Reprinted with Permission of American Bankers Association
Missing heirs--who should pay to find them?
Is it the responsibility of known heirs to pay out of the total estate to find those who are missing -- or should located heirs pay for their own unexpected gain?
Richard A. Blake, Jr.
Blake and Blake Genealogists, Inc.
In many cases when a Last Will and Testament is probated, one or more heirs either named or related may not be located by family members, trust officers, or the attorney. To resolve such a situation, it may be necessary or desirable to call on the services of an independent search firm that specializes in locating missing heirs.
The primary issue that seems to arise in selecting and utilizing the services of a search firm is who should pay to find a missing heir--and how much to pay? The decision influences the method of payment and, very often, the amount of payment, as well as the degree of assurance that all of the legal heirs have been located.
Although there is no one methodology that is right in all cases, the following provides some guidelines as to the selection of a search firm and the choice of payment method. In general, the very best search firms will allow the executor, attorney or family to decide whether the fee for missing-heir searches should be an estate expense or negotiated with the missing heir(s) from their portion of the inheritance.
There are really three methods of payment to search firms--flat fee, contingent fee or percentage of the missing heir’s inheritance, and hourly fee. These are discussed below.
- Flat Fee Payment
A flat fee is often, although not always, the least expensive--but for whom? This is a fee negotiated in advance between the search firm and either the trust officer, the attorney for the trust, or the family. However, because it is determined without the agreement or knowledge of the missing heir, it cannot be charged to them and must be paid out of the total estate. This means that the known heirs are paying to find additional heirs who will share in their inheritance and, in effect, reduce their own inheritance.
Overall, the primary advantage of a flat fee payment is that the total cost will be a fixed, known rate that has been agreed on by all parties, except of course the missing heir.
- Contingent or Percentage Payment
The other major way in which a search firm is compensated is from the missing heir when he or she is found. Usually, this fee is based on a percentage of the inheritance to be received by the missing heir and is negotiated with them when found. If the search is not successful, there is no charge.
The advantage to the estate is that the fee is derived from the inheritance of the person who is benefiting--the missing heir. Certainly if they are named in the will, there is a legal obligation to conduct a thorough search for them, but since they will reap the reward while other heirs will actually suffer financially, shouldn’t they be the ones to pay?
- Hourly Fee The most straightforward, but often least desirable payment method is a straight hourly fee for time expended. Open-ended, this could result in exorbitant expense. Close-ended, the quoted time may expire before results are achieved.
In choosing a search firm to locate missing heirs, there are several key points to consider. First, what is their reputation in the industry? Have they been around for a long time? Do your fellow attorneys or trust officers know of them? Second, do they offer to locate missing heirs on your choice of flat-fee, percentage, or hourly payment, so that all parties can agree on which method is best?
These two considerations alone will go a long way toward ensuring that all missing heirs are not only found quickly and reliably, but that the cost of locating them is reasonable to all concerned.