Tara (00:57):
Hi everybody. It's episode 14 of the Art of Estate Planning podcast. I'm joined by the lovely Carrie Payne and hi Carrie.
Carrie (01:09):
Hey Tara. Lovely again. I'm enjoying the descriptors.
Tara (01:14):
Oh, I'm happy to compliment you all day. So this episode is about pricing for future changes to wills. So this came up in one of our TT Precedents Club hot seats a while ago about either what do you charge for people who you've done their full estate plan and they come back like a year or two later with minor changes, or perhaps even you are talking to prospective clients about implementing their estate plan and they're considering the investment and they're like, oh, if I want to make changes, how much is it going to cost? So it's kind of a difficult topic or a question that's hard to answer because there's so much uncertainty. So Carrie and I wanted just to talk about some of the practical ways that we've handled it in the past or things that we've seen and some of the suggestions that came through from the hot seat discussion as well. And we thought it would be useful just for everybody listening, maybe you'll get some ideas or think about how are you handling this in your firm? So Carrie, you've done a lot of work on this, you want to start us off?
Carrie (02:27):
I dunno if a lot of work is the right thing. I think when you love what you do, it's easy, but I think first of all, I want to thank, I think it was Megan Clark, one of our members from over in Perth who has been an early adopter from the TT Precedents Club. So she's almost a bit of the furniture and she brought this and we thought this was such a great topic because it is so practical in the terms of how we deliver our services because we do have or we want to create a culture with our clients of returning and not just returning when there's a problem, but also being proactive and considering whether things change for them and they have to be or need to be making changes to their documents. So how we do that in a way that means that it is accessible for them is very interesting.
(03:10):
I think for me, and we talked about this in the hot seat, is that there's a few different ways that you can approach it and for me it's largely driven around that client. Obviously there's some markers you've got to meet internally, both from a risk perspective and from a bottom line perspective, whether it's matching what you're doing, but I always also lean towards where's that client come from? What have you done for them in the past? What would they like to deal with in the past? And then you can then work on it from there appropriately. So for example, if someone comes to me from a warm referral, we've done this great $4,005,000 estate plan for them 12 months ago and they've got a small change to make, that's going to be very different than if someone comes to me 10 years ago and it's out of the blue and they want X, Y, z, and there's been lots of changes in law since then.
(04:05):
So I think that the context the client comes from is really important. When we're talking about the actual changes, I think we've also got two things to think about here is the length of time between the changes. Is it just, oh, we misspelt this person's name wrong and we have to re-update the documents and then no, actually we're changing who the executor is. So the first one I think is really important to have covered in your costs agreement because we've all been there where you've done your very best to draught the documents as well as possible, and then the client sort of comes back to you and said, oops, I spelt my brother's middle name wrong. And then you have to do the work of changing the document, resending it out, or helping the client with signing, unless you've got some really clear things in your cost agreement around who covers that cost, what that cost might look like, it really attacks your bottom line in what you're doing. So I know this podcast is coming out after we've released our pricing toolkit. And Tara, I know that we've got our freebie that comes with that about cost agreements, the things that we think you should have in them that are specific to estate planning. So if you want that document, Tara, do you want to tell us how we get ahold of it if you're listening?
Tara (05:22):
Yeah, I'll put the link to it in the show notes. So it's just a free list of we picked the top 15 things that we think do a little audit on your cost agreement terms and check are you protecting yourself and your firm on these items? When I said, Carrie has done a lot of work on this, this is because she's spent so many hours drafting out the cost agreement, term precedent, that is in our estate planning pricing toolkit, which is just a whole bunch of clauses trying to protect your firm and give clear communication around when will there be extra charges, who's responsible if this happens or that happens. And really just trying to pick out all the things that can go awry on a standard estate planning matter and make sure that there's clear communication about what will happen. It's not necessarily about ringing every last dollar out of your client and that perfect example of the typo in the brother's middle name, you may not charge for that.
(06:33):
You might just think it's out of the purpose of goodwill, you'll just sort that out for them. But if it's covered in your cost agreement and the client's been a real pest about it and there's other things going wrong, at least you're on the front foot to say that you've communicated. And I'm always of the view clear communication is kind, things get messy where it's not clear and you're trying to get off the back foot and say what you think and the client's got a different expectation. Yeah. So I just think get that. I've gone on a side quest, haven't I, freebie and just check are you protecting yourself on those things? And the link is there in the show notes.
Carrie (07:16):
Yeah, I think that sort of does draw me back though, Tara, is that, and we do talk about this in our training, but in my quest to look at all the different states requirements for cost agreements and different things, a lot of it came back to is it in your cost agreement whether you can do something? Is it in your cost agreement? And as you said, whether you should use that ability then. So whether you would charge the client in that situation is then totally dependent on the circumstances. Sometimes you get to pick in this instance, if it's a good client and it's clearly just been a oopsie, they've been really easy to deal with the relationships there, you might just not charge them for it. I think that it's also then an ethical question of whether if it's a more complicated issue, you can reach out to your ethics department in your particular state and say, listen, I've got this in my cost agreement, but doesn't mean I should use that.
(08:10):
So I think when we talk about those changes, as I said, that base position is if it's a change relating to something that you've just completed, making sure that you've got cost agreement protection. When we are talking about changes that are sometime further down the track just for those that aren't in estate planning but are listening in and enjoying the journey of estate planning nonsense, there's three ways that we can as estate planning practitioners make changes to an existing will. Number one, we can obviously do a cosel, okay, so which is like a one or two page document that kind of says everywhere where Tara Lucke's name is mentioned, I want it change to Carrie Payne. Okay. The second way is that we can use that version of their document that we did months ago and just replace that name and regenerate it out. And then the third one is doing a whole new will. And each of those different things have different considerations, particularly when it comes around to risk. So you've got to decide as a practise which ones you are comfortable doing and what price that you think is going to cover your bottom line and still provide value to your clients.
Tara (09:17):
You've just explained why there's no simple answer to how much will it cost if I want to come back and change something in two years?
Carrie (09:25):
Absolutely. And that's why, again, this is something that we've put in our cost, well, we've put in our cost agreement precedent is that you can put in there what your current rates are for doing this change, that type of change or that type of change, but you want to give yourself wiggle room because we want you to grow and a part of that growth is increasing your price to allow for things like inflation increase staff costs. Also just adding some buffer in there so that you can grow your practise to be this great service for your clients as well. So yes, we can give indicative prices in our cost agreement that says if you want to make this sort of change, here's like indicative price of an indicative number of what we would charge at today's date, but it might change in the future. I think that for me, just being aware when you do that, there's a very big difference between I want to change some person's name and I now want to change the way the residual estate is divided.
(10:22):
So be really careful. Make sure if you put that information out there that you've got the asterisk that says it depends. So I think as I said, which of those three is very much dependent on your risk palette as a professional, and number two, what's right for the client. And I also want to help people make a bit of decision around what they're comfortable with doing. Tara, I thought I would share, I had that risk workshop that we do with LEXION here in Queensland, and please don't get me wrong, I love Lexion because I think that they have some really great resources around risk, that's their job is to protect us as lawyers. But I also was discussing with the person at Lexion about this concept of doing a cosol for a client. So if someone comes to me and they've got this great will that says everything they wanted to, I've had a look at it and so I'll just charge a small fee to change this person's name.
(11:21):
What they made very clear to me was that you are on risk for everything, even if you're only charging a small number. And I found that really interesting because I thought if your pricing is based around just doing this kind of one document, just being aware that you might be on the hook for everything. So when we go to offer these services, you should be thinking each time around what are you comfortable? And in that process, what is also the best result for the client? Because I had someone just two weeks ago that reached out. They actually wanted to just take one beneficiary out of their list of beneficiaries, which was actually a child of theirs. And so yeah, just a one line change. And I got on the phone to them and I did a free sort of commentary, which I followed up obviously in some really horrible legal writing to make my insurer happy.
(12:13):
Thanks. But I kind of said to them that I understand why you're doing this, but number one, by doing this change, is it going to get the outcome that you want? Because if he challenges the estate, given the value of the estate, you really only punishing your other children. Number two, we are looking at new risks of validity. Do we have to do a full capacity assessment again? Okay, well what about the more common risk that this falling out with the child only happened in June? What about if you reunites that relationship with the child? Do you want to come back and see the lawyer again? So just being aware that when we do these small changes that you need to be really, really clear on what level of advice you're giving and all of those risks you still have to communicate with the client even if you're only doing this one page document. So when we're talking about how do we charge for changes down the track, you've got to get to a level of what you are comfortable with, what your precedence are able to take into consideration and what's going to be best for your clients obviously as well.
Tara (13:16):
Yeah, it's a real challenge to work out protecting yourself versus keeping it simple. And generally the client's expectation that they've already invested in the estate plan, so they want to keep it simple and they're trying to do the right thing. We don't want to deter clients from updating and reviewing their will. We bang on about that all the time and how important it is, but so you don't want to penalise them and they don't want to have to drop the whole investment again. But it depends on the timing too. If it was around a pre 2021 will, and back in 2021, we had all of these changes around foreign person land tax, ferb issues, approval with testamentary trusts, we did some major updates to the testamentary trust will precedents in response to changes happening in different states and federally as well. So if you've got a client who did their will well before that, back to your point Carrie, is it okay to just use the original draught, swap out the changes and send that off? Or do they need a whole new will from the up to date 2024 compliant precedent, which factors in all these other issues which you then need to explain to them? Again, it's hard to get the balance right.
Carrie (14:48):
Yeah, yeah, and I think too, I mean one of the points I did make to the lovely human being at Lexion, and I'm not saying that sarcastically, I do mean it is absolutely lovely, is I think we've got to find in our hearts that balance between what is going to cover us and what people can actually afford as well. I think there's a lot of us that get a little bit out of touch with what the average person can afford in terms of costing. So as you said, if you've dropped five grand the year before on an estate plan and that was a big investment for you, I don't think there's not many people that could redo that again the next year and the next year and the next year. So I think sometimes if we're not set up to take on that sort of a small change, sometimes you're even best to not do the work. And I know that sounds really harsh to say that, but you're doing yourself and the client a disservice if you haven't got the comfort level to do some of those changes. But also we're here to help you if you are not at that level where you're happy to do those changes, come in, talk to us at the TT Precedents Club, we want to talk to you about these issues and work out ways that you can set yourself up for success and set your clients up for success as well.
Tara (15:58):
So Carrie, what if the client just says, oh, no worries, just send me the word version of the will and I'll make the changes.
Carrie (16:06):
I'm glad you read this, Tara, because in our cost agreement terms, one of the things I've made very, very clear is that our work only extends to providing PDF documents because I have been a victim of a client wanting to just make their own changes to a word version and tracking. I think it's an interesting thing because even though we say that, I mean OCR is a real thing. I don't know the actual what that acronym stands for, but text recognition. So if they really want to, they can take your PDF, do an OCR, turn it into a Word document and off they go. But I think it's really important that we don't let that loose of our own accord because the danger in people not doing things, I mean, again, one of the lovely members of our TT Precedents Club reached out to me for a coaching call because her client was a lawyer and oh my God, how great are other lawyers as clients that is sarcastic?
(17:04):
And they had basically turned the document into a word version and had gone through and made all these changes to the trustee powers and I basically we had to go through as a part of the coaching call, all of the risks in them taking out these parts. So when we talk about giving our clients word versions, I think that we want to make it really, really clear about that our scope of work is to give you a PDF and we're not going to be releasing that Word document. You can't stop a person from wanting, as I said, you can't stop 'em if they want to go out and do that and then resign it themselves. I mean, that's their thing, but I think that you're not doing their many favours by giving them a word version and you're certainly not doing yourself any favours.
Tara (17:46):
And Carrie, you have drafted some really wording in our cost agreement precedent that we have in the pricing toolkit to firstly say, we are not responsible for you making changes to the will. We're only our liability extends to the will that we drafted and provided for you. So yeah, as you said, you can't stop them, but at least you're not on the hook for them going rogue. And then also I feel like it happens every quarter, someone's like how my client's asking for the word version and if you've got the wording just saying, it's not how we operate in your cost agreement, then you or the secretary or the lawyer running the matter can just go, sorry, it's not in our cost agreement terms. And I think your clause even explains why. So just having that protection, you really worked very hard on putting some really eloquent wording together to just sort of explain it. I think you also, I just have a nightmare thinking of that client who tried to rewrite the trust terms. Engineers seem to do it as well, and you've basically said, Hey, if you try and do this, it is going to cost you more money. We have the right to come back and charge you more. And I thought that was genius to put that in the cost agreement precedent.
Carrie (19:11):
It comes from a very dark place to our awareness. I've had this happen more than once and it bit me bad because of course I had a fixed price and then a client wanted to go line by line because they hated their son-in-law with the fire of a thousand flames, and we had to amend almost every clause to make it really clear that he couldn't get within a breath of air close to anything to do with that trust. And they were really lovely people, but obviously their son-in-law wasn't in their mind. And that bit me because I had to spend a lot of time on that that I was never able to recover. And so the way that our wording in our cost agreement is that we use these standard terms for trusts and this is the reason why we do it, but if you think you need tailored terms, let us know because this cost agreement isn't going to be appropriate for you. Our scope of work isn't going to be right.
Tara (20:02):
Yeah, well look, there's a lot in there and I mean, I guess we should have said this at the top of the episode, we're big fans of fixed pricing and particularly value pricing. And if you listen to our episodes, I think number 9 and 10 about maximising profit on your estate planning, we waxed lyrical about the power of value pricing and giving a quote and price certainty because everything you can do in investing behind the scenes in your systems, your precedents, your processes and your knowledge will mean that your matters are more profitable compared to billing on time basis. But one of the things that you really have to think deeply about if you are doing a fixed price is just protecting yourself. So with the cost agreement terms and getting your scope of work so that when there is scope creep, which is inevitable, you are setting boundaries. It's like with my kids, I just got to get on the front foot and set the boundary around the iPad and all of that. And it's kind of the same with clients. It's not us versus them, it's just about here's in, here's what's out. We can help you with that, but they'll cost more.
Carrie (21:18):
Yeah, I mean probably reiterating something we talked about in those. The reason we want you to price things properly so that you can necessarily go out and drive as BMW, okay, we want you to price things well so that you can live a happy life and a long life in law so that you can continue to provide excellent services to our community. And those things only come from having the money to be able to do them. So if you are offering a codicil for a hundred dollars, alright, where's the capturing in that of your skill and expertise that you spent years building all those weekends when you're reading, I took a law textbook to a music festival this weekend because I had something I wanted to look at and I knew there would be downtime, and you're never going to catch that up. There's no way that you can capture that in a hundred dollars when you're thinking about that small change to the document. It's not literally just you punching in words into a template. It's everything around that that is really important.
Tara (22:21):
And so Carrie, you put together a really great template in the pricing toolkit. What is it? It's a priceless template with the different options about the nature of the changes and it's very specific. Is it a short typo fix? Are we changing beneficiaries? Are we changing clauses that interact with other clauses? Has there been a major law change? All of that. And then the method of the update and the pros and cons of each and then what the pricing for that might look like, which I think you did a really beautiful job of simplifying all of these competing factors that we have to think about and that is in our pricing toolkit as a resource now for the people who have that precedent, I want to ask you, we've talked about codicils, but I think both you and I are on the same page where we're not huge fans of them.
Carrie (23:16):
I'm not a huge fan, Tara. I do them occasionally, and this is something that again is I make that risk decision based on a very particular set of scenarios. I'm not doing them every day of the week, maybe one a year. So I think that that shows you in terms of the volume of them that I'm doing and how infrequently I see them as a comprehensive solution for people. And that probably more comes from my social mindset that I think that I want services, legal services to be accessible for people, but there's a horrible big letter that I give with it that says all these things. So I think that yes, it is an option legally it's an option and certainly it can be an option if you want to provide that service, but it's very seldom the right solution for a client.
Tara (24:04):
Yeah, I mean the problems I have with codicils, that doesn't mean, again, it doesn't mean I wouldn't do them, but I think you have to mitigate this and be on the front foot. It seems like at first glance I'm like, oh, maybe a codicil is an easy way to make this change, especially when the testator is elderly or just wants a quick thing and the change is quite minor. But I still think the onus is on us to make sure that the test data understands the combined effect of the changes in the codicil and the original will, which is what you were sort saying before the risk to us. And I actually think is it harder for them to sort of import change this section from this document and then an entirely different document and understand how they interrelate that could in fact actually be way harder than showing them a red line version of the will and then getting them to sign the accepted tracked changes version of that will once you've been through it.
(25:13):
I also think risks of losing it and people not knowing there was a codicil to the final will. I think for us too, it's harder sometimes if you're trying to draught the changes and you've got to keep referring back to the original will to make sure you're drafting as consistent with the definitions or the terms or all of that. I just think got to be alert to that and think that through when you're deciding not like, oh yeah, cut us all. No worries. And then you get there to draught it and you're like, oh, bummer. This is quite complex.
Carrie (25:49):
Yeah, yeah. I mean certainly some of the kind of things I use as my bar for when to do one or not at the top of it, as I said, is what the client's circumstances, but also what they're asking to change. As I said, if it's just one executor replacement, that's very different than if they're going to ask you to change the executors and personal property gifts and then the residual estate and then you've got to do X, Y, Z down in the powers. So the client is the primary consideration, but then what are the actual changes? Is it going to make things harder?
Tara (26:20):
Yeah, and like you said, with that change about excluding the child taking one beneficiary out, it's the same. You think changing the executor is simple, no worries, just a name change, but what's going on in the super strategy and is the role of executor actually really important or is there a family trust where the is going to take over control of that family trust? And suddenly the whole strategy about the division of assets and everything is radically different because we've swapped one name in a will in a one page cotis that you've charged $150 for. Oh, just gives me goosebumps thinking about it.
Carrie (27:03):
Yeah. Yep. I think if you are going to do that sort of thing, you've got to have a really great set of resources to help educate your client around why that probably might not be the right choice for them. You've got to give them those worst case scenarios both from before you agree to do it, and then also once you've done it, and then again in your cost agreement, having what's in and what's out. If you are literally doing the change, you're not giving any advice on taxation effects, family provision risks, whether the change is actually going to achieve the objective that they're trying to get to. So when you're doing that, you might be charging a couple of hundred dollars. Are you actually making that back? Probably not, unless you've got a really great precedent system in place.
Tara (27:48):
And as you said, Carrie, there's all this work to identify and explain and manage the risk. So one of the things you put into the price list, I think, or maybe the cost agreement terms, you put it in somewhere, is actually having a bit of a strategy meeting with them and that costing money, charging for that, but then making that redeemable on the changes so you can then and maybe not quoting, doing two quotes, quoting for the initial meeting and then quoting for implementation. But the initial meeting price is sort of redeemable towards the second. Now, I don't know, not everyone wants to do that. Some people just prefer, I used to probably not do that. I used to just do a phone call for free to ascertain enough information in the scope of work. But yeah, I think some thought should be given to setting up a system so you're not making it up as you go each time.
Carrie (28:51):
Yeah, that point we said before around whether you have that free review up first, so to speak, or that free conversation could be dependent on your relationship with that client or the ease of dealing with them. But yeah, certainly allowing you to recover your costs even if you have the meeting and you find out that you talk them through things and then you discover it's probably not worth making any changes, is your time captured?
Tara (29:17):
Yeah, this is a bit of a side quest, but I thought it was interesting, and I'm sort of taking us back to maybe episode nine or episode 10, which is that two part series about how to maximise profit on your matters. And one of the things we talked about in that episode is using diagrams like family trees, flow charts of where the assets are going and diagram about how the assets are held. And I just think if they're a past client of yours and you did their initial plan and then you have got those assets on the file, it's going to make identifying these issues and getting back up to speed so much faster. If you've got those summaries, a picture tells a thousand words, you've got the flow chart, you can see how one little change is going to trickle down and decide is this a clerical change or a strategy change? I really do just want to give a plug to the power of doing those supporting diagrams and strategy flow chart template things because I think they really help get back up to speed.
Carrie (30:27):
I think too, Tara, I mean one of the last points I have here from my perspective is just also when we do planning in general, I think we need to think and express to our clients that the plan should be robust, that hopefully we shouldn't be redoing this again in a hurry. So when we are talking with our clients, what we're looking here is stress testing all of the people that we're putting in there, taking them through the ringer in terms of are they a fit and proper person to do that role? And I know we've talked about that last week in the TT Precedents Club hot seat and then looking at the gifts, how that's going to play out, what's the goal here, and trying to get that document to be as robust as possible. I think that's super, super important. And tied into that is also talking to the client around whether something actually does need to be in the will or whether it can be in another document like your letter of wishes, which doesn't need the lawyer involved to actually update because it's not a legally binding document.
(31:25):
And talking them through very carefully around the pros and cons of using a letter of wishes versus hardwiring it in the will. And one of those huge points being robustness. So we've talked about in before, how sometimes we like putting the age at which children should take control of a testamentary trust in the letter of wishes. The example I give is a good friend of mine had in her will the age progression in her will at 25, and then her boys are now 20 and 21 and very much not positioned to be taking control of things. And so now she's having to update her will and invest in redoing that again because those mechanisms are in the will. So I think that one of the things that the gifts that we can give to our clients is actually to say, Hey, test in the original plan. Is this something that needs to go in there? Can it be somewhere else?
Tara (32:21):
Yeah. Look, Carrie, I think those are really important points. I can't believe we actually are only talking about the letter of wishes now. But yeah, really worthwhile thinking about other things that can go in there and the client has got that autonomy now. I always think you want them to show you the updated letter of wishes and ideally store it with the will, so you can check that yes, legitimately this does belong in the letter of wishes, and they're not just being a cowboy trying to make changes to the will that ought to be in the will, but they're doing it in the letter of wishes. But yeah, it's a really powerful part of the process too.
(32:57):
That's all I had Tara in my list unless there's anything you had you wanted to add in. No, me too. I mean, I guess it just shows how long we've been talking for over half an hour around this, something that should be simple or seems to be simple, but to protect yourself, it is worth giving all of these factors some thought, and I think it's much easier to think about them when there is no specific client in front of you that you feel really obliged towards. I don't know about you Carrie, but when it's a particular person and I'm like, oh, they're so lovely, I don't want to charge them anymore. Oh, I feel bad. Even though it's nothing to do with you that they need this change, it can be really hard to charge your value and protect yourself. So I would just encourage people listening, if you don't have a policy or a framework in place for when this comes up, it's worth turning your mind to it.
(33:54):
Now, if you want the cheat sheets, we've got that for you and the estate planning pricing toolkit. But hopefully even if you don't want that resource, you've had a bit of food for thought about what we've talked about today so that when it does come up, you don't have to think about it. You don't have to tailor it for a particular client or feel bad and not do what you would've done if you were a little bit removed or if someone who wasn't so personally attached to the matter made the decision. And then also you'll be able to be really clear with the client, answer their question right away, explain what your position is instead of umming and ing. Because I think when it comes to pricing, it's not that people don't want to pay for things. It's when they smell uncertainty or fear and being clear is really kind set the expectation.
(34:43):
And if they know that if they get the names wrong, they are going to be hit with a fee, they'll probably double check before they send you the instructions or when they're reviewing the draught will. Whereas if you're not clear about that, then they're like, who cares? I'll just get fix it if I found out down the track. So yeah, I think this isn't, we've focused so much on the upfront pricing, but I think this is an important aspect of getting your pricing policies in place as a firm. As I mentioned, Carrie has put together some really powerful resources on that if you don't want to do the legwork yourself. And if you do have any scenarios, questions or comments based on what we've talked about today, happy to keep that conversation going in the Art of Estate Planning Facebook group as well. Well, I think that's it from us today. Thank you so much for tuning in and we will see you in the next episode.
