Tara (00:00):
There's nothing worse than going through one of the most terrible moments of your life, losing a loved one and having the financial stress. They can just look at a problem from so many different angles and try to come up with an out of the box solution that wins for everybody.
Leigh (00:20):
You got to ensure the house that you are responsible for the grass is getting out of control. Fix the leaky roof, the pool's going green. So all the fiduciary duty obligations to maintain and preserve the estate. Where does that come from?
Tara (01:15):
Welcome everybody. Thank you so much for joining us back with the Art of Estate Planning podcast. It's your host, Tara Lucke. Today I am thrilled to be bringing you this special topic because in estate planning world it's kind of rare for us to get a new and exciting estate planning solution and so I'm thrilled to be talking about it today. I have actually brought in a special guest, so we've got Leigh McBean, he's an incredible resume. We've got a former swimming representative for Australia, former family lawyer now turned finance professional. So welcome Leigh.
Leigh (01:57):
Hello Tara. Thank you for having me.
Tara (01:59):
Oh, it's a pleasure and I'm so excited to have you come and talk to us about the new estate planning funding solution that just fund have released over the last few months. I'm mostly excited for our listeners who are running estate planning administration and estate litigation services in their estate planning firms because looking at this service that just fund have just released, it really is a win-win for executors beneficiaries and estate planning firms alike. So I really wanted to use your time with us today to understand more about this funding solution that just fund have released how it can work in practical scenarios and yeah, basically just have our listeners have it on their radar as one of the tools in their estate planning toolkit and be able to make a decision about whether it's something that might help some of the files on their desk and just have it up their sleeve if they get a new inquiry where their funding could be an issue. So before we dive into that, can you tell me a little bit about yourself and just fun?
Leigh (03:12):
Yeah, well I was admitted about 18 years ago as a family lawyer and so I've been in various law and commercial roles ever since then. I've been in legal finance ever since then as well in various capacities. And so coming in and out of this really lovely mix of law of finance and helping people fundamentally and we know that the access to funding or just dollars in general to pay for legal fees, to get advice, to get help to move on with your life in family law is a real pressing topic as people separate and as we support so many family lawyers across the country, so many of them also do estates work and they're saying, Hey, we need help as well for our state's clients. So as we get into the estate service that we're providing, I'll talk more about that in a second, but about me, I have a deep interest in supporting people fundamentally I have the law background but I'm not practising anymore, but running legal type matters and supporting firms through our commercial operations that we have a just fund and lead, a wonderful team of lawyers. We're a company of 70 people now across Australia supporting over a thousand law firms in Australia and also a small part of New Zealand. So where it's a great journey and the last three months the estates market is starting to have a service that we're providing.
Tara (04:37):
And I remember hearing you speaking with Cynthia Harris and I think Jacinta Watkins and Chris Harold as well, and basically Cynthia was like, we've been begging you just fun to bring out a funding solution for us. It will just solve so many of the problems that practitioners see coming up on their estate. Administration matters. I mean that's always the problem, right? Either availability and fast access to funding or just not having the funds to actually get the process going. So I'm really excited for you to tell us how it works and the kinds of use cases of the funding solution that you have.
Leigh (05:19):
Yeah, absolutely. I mean we fundamentally exist to support the legal profession. Clients will come and go, but we are here to build longstanding relationships with lawyers and practitioners and then helping them provide good service to their clients in whatever shape that looks like. And so begging the words from Zito, I think it was bullied more is the one that they refer to. But historically in family law where we have our origins, the status quo behaviour was why just defer fees? If I'm acting for a stay-at-home mom, there is a house to be sold at some point as they go through their divorce and money will flow at some point in the, I'll get paid at the end when that thing, when the matter settles, but that's 12 months away or whatever. And so over time that status quo behaviour of just deferring fees has shifted as really all the great law firms across the country are managing their cashflow.
(06:11):
They've got their own bills to pay all that. So we don't want to defer, but neither do third parties. You have a lot of listeners in your audience who are financial planners and accountants and their professional third party disbursements. They don't want to wait either. Neither do barristers, neither do mediators. There's so many areas where people don't want to wait or can't wait, and so the alternatives out there is to defer fees and in family law, less and less family lawyers are doing them. And now as those like Zinta and Zinta Chris and others that have experienced us in the family law space or have their colleagues experiencing us in their family law space helping their clients like, well, this is deeply relevant for states as well. And so our early some commentary from law firms early on, he is like, well, we just wait till probate.
(07:00):
We just get paid the later point in time. And so as we go into the detail around what our service provides, that comment of we just wait till probate. It's not a complete solution for the law firm because they have their own costs to pay, but also it's not overly helpful to the client because the client who is normally an executor has other things to pay beyond the legal fees. They've got insurances rates, they want to prep the house for sale, we can go into more in time, but deferring fees isn't a solution in its whole to the client. And so we want to be able to provide the lawyer with an improved list of options and improve the quality of the conversation that they have with their clients at any point, whether it's an initial consult or halfway through the journey, they have an extra option in their toolkit that then informs clients with better choices around what they can then move forward with. So just equipping people with more options fundamentally is what we want to do.
Tara (08:01):
And I feel, not that I really ever practised in a state administration, but just sort of seeing the conversations that are happening in the art of estate planning community, there can be a real disconnect between what a lawyer or law firm recommends as best practise in the carriage of administering the estate and then what is actually achievable based on whether we've got illiquid assets sort of tying up all the wealth or just not a lot of cash around initially, I'm thinking, yeah, firstly in our community we have a lot of soul or boutique practitioners and you are the breadwinner for your family. It's not fair for you to be carrying so much whip or disbursements on your matter for such a long time. So this can help you take on more of these matters or just the billing happening more quickly so you are not basically being a good Samaritan trying to help out these clients.
(09:01):
Also, I think you mentioned or touched on it, we always want our clients to be able to go and access the external professional advice. So executive getting taxation advice, beneficiaries getting financial and taxation advice. And again, those professionals are in the same position, we can't pay you until the end. Or I think what happens more likely is the advice just isn't sought because who's going to pay for it. So where we've really sort of pushing that recommendation, if the funding piece is taken out of the equation, we know there's going to be money eventually. It's just not there. Now, hopefully as law firms, that really helps us be more confident in we're pushing this recommendation and here's a practical way to achieve it.
Leigh (09:50):
Yes, and ultimately best interest of the client is what you're here to do and put them in a position of making informed choices and then get the knowledge and the skills around you, whether it be through three parties or just to move things forward in a helpful way, but yet no other profession defers fees or costs like the legal profession does. And so we want to help on that. And I think there's probably three buckets where we are getting asked for support and we can go into some really good case studies as well as around some of those buckets. I'll go into the detail, but bucket one would be support for executors and I would include independent administrators in that category. So anyone who's tasked with administering an estates, so we call that our executor loan, but yeah, ias are absolutely able to utilise it.
(10:38):
So funding then for the legal fees, the court filing fees, which we know in say in Victoria in particular are super expensive. Now, I would pretty much guarantee other states are going to raise theirs in time. So it's the disbursements for the filing fee and there's all these other costs that executors need to dip into their personal cock and pay for that the lawyers don't normally care about necessarily because it's not their problem. It's the executor's problem. So you've got to ensure the house that you are responsible for, where does that come from? The grass is getting out of control. We want to sell it shortly. So we've got to maintain, so all the fiduciary duty obligations to maintain and preserve the estate, fix the leaky roof, the pool's going green, so chemicals need to be added to it. Deceased died in Bali. We've got to repatriate the body and we've got to pay for that reimbursement.
(11:27):
The executives may have asked the beneficiaries for money to pay for the funeral really quickly and they want that back. They want to wait till the distribution in six months time. The beneficiaries need the money now and want to return it. So what do I do as an executor in this moment? I asked the beneficiaries, I dip into my personal pockets, throw it on my home loan. They're all options. They're not great ones. So we want to be an extra option in that moment to cover all those things. Oh, we need tax advice. We want to engage a mediator. We don't want to go down the court pathway. We need collaborative law. All of these things are available to be paid for through us. I'd call all of that the executor solution, executive funding separately. We have a whole range of options for beneficiaries. I'm coming into an inheritance at some point in the future.
(12:12):
I'm harassing the executor, I'm harassing the executor's lawyer. Can I get an early release please? And everyone's like, oh, this state, this is not probate yet. We're still waiting. And I've talked to some really helpful examples of how we've supported people in this category getting an early release of their inheritance throughout beneficiary products. So go that more in a second if you like. There's some really good heartwarming stories of people over Christmas that we helped in particular there. And then the third bucket is one that we're not doing right now and I'm not sure if we will or not. So this is an open conversation with a legal profession and that is litigation funding. So we are a lender, we provide loans to people, they repay it back. Litigation funding is no win, no fee. It's what happens if I'm unsuccessful, so plaintiff claims I'm seeking further provision or I'm seeking a family provision and there is this discreet chance that they are unsuccessful.
(13:10):
What happens then? We aren't a no win, no fee type arrangement. So we are a responsible lender under Australian consumer Credit Protection Act credit laws, we look after clients, we're regulated by rsic. So we're very safe in that respect, enough for protections in that regard. Litigation is different. And so law firms ask us about how can I fund a plaintiff matter to seek a further distribution or a family vision claim? We haven't gone down that pathway yet. We are focused for now on executors beneficiaries and whether we do litigation, that's a thing to be determined in time
Tara (13:46):
And that's completely understandable. So I would not describe myself as financey at all, but would I be fair to say that basically you are lending with security against the known expected estate distribution?
Leigh (14:05):
Yeah, exactly right. So in the same thinking that you would do if you're like, I will defer fees here because I know the estate is a house and there's super and there's cash and it will administer well when we go through the administration phase, it's a solvent estate, I can confidently carry my fees because I know that I'll get repaid later on. We step into your shoes and do the same analysis. Essentially we take a conservative view of asset values and liabilities and all that sort of thing. And we just take a view around if we're lending into the executor, we are pretty much relying on the reimbursement obligation of the estate back to the indemnity that the estate gives the executive for reasonable costs incurred in the probate and administration phases. So we pretty much looked to the residue of the estate fundamentally the net residue residual. And so we lend to that and make sure that the loan size is in proportion to that number.
(14:57):
We don't want to put people in stress or financial difficulty. We're here to help people separately. For the beneficiaries, it's the same thing, but just their distribution. If I'm receiving 50% of the estate and the estate's a house, I think it's going to sell for a million dollars, I'm going to get 500,000. My sister's, the other beneficiary I want to borrow against my 500,000 that's coming to me as beneficiary. We'll lend a portion of that number again, so it's in control, it's in proportion. If that number shrinks a little bit because the house sells, were slightly less. Totally okay, we haven't given someone a hundred percent of their entitlement and there's a bubble. It might lend a smaller amount, 25% say of what they are going to receive just to get them through the period of time between now and when they do receive their distribution. So really simply, we're lending against their future inheritance or the residuals estate on the executive side of things.
Tara (15:54):
And that makes perfect sense. From the upfront estate planning perspective, we are always trying to make sure there's enough cash and funding there. When we are documenting the estate plan, I always sort of say, clients dream up these beautiful wishes, but someone's got a stress test and sense check it to make sure it works, but that's still just happening at a single point in time and assets change and there's nothing worse than going through one of the most terrible moments of your life, losing a loved one and having the financial stress on top of that. That is just such an awful situation to find yourself in. So what I love about this estate planning funding solution is it can just ease some of that temporary financial cashflow, stress to help people just move on going through the estate administration process. It's not fun, but it has to be done. So let's just get it done in a way that is effective, protects everybody's fiduciary duties and responsibilities, maximises the value of the estate with as least amount of stress as possible.
Leigh (17:15):
It's a fundamental driver of our business is the social impact. We employ family lawyers, we employ estates lawyers in a team that focus on legal issues, but we also employ a range of amazing customer service people that are in Australia that are on the phone, welcome, Joshua, how can I help you? And we pride ourselves very much on the feedback. We get fantastic feedback from clients and survey results saying, you helped me through a difficult time of my life. You took the pressure off, my spouse died. My mom died dealing with the grief. And similarly in the family law world, going through separation is equally stressful and in grief, a little grief in that in the same way, in similar ways, I should say, as DC states. So we are supporting people through difficult times of their lives where it's family law, estates matters, and so we take that pride and customer care very seriously. We take a lot of pride in our customer care, we value it so much and we protect our, we want to make sure we look after people fundamentally.
Tara (18:18):
Yeah. We were having a bit of a chitchat before we started recording. I couldn't believed that you said just fund has helped nearly or provided funding for nearly a hundred estate planning matters in the last couple of months. Are you able to talk us through some of the examples of that? Yeah, am I exaggerating that number? I might've just picked the high.
Leigh (18:40):
You picked the number. It's good. I wish I could say it's a hundred. We've, we've got close to a hundred people apply.
Tara (18:46):
Oh yes. Okay.
Leigh (18:47):
Haven't got to to say yes to everybody that's come through for, it might be an insolvent estate or it's litigation funding only, or I'm coming into an inheritance in Sweden. Can I, Boris?
Tara (18:58):
I'm actually happy to hear that, Leigh, because we are not talking about a loan shark just funding everybody at extortionate interest rates, right? As you said, it's responsible lending, it's got to meet a certain criteria. We can talk about it at the end, but you can't even just sort walk off the street and apply. There's a whole protocol. So I am actually, it's reassuring to hear that.
Leigh (19:24):
Yes. And look, we rely on positive word of mouth and we rely on lawyers speaking positively about us to clients and that's never going to happen if we are expensive or we are unreasonable or we just behave in a way that doesn't sit in line with the values of the legal profession and the overarching obligation to look after client's best interests. And as lawyer myself and there's a lot of lawyers in the team, we have to and wants to be lined up with that same objective. So we are never intention with our lawyers and our relationships, we're here to help people and that only happens if we're looking after them. And so you asked about some case studies, so we've got some really good ones coming through. We've got, if I speak to some executor examples and then I can speak to some beneficiary ones as well, if that assists you.
(20:11):
So we had an executor where she needed, I mentioned it before we had illiquid estate. Everything was frozen, of course there was not enough cash. Mom died on the 20th of December. No ability to pay for the funeral. She's only child, no other beneficiaries to call upon. And facing the prospect of mom in the morgue, unburied all the way through Christmas, new Year's holidays, that's a long time to be stressed about mom in that situation. So we were able to step in really quickly, pay for the funeral, and then she's now using us to continue to pay her lawyer for the probate process, filing fees and all the other costs. And so the relief that came off her and her, she said, I cannot express how much value that gave me in peace of mind that I don't have to worry about mom over that period of time.
(21:03):
And now we're supporting her through the next step, as you say, through the administration, probate application and administration journey. So there's a good example of an executor. We have another executor who's just sole beneficiary and the executor of the estate, but the house needs to be sold. It's in state of disrepair. The deceased is a bit of a hoarder, where do I pay for skip bins and cleaning it up and I don't want to sell it as a deceased, stay at home at a rock bottom price generally in the market. I want to sell it for a better price for myself. And then we've had that happen in other instances where executives like, well, I've got an obligation to look after the best interest of the beneficiaries. The beneficiaries want me to sell it at an improved price because it looks cleaner. Mow the front lawn, paint the front house, paint the fence, fix the fence, paint the house, whatever it might be, just clean it up, please get a better sale price, more proceeds available for the beneficiaries. Everyone's very happy with that.
(22:02):
This is a really good example. We have an executor who has been appointed. He is a beneficiary alongside two other siblings, but there's a right of occupation to one of the siblings for the next three years for them to live in the house. It's the sole asset of the estate. So this executor, one of the brothers is having to pay for everything. He's not getting reimbursed for another three years plus it'd be three years until the right of occupation ends and then the house will sell and then the proceeds distributed between him and the other two, one of which is living in the house under the right of occupation. So he's facing three and a half years of costs out of his pocket. We won't get reimbursed until that time. We are helping him pay all those things. So this is an example of an executor who can move on with his life, doesn't have to burden his family, dip into his school fees account, dip into his home loan, whatever it might be, and also avoid the tension that comes from executors asking the other beneficiaries to chip in money to pay for costs, whatever those costs might be.
(23:10):
So there's a couple of really good examples of helping executors through who are grieving. Most of the time they're also a beneficiary and most of the time it's a loved one who has died and now they've got the job or the burden of the financial pressure and the other beneficiaries might chip in, they might not. Siblings have different income levels and different things going on in their lives. That in itself creates tension. And so we want to remove all of that and we are, and these are really good examples of that. We have another one where a young lawyer who's setting up our own firm independent administrator duties has been appointed as an ia. Well gosh, I've now got outgoings to pay as part of this process. I've got to dip into my firm's working capital to pay these outgoings in my role as ia. I know I'm getting reimbursed at a later point in time. That's the whole point, but I don't want to wait six months or 12 months for that reimbursement. So collectively, these are all really helpful examples of live matters that are coming through us where we're supporting the executor in a variety of capacities to remove, remove stress, remove financial pressure, remove emotional pressure, and help them move on. So there are some, yeah, they're executive and questions about maybe anything that sparks to mind in those examples.
Tara (24:25):
Yeah, Leigh, when you were talking about the siblings and the financial stress of that arrangement, and I'm just picturing the resentment bubbling into all their interactions, and I had a question about speaking of Zinta Harris before, if the lawyer identifies maybe we need to go down a collaborative dispute resolution pathway, obviously that involves a lot of professional fees from legal, but also independent financial experts as well. Would that be the kind of thing that could be funded?
Leigh (25:00):
All day long? Absolutely, yes. We would be able to provide a service to the executor to meet the mediator's costs, the neutrals, the financial parties that are coming in, the collaborative professionals, whoever needs to be involved in the process, the venue hire, even whatever's going on on the day or whatever's required independent valuations, accountants to value the corporate trust structure or the family business or the shares in the family business that are owned by the deceased. Whatever's required for that, and particularly when you're collaborative law and you've got multiple parties each with their own collaborative practitioner supporting them and you've got your neutral, all that needs to be paid for somehow. So you either ask everyone individually to stump up the cash or we can do it at the estate level.
Tara (25:47):
Great. And barrister opinions, if the solicitor's sort of identifying, well actually, yeah, in terms of timing, so say there's a will but it's unclear and an opinion needs to be obtained from a barrister about how to proceed with the will or something like that. How would that work? Do you have to get the grant before the funding can go through?
Leigh (26:14):
We can lend pre grant. Obviously it's less risky for us to lend post-grant things of us more certain and stable, but pre grant is fine. Where we might struggle pre grant is if there's a challenge to the executor's role themselves, so they're therefore what's their capacity to enter into a contract with us if they are unlikely to be the executor later on. If we're paying for reimbursable costs like the funeral and third party costs, you'd say, well, that stuff flows through at estate debt under the indemnity anyway. Where it might come a bit trickier is if they want to renovate the kitchen, it's like a discretionary cost. It's something that's not necessarily reimbursable under estate law principles, but it's the same on down on the request of the beneficiaries. It might get a little bit trickier, but we absolutely do those renovation costs with say, when the beneficiaries are saying Yes, we want you to spend that money to fix the kitchen so we can get a sale, a better sale price because it benefits us ultimately anyway. But back to your question on pre grant legal advice or counsel's opinion, if there's a family provision claim running and there's challenges to the will around the becoming provisions and we're up at the executor level, that's fine.
(27:27):
There's no issue around the executor's role separately, there might be pre grant, there's two wills, current will and an earlier will and the current will's being challenged for some reason on the basis of capacity or whatever, and someone wants the previous will to apply, and the executor is the same under both. Again, we're fine with that because the ability for that executor to use us, enter into a contract, spend the money as they're required to defend and look after the estate, engage with proceedings and it's reimbursable, then that's all fine. It's only really where there's a challenge to the executive themselves or I want the earlier will to apply, and I'm the executor under that earlier will as well. And you are off the hook and there's this binary outcome of yes or no, like pass fail executive's on or executive's off. They're the ones where there's too much uncertainty and we'll say no for now, but resolve that issue and post-grant for example, or that issue disappears and goes away. We can engage with the instituted or nominated executor pre grant. We just want some level of certainty around who we're contracting with fundamentally.
Tara (28:36):
Yeah, I mean, and that's entirely reasonable.
Leigh (28:38):
Yeah, exactly right. And we don't want to wait on all matters post grant because if there is liquid assets, the need for us disappears. The problem that people are facing is pre grant when stuff is assets are frozen and bills need to be paid today and we need funding today post-grant, the value, we have a lot of value post-grant on illiquid estates. I now have to spend money to fix the house, market it, prep it for sale, it will take three months, then a month of negotiation, then 60 days of settlement terms or whatever it might be. And suddenly we're looking six months away until cash flows, even post grants. So we were able to provide value pre grant and post grants.
Tara (29:17):
And you sort of mentioned debts on the estate, so if the executive's sitting there going, oh, there's a lot of high interest debt, can they use your solution to consolidate the debt into a better interest rate outcome?
Leigh (29:31):
Absolutely. I mean, some lenders will pause interest post death on a deceased, but some don't rates and council stuff moves into arrears and high interest continues to accrue. And so it makes total commercial sense and in fact, in the best interest of the estate and keeping completely in line with fiduciary duties to look after the estate is to migrate high cost debts to lower cost ones and save the estate money. So we would absolutely be able to pay pending tax obligations arrears to council fees or overdue rates, notices or whatever might be pending out there, third party professional costs that are still lingering with financial planners and advisors and the accountant, whoever that were providing services to the deceased before they died. Yeah, we can clear all those things pre grants because we're acting on best interest, we're acting on good faith and relying ultimately that that stuff is reimbursable by the estate anyway.
Tara (30:28):
I mean another sort of example where I think there can be a lot of heartache caused by the financial structure is just where there's a surviving spouse and their funds aren't in joint bank accounts or they just don't have access to cash until the grant's obtained and going through that process. Is that a solution where just fund can step into?
Leigh (30:51):
Completely, completely. We're seeing larger states that are just largely illiquid, largely in real estate. We're seeing ones where the wealth of the estate's in a refundable accommodation deposit that's going to take time for access too. We're seeing estates where there was a bit of cash and it got depleted to pay for the funeral, but now there's not enough cash for other things thereafter. And so suddenly surviving spouse of the older generation say the man controlled the money and the wife didn't have much access to things and now he's died and she's left behind with no access to resources, it's all frozen in his accounts completely. So we can provide early releases to people, we can free up cash. We're very flexible in the sense that if we lend to the executor, we can pay all the third party costs, the probate the legal fees. We can also at the executor level provide early releases to beneficiaries if they want us need 5,000 to flow to all five kids for the time being pending their future distribution, but I want an interim distribution, we can provide that at the executor level, which might be helpful in that instance for say a surviving spouse.
(31:56):
Separately under our beneficiary product. I've got some good case studies for that one as well for you. But they could access if they are the surviving spouse, so there's no will and they are going to be the one appointed letter to administration under letters of administration or they're going to be receiving the distributions, no children, for example, or we can provide early releases to them under that product as well. Yeah, and we see this in family law too. We see so many women in particular stay at home moms. They've got the children, they are in the household, they separate from their husbands, the husband moves on, he can pay his legal fees, he's got the income and...
Tara (32:34):
Yeah
Leigh (32:35):
She's working at home looking after the household, unpaid, unpaid work, looking out for the kids and how does she pay her lawyers? And so that's the value that we provide in the family law space. And then for husbands as well, of course. But there's a overwhelming lot of people that need the help separated under one roof, for example, when people go through separation and why can't afford to move out? How do I buy a house or rent in the meantime? And so like that, talking about that, this sparked in my mind a really good example of a beneficiary that's come to us recently that we supported. So we've done loans to people for as little as $5,000, pay some insurance and the filing fee and the lawyers fees. We've done one for a million dollars and everywhere in between. And the million dollar one, for example, is I am 50% beneficiary with my sister. The borrower is 50% to men or women, husband, brother and sister should say he's living in the deceased house. He needs to get out of the house so that the house can be sold. His son lives a little away from him and we lent to him against these pending distributions.
(33:45):
So we think that house will sell for quite a few million. He's going to come into quite a few million, he's 50% share. We limit a million against quite a few safely and conservatively. So he rehome himself. He has bought a house closer to his child's school and closer to his work. So he's now picked up more work, he has less commute time. He has been able to vacate the deceased home so it can be prepped for sale and speed up the distribution and the sale proceeds for it for the benefit of his sister. She doesn't want to wait for her money, she wants the house to sell and off she goes. So him re-homing himself, he's closer to his son's school and he's got more work, less commute time. So we helped him move on with his life in that respect. And so that's not one that lawyers would necessarily be thinking about because this is a beneficiary and the lawyer's not, I'm acting for the executor and the executor's looking after the beneficiaries.
(34:37):
And so it's kind of like one step removed from the role of the lawyers generally speaking, but for them to be aware that the beneficiaries are able to separately access funding. It takes a pressure off them getting phone calls saying, access to my money, please. You can say, well, Jo one's able to support you in this, but just to be aware that or to have the knowledge that people can move on with their life and do different things. And so Rehoming is a good example. We have another beneficiary who applied not long ago, much smaller amount of money, but he's living in housing commission and he's bought himself a small business. He's used our money to then start owning an income and get back up on his feet. He will come into some more money when the estate distributes, but that's six months away. He wants to start to improve his life today. That's another really helpful example of a good beneficiary loan that we made. So we're here for all those things like school fees, renovating the house.
(35:34):
I'm just swamped by debts right now. I'm coming into money in the future. I wouldn't mind clear my credit card and taking some pressure off my home loan, which is causing monthly. So there's the monthly repayment pressure on people's lives. That's probably an important aspect that if any listeners are thinking about, well, how is our service helping people's life? No one's paying any repayments, no monthly repayment stress. So you take out the loan with us today, there's no monthly cashflow pressure of you back to us each month. The banks would require. It all gets wrapped up and paid at the very end when in a lump sum when these state distributes. And so right now, if you in your personal life or professional life are going, all right, I've got this bill to pay. I've got the interest on my home loan, I'm falling behind on my credit card and the monthly repayments are killing me. I've got my school fees to pay for as well and all this, and we can come in and clear a bunch of things for you and there's no repayments back to us each month. That's the value because suddenly my life is now removed to this monthly outgoing stress and I'll just clear the just fund debt when I have the ability to in a lump sum capacity at a later point in time.
Tara (36:45):
I love that Leigh, and I'm just sort of sitting here thinking about a lot of the lawyers in our community and I know how generous and kind hearted they all are. I think especially if you get into the unglamorous side of estate planning, we didn't get in here to be like lawyers on suits. We care about people and families and I think it can lend us to putting ourselves into situations where we might put others clients' needs ahead of ours and we are trying to, like our mission here is for estate planning lawyers to have profitable firms that is win-win, delivering a high value customised service to clients, but also being able to enjoy their life as an estate planning lawyer and be paid for their value. But yeah, carrying the costs, filing fees, disbursements the WIP on the file ultimately affects the take home pay for families and puts extra stress on firms from a cashflow perspective.
(38:00):
So I do think it's really important, obviously for the beneficiaries, we can see how that's really transformed their life and helped them move forward in such a positive way. And then also for law firm owners as well, this can just mean that we are not stressed or even just going, how many of these matters can I carry because of the financial delay in being paid for our services? It just means you're free to focus on helping your clients. So I really, I'm so grateful that just fund have released this for the estate planning sector as well.
Leigh (38:37):
Yeah, absolutely. The Cashflow Law firm is crucial for you to be able to continue to provide good support to your clients. There's also, there's the awkwardness of that conversation around, we expect our fees paid upfront, but I know you're struggling. And then what do you do in that moment? You either decide to take it on yourself, like you say, good Samaritan, but that starts to build of pressure at the back end. It also puts you in a funny position of conflict inherently where you're acting the best interest of the client, but you are owed money, you're at mediation that'll be settling today so you can get paid soon or you pushing on these things creep into the back of your mind and you can get rid of that if you're just paid upfront. And also you want to look after the client, you care about them and they've got other things going on in their life. And so not only can you just equip the whole, improve the quality of the whole conversation to say not only are our fees paid, but you've got the insurance, the rates, the gardener, the leaky roof or whatever's going on, that can all be covered as well. And for all those reasons, it just lifts the pressure off people. They can make clearer decisions, they can grieve as well without one added piece of stress.
(39:44):
We are here to support all aspects of that. The beneficiary, the executor, the law firm. We can wrap it all the third parties, the neutrals, the financial planners, everyone. Yeah.
Tara (39:53):
Leigh, can I ask you a few questions about the practical side of how the service works? So you said we don't have to deal with monthly repayments, it's just one lump sum at the end. Is there a set interest rate or does that vary depending on the amount and the nature of the assets in the estate?
Leigh (40:14):
Yeah, yeah, no, it's a really good question.
Tara (40:15):
And the reserve bank interest rate.
Leigh (40:17):
Yeah. Well, we've kept our rates stable for the last four years despite ups and downs all along. So we don't pass that through and we've kept a consistent price. I think certainty and confidence matters in that regard. And so we wear the increases at our end and it's ups and downs, so it's a stable price to your question. We have an establishment fee and that's paid on the loan size. There's $560 for loans up to 15 grand, and thereafter it becomes more of a percentage figure. But each loan's different. But we have an upfront fee that's payable regardless of how much you use. It's a lot of credit. If you ask for 20,000 and you only use 16, you only pay interest then on the 16 that you use. So there's a establishment fee and there's an interest rate that's 9.85%. So we are very conscious that our total cost of our executive loans would be probably hing around 12 I'd say is probably the on average total cost. How long is a piece of stream because how much you paid for, how much it cost ultimately to function of how long a loan's open for and how much you use.
(41:22):
But we are conscious very much that executors need to act in the best interest of the estate. That pricing needs to be reasonable and appropriate. It's more expensive than a home loan, but it's cheaper than a lot of personal loans and it's far cheaper than credit cards.
Tara (41:36):
And we're talking about a short term loan here. So of course you would expect it to be a different rate than a 30 year home loan.
Leigh (41:44):
Exactly right. And so we set a two year term on our matters and our loans. And so most of the states are administered well within that two year period. And if it goes longer than two years, we just do an amendment. We price for that basis, but we're expecting most executive matters to be depending on the state. Different states have a different speed to probate and we're providing a national service on a state by state basis. But look anywhere from two months probably to eight is probably the range we expect people to be taking out our credits.
Tara (42:19):
If a firm is sitting here going, oh, I actually can think of some matters where this is worth considering, how do they get started?
Leigh (42:28):
Yeah, that's a good question. There's a couple of ways. So we're quite flexible in this. So on our website, if a law firm, we need to have a relationship with a law firm in order to lend to the client, this is part of due diligence and you want to know who we are, we want to know who you are. And so we've got a number of them across the country. So it's about a thousand law firms have already signed up and work with us on accredited basis. So you can go onto the website and request accreditation, and then we do some mutual due diligence and there's no payment, there's, it's just literally just a relationship to work and support your clients. So they can start that way. This request accreditation, we have a wonderful partnerships team of relationship managers that will work with you and get the firm onboarded.
(43:14):
That's one way. The other way is to start an application so lawyers can submit applications on behalf of clients through the website. Also, clients can submit applications for themselves. And so a lawyer can start filling it in with permission from the client of course, or the lawyer can send the link to the client and say, here's the link to just fund, do your own research and shop around, but if you want to apply, you can apply directly client. And then we get the application from the client. So when applications land with us, either via the client or via the law firm, if the law firms are not accredited, we'll just reach out and say, we've had an application from your client, Mrs. Smith for X dollars. Here's some information we need about the estate, a copy of the will, copy of the death certificates and some things that we need copy of the inventory list if you've got it.
(44:04):
If not, now we'll work these things through and we've got estate's lawyers to talk with the lawyers on the file about how best do we make a good decision and come to a quick decision so we can help people. But if the law firm's not one that we hold a relationship with, we just build that out in that moment in parallel. So start by the law firm can come to us directly for the website, the client can apply or the lawyer can apply on their behalf. Either way we then build a relationship with the law firm once that's we can just look after clients quickly and easily thereafter.
Tara (44:35):
And so a self-represented or administrator or executor can't apply. This is really a business to business solution.
Leigh (44:46):
So this is something that we're working through. So as on the executor side of things, most executors will have a lawyer. If an executor is a professional executor, a lot of lawyers are often appointed as executors. Well, that's fine as well because you are a professional in that respect. If you are essentially a self-represented executor, we will take a case by case approach on that. We do rely largely on the law firm being involved in the process around the flow of funds that administration funds guide the trust, then debts get cleared. And so we do worry a little bit of money going from an estate to an executor and then disappearing and how do we ensure that we as a creditor paid as part of that usual process. That's just an easier process when lawyers are involved rather than sell.
(45:31):
As far as beneficiaries, a lot of beneficiaries don't have lawyers, and so we don't necessarily need a relationship with the executor's law firm when we are lending to the beneficiary. So we're flexible in that respect. But for most of the all listeners who are practitioners looking after executors, we just hold a relationship with your law firm and we've got so many family law like hybrid firms. You mentioned Jacin Watkins before. So at Amanda Little and Associates, they have family law and estate. So if we already hold a relationship with your firm and we might already do, then it's up and running. It's all quite already. Yeah.
Tara (46:07):
You just mentioned Amanda, we are going to be catching up in person at the Disrupting Tradition Conference run by the Family Law Education Network that Amanda Little is behind. So that is coming up on the 27th of March. So you are going to be there. You are also, I think, are you presenting or just sponsoring?
Leigh (46:27):
Well, we as a business are sponsoring, I am there running a panel discussion on one of the days. Yes, it's going to be a great conference because there is a whole entire family law stream and then separately there's an entire estates stream and there's also collaborative law streams as well. And so I think for one of the first times, a lot of the law firms have estates lawyers and family lawyers going, oh, the family lawyers get to go to a fun conference, what about the estate? But at least they can all go together now. And so we're super excited about March and yeah, I look forward to running the panel discussion and the two days.
Tara (47:00):
So if you're listening, go and find Leigh and go off and have a chat to him in the break. And I imagine your team will be there. As you said, you've got a really strong team, so there'll probably be quite a few of you there. So I am thinking for anyone listening who has more questions and you're going to the conference, go off and find the team and also check out Leigh's panel discussion.
Leigh (47:23):
Yep. Great.
Tara (47:23):
Oh, well I'll give my session a little plug too while I'm here. This is just funs episode, but I will say I am actually running a breakfast for the Art of Estate Planning community. So I think we're actually sold out, so if you already have your ticket, I can't wait to see you. And then I'll be running two sessions in the estate planning stream room. So the first one will be about assets in family trusts and testamentary trusts and how they are protected or exposed in family law proceedings. So I'm not intimidated at all about doing that at a family law conference, not being a family lawyer myself, but I think that'll be a really good conversation to have. And then I'll also be facilitating a panel discussion where we're going to have a combination of estate planning lawyers and family lawyers, and also lawyers who do both talking about how we can have the process run smoothly for clients who are going through a relationship breakdown and need to get their estate planning sorted and just all of the crossover and interaction that those two life events can bring and what that means for us as practitioners and just trying to learn from the different specialties to basically just again, deliver a high value outcome to clients and sort of be aware of the nuances of each of those different practise areas.
(48:55):
So if you're coming to the conference, Leigh and I can't wait to see you, I think it's going to be incredible. Leigh, was there any other examples or case studies that you wanted to make sure we heard before we wrap it up.
Leigh (49:08):
Well, you speaking about the hybrid family law estates actually did remind me of a couple actually. I want to come and listen to your discussion by the way on the day. I can't wait for that. We've had a couple hybrid matters come through where we have had a husband and wife separating in family law and they need to pay their family law legal fees, but one of the assets in the family law dispute is the pending inheritance that's coming through. And so we're like, well, how do we manage that? We have ones where we've had another one where it's kind of like the reverse is that the deceased died, but so the family loss property settlement is an asset obvious state, and that's pending at the same time as the divorce proceedings or the family law property settlement proceedings. And so money's coming from the family law jurisdiction into the estate's jurisdiction.
(49:55):
And we've had a husband who's been put under orders to pay the wife a chunk of money in the FEMA law settlement. He's retaining a business and property, the wife is keeping cash or can cash from him. And he is like, well, I actually don't want to sell things to liquidate them to pay her in the family law settlement, but I am actually coming into an inheritance through my father's estate at a later point in time. So he has borrowed from us on the estate side of the business against his pending inheritance and is then using that to meet his family law obligations in making a payment to the wife. Just that flexibility and those crazy options that never existed before are now starting to become possible.
Tara (50:37):
I love it. Yeah, I mean, Zeta always says when they get in the collaborative law room, they can just look at a problem from so many different angles and try to come up with an out of the box solution that wins for everybody. And I can just see how having the funding of that and the short term gaps or just freeing up the options, as you said, so they don't have to sell an asset, they don't want to. The wife can get paid out and go on her merry way, get closure for her life. I can just see how that creates such a positive outcome for everybody involved that might not have been an option for them previously.
Leigh (51:21):
As we talk, I keep thinking of more examples. We had a borrower who is a beneficiary alongside five other siblings. So they are each to get one sixth of the estate and that is to come from their mom's home. They don't want to sell one of them, actually, I should say five of them don't care. They just want the cash. One of the daughters wants to keep mom's home, but she needs to pay out the five siblings. She is separately coming into a family law property settlement, so she is borrowing against her property settlement and family law to pay out her siblings in the estates world. And we are lending essentially on a hybrid basis that she'll come into the house, she'll keep mom's home, she'll pay out the siblings, they don't care, they just want their cash. The value to her is that she can sentimental reasons mom's home doesn't need to be sold. The other beneficiaries are happy, they get their money and she, she's used her divorce process to and the hybrid nature to make it work. And that was extremely valuable for her as well. And this that would never have existed right up until now. That house is being sold and everyone gets on six of the proceeds.
Tara (52:29):
I can just imagine the positive impact that also has on the sibling dynamics in that family now because she's not there going, oh, you all made me sell the house, or everyone wins, which I think is just so important.
Leigh (52:45):
Yeah, agree. Yeah, I mean, I could talk case studies with you forever, but
Tara (52:48):
Oh, Leigh, you've been so generous with your time, so thank you so much for joining us. I hope people listening, this has just sort of got some wheels turning in terms of ideas or even if you don't have anything where it's going to be a potential solution for, you've just have it tucked up your sleeve as something in your toolkit in case you come across a matter. So yeah, Leigh, well firstly, thanks to just fund for supporting the estate planning industry and releasing this new service. And thank you for your time today and telling us all about it, and I'm looking forward to catching up with you at the conference.
Leigh (53:26):
My pleasure. And I can't wait as well. Tara, thank you so much.
