Is it really my job to bankroll the business?

[ks9aq]

My parent passed away a few weeks ago. They were a landlord/freeholder with two main rental properties. Myself and my sibling are the executors of my parent's estate. We went to see their solicitor this week to discuss the estate, grant of probate etc. and when we said we were setting up an executor account in order to continue to collect the rents etc. and for paying bills related to the properties, he was very resistant and didn't see why we would think we needed to do this. When pressed further, he said that the rents should be directed to the solicitor's client account and that my sibling and I would need to bankroll the business, if repairs were needed until there is a grant of probate. My sibling and I have very little money and financially cannot bankroll the business for the next 6+ months. The solicitor suggested that if a large bill needed to be paid such as roofing work (which is a possibility), they would not pay this out of the monies they are holding and we may have to get a loan.
For context the estate has enough 'cash' in it to pay all inheritance taxes due.

Q. Are they correct? Do the executors have to bankroll a company in this situation whilst the estate is going through probate?

Is the solicitor also an Executor?

No. Just me and my sibling.

That sounds shady.

Setting up an executor account is a perfectly acceptable way to administer the estate.

You can swap to another solicitor to progress the probate if you feel it would be better. You don't have to accept the solicitor's opinion. As long as the estate is administered and reported in line with government requirements then you can exercise your judgement as the executors of your parents will.

I'd be suspicious of this solicitor I were you. Not all solicitors are very good or as honest as they appear. They may be having cash flow issues at the moment (many independent law firms are going under). Proceed with caution.

Sounds like the solicitor sees an opportunity to send an invoice for doing sod all. You do not need a solicitor to get probate, download the forms and fill them in, pay the tax due, then send the forms to the probate office. It's tedious as you need to locate and value all the assets, which you would have to do anyway. The only thing to remember is that you can't charge the estate for your time (unlike a solicitor) but can charge your expenses.

Thank you for your response. I take on board what you say about cash flow, despite being independent, they are a very long established firm and actually don't actively look for work as they have a large bank of clients/families who use them and keep the work flowing. Without going into too much detail, I know they turn probate work down when new people enquire because they are so busy. My parent was one of their clients so therefore they are keen to get the grant of probate. Again, without going into too much detail, this solicitor firm knows a huge amount about my parent's estate/properties etc, so it would cost more in the long run to move to a different solicitor as they don't know the background and the current solicitor will charge to supply some documents.

Go with your gut. The executors account is very sensible the way you have explained it, and I set one up to so there was full transparency of shares being sold, insurance payouts being paid etc. It seems an odd thing for the solicitor to advise. I get you want to stay with them and why, but I would say do what's right for you and set this account up to manage the properties efficiently and honestly.

it seems worth asking them why they are against it

I'm going to guess it's something to do with them having control

But I would be interested to know the answer

Had to do quite a lot of stuff relating to Parents and property in recent years

No one ever seems to suggest executors account and I wonder why

It's so hard to get proper legal advice

I have recently had to sell a relative property on the power of attorney

It was a nightmare. I have actually done it before and it was really straightforward.

Either solicitors don't work as well as they used to or there are new regulations in place

I can't see why you would have to bank roll it

An executors account would only have all the money due to the estate going in it correct

So the rent needs to be paid somewhere and it doesn't make sense for the solicitor to have it and it's a lot easier for it to be in separate account

I suspect they're trying to save themselves some administration

Like going between the executives account and client account

As executors its up to you. I could see that there is the potential for the cashflow to get complicated if there are also estate monies going into the same account as monies generated and spent by the business after your parents death. You'd need to keep very clear accounts to differentiate between cash going into the executor's account from other cash accounts and going out to cover stuff like funeral expenses, paying off credit cards bills owed by the deceased and so on: and cash coming in and going out to keep the business running and which may be generated and spent after your parents died. I am not sure why it needs to go to the solicitor's client account unless that is how the business has been run up to now. I don't know what the answer is but my best suggestion is to be clear to the solicitor that your taking out a loan to bankroll any part of the business is not going to happen. I think you need to fully and completely understand their reasoning before you make a decision and it IS yours to make. I'd be going back with questions why which would be basically why do this and what are the pros and cons and keep digging until you fully understand their advice. You might also want to explore with your parents' bank getting you both added to the business bank accounts so that you could keep business cash and outgoings in the business's account. NB I am not a legal beagle

Absolutely not @ks9aq . That doesn’t sound right at all. It is sometimes necessary for executors to get loans, but if there is enough money in the business to pay everything that absolutely shouldn’t be necessary. If you want to use them because they have a lot of knowledge that’s fine, but I’d be tempted to run the probate myself and get them to have a limited advisory scope of work.

Are the properties held in a company? If so make sure it has directors and the the usual bank account arrangements should be be able to continue uninterrupted.

I absolutely agree. Use the solicitors to undertake the work that YOU decide you need them to do and do not let them take control.

When my mother died intestate, my siblings nominated me to be the executor. I opened an executor’s bank account ( with NatWest ) and directed all funds and investment income into this account. I used the funds/arising income to pay any expenses. I make sure the beneficiaries are updated regularly with an income/ expenses statement including screenshots of the bank account. I handled the probate myself and was totally transparent about all transactions / correspondence etc with all beneficiaries. Solicitors were appointed as and when necessary and paid out of the executor’s account.
Is the above information of help?

They've got $$$$ signs in their eyes. You can see it a mile off.

The solicitor wants all the rental income to go into their client account but wants you to pay any ongoing maintenance bills yourselves and won't let you use the rental income to do it? Ruddy cheek. Who do they think they are?

From what I can see from a quick Google and reading stuff posted by other solicitors, the rental income after death forms part of the estate, but the executors can collect and manage those funds and use the money to pay any ongoing property expenses.

As executors, I don't see any reason why you shouldn't open an 'Executors of the Estate of ...........' bank account to use for all the receipts and payments. If the solicitor is adamant that the rental income should go to them, they they have to accept that they then should use those funds to pay ongoing bills.

I think the issue that makes this different is that the business which forms part of the estate is generating income and expenditure post mortem. I was the executor of my late husband's estate and did it all myself except for what I would have struggled to do. For those bits I employed the solicitor who wrote our wills and It was at his suggestion.

Thank you for your thoughts. There is no business account so that is one of the reasons why my sibling and I want to set up an executor account. The solicitor said that if all monies went to them then my sibling and I would have to pay the bills and then wait to be repaid when probate is granted in 6 months time. If we have an executor account where the rents are paid in and the bills exceed the rent money in the account, then we would have to bankroll this and if necessary get loans if we don't have the money ourselves until probate is granted.

Yes, this is of help. Although my parent had a will naming my sibling and I as executors.

You understand the situation!

Thanks for your comment. The solicitor has confirmed that whilst monies would come in to his client account, no money could come out until probate is granted so any bills would have to be covered by me and my sibling.

Without oversharing, the estate is quite large and complicated so a solicitor is needed.

Thank you for your thoughts. Solicitor said he is only willing to act 'all or nothing' so no advisory role option.

The properties are not held in a company, so no directors and there are no business bank accounts.

But you call the shots. The solicitor does what you tell them to do. I also suggest you get a quote from another solicitor. Old and established doesn't mean they're any good, only that they have a ready stream of clients prepared to pay their bills.

Is there maybe another solicitor in the firm who might be prepared to do it?

The all or nothing thing is possibly his personal choice

We had trouble getting a solicitor to sell a leasehold flat there were a lot of problems with it but in general I think solicitors are moving away from any work they find too complex - unless they can really make a lot of money on it

But the expectation that you will bank roll, the properties is not right. Why can't they pay related expenses from the solicitor client account? As I type I realise it's because they don't want the admin isn't it.

So hard to find a good solicitor now it never used to be this difficult

As soon as you said "all or nothing" I went "okayyyyyyy" There is no way I could accept that attitude regardless of the solicitor's history with your parents or their business. I know you said they will charge you for certain documents but how much will the charge be to do the whole probate? If they do have information about your parent's business or estate and they have indicated that this is why you should stay with them, do you feel that they are putting you under undue pressure? I mean you know your business but to me it stinks a bit.

Honestly that’s a red flag for me, it isn’t his job to dictate he should be supporting you and giving an advice which you are entirely free to ignore if you wish to do so. Unless you are doing something unlawful he has no business behaving this way.
In those circumstances I’d be minded to tell him to hand over the files and find someone else.
Ps. I’m a solicitor

The solicitor has to be wrong. My background is in accounting, not law, but what they want you to do is ridiculous. Please approach another solicitor or an accountancy practice for further advice.