Over the last few years, the probate process has become synonymous with delays, affecting not just beneficiaries but also the professionals who help navigate these legal waters - solicitors.
Previously, solicitors could expect to collect their fees from an estate within weeks. With mounting probate delays solicitors now face an average wait time of at least 16 weeks to receive payment for their services. This extended timeline poses significant challenges to the financial health of law firms, especially in terms of cash flow management.
The Financial Strain on Solicitors' Firms
For any business, payment delays introduce challenges and additional risks. Solicitors' firms, often relying on timely payments to sustain daily operations, are now facing increased financial pressure. Unpredictability of cash inflow can have a negative impact on any business, and solicitors are no different.
Firms may find themselves focusing on cash flow issues, which can hinder their ability to take on new clients or invest in business growth.
Funding as a Solution
One practical solution to mitigate these delays is through estate expense loans. These loans provide an immediate source of funds to cover solicitors' fees, ensuring they are paid promptly for their work.
The loan is taken out by the Executors of the Estate and is treated as a testamentary expense and repaid once the estate’s assets are liquidated.
How Estate Expenses Loans Work
Estate expense loans can work by advancing the solicitor’s fees upfront, thus alleviating the financial strain caused by probate delays. Here is how it operates:
Immediate payment: Solicitors receive their fees as soon as the loan is approved, bypassing the 16-week wait.
Debt to the Estate: The loan amount is recorded as testamentary expense, and the lender is repaid once the estate's assets are sold.
No upfront costs: Executors are not required to provide funds upfront, which is particularly beneficial for estates that are asset-rich but cash-poor.
The Advantages for Solicitors and Executors
For solicitors, the benefits are clear. Immediate payment improves cash flow, reduces financial risk, and allows firms to maintain smooth operations. Moreover, with a stable financial footing, firms can consider expanding their client base and services.
For executors, estate expenses loans mean they are not burdened with upfront payments. This can also be important for preserving the estate’s value, preventing the need for rapid asset liquidation to generate cash.
It can also help to speed up the probate process, especially if funds are required for IHT, funeral costs or liabilities such as:
Property repairs and maintenance
Property clearance costs
Professional fees such as private, valuers and surveyors
Conclusion
Probate delays are an inevitable part of the current legal landscape, but they need not disrupt the financial health of solicitors' firms. Estate expenses loans offer a viable solution, ensuring that solicitors are paid promptly for their work, while also safeguarding the interests of the Executor.
To find out more about how Level can help Executors to manage the administration, testamentary and tax costs associated with probate, visit our Estate Expense & IHT Lending page or enquire now to speak to a member of the team.
