and when does the firm start charging a storage fee?
The Art of Estate Planning’s costs agreement precedent includes prompts so you can customise these clauses to reflect your firm’s business model and policies. Secure storage is not for the faint-hearted, but it goes hand-in-hand with estate planning.
3. Limits on the Scope of Work (Tax, BDBNs, and Financial Advice)
The Art of Estate Planning’s costs agreement includes "ring-fencing", which specifies what is and is not included in the scope of work.
Estate planning sounds simple - just a will and enduring power of attorney, right?
But in reality, there are many peripheral issues, and the responsibility can become murky, especially when collaborating with accountants and financial advisers.
If you updated a client’s Binding Death Benefit Nomination (BDBN), who is responsible for lodging it? Who ensures the super fund has accepted the BDBN?
Land tax, capital gains tax, trust deed review, life insurance, business succession, social security … the list goes on!
4. Changes to Instructions, Correcting Errors, Incomplete Information and Change of Mind Alterations
When working on a fixed-price basis, there are certain assumptions built into that price, for instance, that complete and timely instructions will be provided at the beginning of the matter.
So when things do not go as expected – e.g. the client takes 3 months to finalise their instructions, or changes their mind in the signing meeting – you need to be able to adjust the price to reflect those changes.
If the thought of issuing a price variation makes you want to vomit, and you find yourself chickening out and just absorbing the cost increase … having a clear procedure set out in your costs agreement will make things easier, for you and the client.
Failing to adjust your pricing to reflect client variations can undermine your firm’s profitability. Many of us feel self-conscious about updating prices to meet customisation requests, but this is not about shutting down changes or disengaging. It is simply acknowledging that when clients want more than an 'off-the-shelf' solution, the pricing must reflect that.
Communicating your expectation and the clients’ responsibility upfront in the costs agreement is simply kind.
5. Clients behaving badly
There are certain client behaviours that can be really frustrating – think uploading your advice into artificial intelligence programs, recording your conversations without your knowledge, amending the PDF documents and sending them back to you, going through every boilerplate with a red pen … we have all been there!
These types of behaviours have you writing long emails, erode your profit, and generally undermine your client relationship.
Making it clear from the outset in your costs agreement that these are not permitted can be really beneficial to helping you disengage if the behaviour arises, or hopefully let the client know that you are not the right fit for them before the engagement even begins.
Freebie
If you want to deep-dive into the other essential clauses, we have a freebie for you: "The 15 Essential Clauses to Include in Your Costs Agreement for Estate Planning Matters".
Download NowStay connected with news and updates!
Join our mailing list to receive the latest news and updates from our team.
Don't worry, your information will not be shared.
We hate SPAM. We will never sell your information, for any reason.
