Solicitors unreasonable demand.

[roythegrass]

I’m an executor in an estate.
The deceased’s property was valued and IHT paid on that valuation. The property subsequently sold for a higher value.
The solicitor acting for me in the estate advised that Capital Gains Tax would be payable on this difference. The solicitor advised that rather than the estate pay the CGT this amount could be attributed-paid- to the beneficiaries who would then be liable for the CGT- if any. Within 24hours he then corrected himself and said that it was now too late for such an arrangement and the estate would have to pay the CGT. His oversight in timing has cost each beneficiary several hundred pounds as all had no capital gain in the year.
I wrote to the solicitors seeking their proposals for reimbursing the estate for the CGT loss by the beneficiaries and after four months they replied stating that without accepting any liability they would be prepared to make a good will payment to the beneficiaries for the same amount as their loss subject to my not making any further claim on their firm. I believe this is unreasonable, they are either liable or not!
As the sole executor I am personally liable to the estate’s creditors and beneficiaries and I cannot possibly predict if at a later date they think they have been underpaid and look to me for recompense.
Thoughts?

[atticus]

I agree that potentially this is too wide. Have you thought to limit this proviso to claims in respect of the specified CGT loss?

[Sam101]

Try talking with them one more time and suggest a compromise figure. Say that you are reluctant to make a FORMAL COMPLAINT, which would require them to go through the process and report to their insurers that there is a possible claim. You may obtain a better figure, but they have not admitted liability.

At least they should have explained that the figure submitted to Probate is approximate and if sold at a higher figure then CGT would be payable. Very poor guidance if they did not do this. It helps to prevent people putting in a lower figure to avoid IHT. However. there is no guarantee that your claim would be met, but you have a chance.

Arbitration does save time, but it depends on the figures.

[roythegrass]

Try talking with them one more time and suggest a compromise figure. Say that you are reluctant to make a FORMAL COMPLAINT, which would require them to go through the process and report to their insurers that there is a possible claim. You may obtain a better figure, but they have not admitted liability.

At least they should have explained that the figure submitted to Probate is approximate and if sold at a higher figure then CGT would be payable. Very poor guidance if they did not do this. It helps to prevent people putting in a lower figure to avoid IHT. However. there is no guarantee that your claim would be met, but you have a chance.

Arbitration does save time, but it depends on the figures.

There is no dispute as to the amount – only that the solicitors will only distribute that amount if I undertake not to make any further claim on them which, although highly unlikely, prevents me from making a claim on them should a beneficiary or creditor claim on me as the executor at a later date.
The amount is small, approx £6000 being roughly a few hundred pounds per beneficiary. It is my duty to act in the best interest of the beneficiaries.

[roythegrass]

I agree that potentially this is too wide. Have you thought to limit this proviso to claims in respect of the specified CGT loss?

Hi Atti,
Are you the same Atticus formerly on Swarblaw? You were a most helpful contributor on that forum.
Is this something I can refer to The Law Society/SRA/ Legal Ombudsman for resolution? Do I have to first notify the solicitors that I will proceed in that manner if they continue to insist on my undertaking to make no further claim on them?
Thanks

[atticus]

Yes, same poster.

My understanding is that there are limits to what the SRA etc will treat as matters related to a solicitor's service. Matters of possible negligence I understand to be beyond the scope of what they will look at.

Others - dslippy? - may know better.

[roythegrass]

Whilst not yet making a formal complaint to the Legal Ombudsman I have emailed them with the basic facts enquiring if this is a matter they can deal with. Their automated reply was to say it will be several weeks before they respond!
Irrespective of the solicitors offer of a good will payment without accepting any liability this is a clear case of professional negligence. CGT was paid to HMRC which could have been paid to the beneficiaries had the solicitor acted in time.
The amount involved (approx £6K) is too small for a CFA solicitor to handle and I cannot instruct another solicitor to make a pro neg claim as I just know the solicitors who dealt with the estate would spin things out and then settle at the last minute without going to court. That would leave me having to pay the new solicitors costs which could exceed the amount claimed.
Is this something which can be pursued by a small claim? Given that the estate solicitors have offered to make a payment but on terms that I will not accept (relinquishing my right to make any further claim on them) would I sue for the £6K or solely for an order that the amount be paid to the beneficiaries without my giving any such undertaking?

[dslippy]

I think Atti is right. The SRA may not deal with issues of negligence.

Do you know of anything to suggest that further mistakes have been made.

You could ask them to confirm before signing the release that they know of no reason to think that additional claims might arise.

There comes a point where you just settle and get on with life. Talk about it with the other residuary beneficiaries.

[roythegrass]

I am not prepared to relinquish my right to make any further claim on the solicitors. I cannot possibly know what a beneficiary or estate creditor could claim at a future date should they audit the estate accounts in detail. Although they would have to submit a claim within 6 years HMRC can claim for an indefinite period if they found errors in the IHT or CGT paid.
As a case in point I had to sign a tax return for the deceased whilst having no knowledge whatsoever of their income and relied totally on the figures submitted by the solicitor.
As an analogy imagine making a claim on your car insurance for your insurers to tell you they would only pay if you made no further claim on them!
I believe the solicitors demand is tantamount to blackmail (“to force or coerce into a particular action, statement, etc.”)
Although a very minor beneficiary as a compromise I could agree to make no further claim as a beneficiary but in my capacity as the executor I cannot give such an undertaking as I have a legal duty to act in the best interests of the other beneficiaries.

[Sam101]

Roy, you will not get a suitable reply from the Ombudsman's office, as they can only get involved after a formal complaint has been made. They do not intervene with the practice of solicitors as they are there to help after a complaint procedure has taken place and no result has come about..

[roythegrass]

I think Atti is right. The SRA may not deal with issues of negligence.

Do you know of anything to suggest that further mistakes have been made.

You could ask them to confirm before signing the release that they know of no reason to think that additional claims might arise.

There comes a point where you just settle and get on with life. Talk about it with the other residuary beneficiaries.

Thanks DSLippy
Sorry to resurrect this post but I’ve had health issues which have taken priority.
I do suspect that further mistakes were made. Most had no monetary vale –just carelessness- but of most importance was that the solicitor failed to recognise that a well known charity were not liable for IHT and should have been paid gross. When the charity challenged the solicitor he paid them the IHT that was due on their share and then reduced the amount payable to the remaining beneficiaries by the same amount. Surely this should have been claimed back from HMRC ?
This is another reason why I refuse to give an undertaking not to make any further claim on the solicitor.

[atticus]

Then don't give the undertaking. Or is there more to it than that?

[roythegrass]

Then don't give the undertaking. Or is there more to it than that?

Thanks Atti.
I doubt I'll be giving the undertaking they seek. Nothing more to the matter other than previously stated.
With regard to the SRA what a useless bunch of (expletive)
Despite comprehensively setting out the facts including the exchange of emails with the solicitor they replied with a clearly generic letter stating they cannot accept a complaint until I first complain to the solicitor!
There may be a possible solution.
The solicitor had to issue a third set of ‘final’ accounts for the estate due to mistakes in the previous two. (Which speaks volumes for their competence)
By way of a compromise I could agree to make no further claim on the solicitor subject to the third set of accounts being accurate. I know there’s an error in this final account but they don’t know I know this!
If they agree to this that would leave the door open for a further claim should it become necessary.
If they decline then that would be an admission that they have no confidence in their own work.