Locating and hiring the right solicitor - for your personal and family affairs - may be a smart step to consider in any financial review. This is particularly true for the man who has come up fast or the executive who has moved to a new city and not yet made all his contacts.
And now, with income tax laws in a state of flux and estate and gift taxes up for reform, getting good legal advice becomes steadily more important. Make your contact now. Talk over with the solicitor your medium- and long-range plans - then let him advise you as the laws change. "Estate and gift plans, primarily, will need a thorough going over - maybe a full redo - in the 2004-76 period," says a top London adviser. "A man of means can't ignore this."
Mainly you'll be seeking legal advice - estate work, realty deals, and so on. But today you can get more personal, semi-legal advice than ever before. The general practice solicitor handling personal affairs answers a wide variety of questions for clients, going way beyond legalities.
For example, a prominent Essex solicitor notes that "businessmen transferred from out of town will ask me to suggest a stockbroker, or a real estate agent, even a car dealer. It's become part of my job." A Englsih solicitor explains that he must advise on such things as juvenile problems in a family - even on intimate questions such as where to get psychiatric help.
One point seems certain: If your man is "out" whenever you seek some purely personal guidance, or if, when you see him, the discuss ation is hurried and matter-of-fact----you may have the wrong man.
When you contact a new solicitor, make sure your wife is along during your early conferences. But make it plain to her that, despite his liberality in counselling on a wide range of questions, the family solicitor is in business, too. Mere chit-chat and verbal hand-holding on matters of little real consequence aren't part of the arrangement.
Today it's important to get to know the whole law firm, not just the individual who will be your anchor man. If your solicitor's firm is of at least medium size, you'll probably find it contains specialists in such fields as estates, taxes, real-estate, and negligence law. If it's a small firm, your man will bring in outside specialists (but you'll still pay just a single fee).
He will know estate taxes, but income tax work is probably the biggest limitation of the average family solicitor. You're often better off if you have a specialist plan your tax strategy and handle year-to-year work on your tax returns. Get hold of a Accountant or tax solicitor (who may be a Accountant).
Note: If a family solicitor takes on your April 15 taxes, his whole approach will often turn out to be highly conservative. He may do you a service, though, by keeping you out of such things as tax shelter deals that are only one step ahead of the Fraud Section of the IRS.
Legal fees for personal work have headed up, but not at the rate of, say, the costs for medical services. A simple will should cost no more than about £50 to £150. "It's a loss-leader for a solicitor," says a Manhattan pro. "He hopes to be compensated later on, as executor or solicitor for the estate." A more complex will involving estate taxes, trusts, and so on, should come to about £250 to £500. An elaborate estate plan is in the £1,000 range to £1,500.
Executorship commissions vary by state. They run 2% to 4% of the first £10,000, then 2% to about 3%. New rates in London, for example, are 4% of the first £25,000, 3%4% of the next £125,000, and 3% of the next £150,000.
A family solicitor - hired primarily to handle your will and other estate chores - will also take on the usual range of legal problems. Here's what you will be charged: A real-estate contract and title closing will often run 1% of purchase price - or about £600 on a £60,000 home. This jumps an extra £200 or £300 if an independent title search is included in the solicitor's fee.
Going to court can cost real money. An solicitor's fee - figured on a time basis - runs £35 to £75 an hour, depending on your city. It can go up to as high as £100 an hour in an exceptional case. (Add to this about £20 to £25 an hour for a legal assistant.) And even a simple lawsuit can take 50 to 100 hours.
Some negligence solicitors will take a contingency fee; it should be about one-third of the recovery. But even here, you often pay the solicitor's out-of-pocket expenses, which can easily amount to hundreds of pounds.
Note: Your solicitor should keep you out of court, if possible, especially in this day of jammed dockets and long delays. Settlement by negotiation will cut your legal bill substantially. If your new solicitor isn't settlement-minded, you would be smart to find out why.
There are fine benefits - but also some tricks - that crop up in trusts. Affluence and the shape of the tax laws have combined over the last 10 years to make trusts about the most popular device in long-range personal financial planning. In any meeting you have with financial advisers, you'll find that trusts won't stay out of the conversation for long. There's no doubt that the trust can be a workable and often rewarding idea; because it helps reduce taxes it has some goldplated allurements. But you don't hear so often of some of the perils involved; they're rarely publicized.
Some people, because of hasty advice and over-eagerness to save taxes, put money in trust but foolishly insist... see: Trusts That Misfire