Probate work is an attractive and potentially lucrative area for many accountancy firms. It aligns well with accountants’ skills and competencies, as well as offering opportunities to improve services for existing clients and attract new business.
The Legal Services Act 2007 defines the reserved service of probate as the preparation of ‘any papers on which to found or oppose a grant of probate or a grant of letters of administration’.
Before undertaking probate work, firms need to be accredited by a legal services regulator, such as ICAEW. “If a firm is doing probate work, it is required to be accredited and hold either authorised or licensed status,” explains Sandra Da Silva, Legal Services Case Manager at ICAEW. Firms regulated by ICAEW for probate can only carry out non-contentious probate; they do not get involved in contentious work.
“Probate offers firms a really good business opportunity as part of an ‘end to end business advisory service’,” she says. This might include having inheritance tax planning and probate services within their usual tax services.
“It’s essentially a cradle to grave service,” she suggests. “This enables existing clients and their families to stay with their accountants, with whom they’ve built a long term relationship, during a particularly vulnerable time. But, with the right marketing, it can also bring in new clients.”
Routes to accreditation
There are two routes to accreditation for probate work: you can become either an ‘authorised’ or a ‘licensed’ firm:
- Where a firm is authorised, all the principals and owners of the firm are individually authorised to carry out probate work.
- If a firm is licensed at least one principal, either an individual or a corporate entity, must be a qualified authorised individual for probate, but not all principals or owners need to be authorised.
The choice is entirely up to you, but factors to consider include your firm’s type of practice, and its size. “Authorised structures tend to be for smaller firms,” explains Da Silva, “because it requires all principals and owners to be qualified authorised individuals. It lessens the risk of influence on those authorised individuals when everyone is registered to undertake probate work. This reduces accreditation fees but can also be less flexible in terms of recruitment.”
Licensing is more flexible. “If you’ve got a slightly larger firm and do lots of different types of work – audit, insolvency and investment business – as well as probate, choosing to be licensed means not all the principals or owners need to be authorised individuals,” she says. “So there’s a bit more flexibility around recruitment and what other work the firm undertakes, but the accreditation fees are higher.”
With the licensed structure, the risk of influence on authorised people increases, so there are additional assurances built into the application process. These include extra security checks and due diligence.
Is probate right for your firm?
As with any extension to a firm’s business, before applying to do probate work, you need to look at whether it fits with your existing services and skills, and how it can add value. “You need to have a solid business plan, with an associated marketing strategy for extending the business,” advises Da Silva.
“You’ll need to market the service to potential and existing customers, which is particularly important for probate because in the past it’s not something accountants have done or something people automatically expect accountants to do,” she adds. “So consider your client base, the existing work you do, and the firm’s staffing capabilities.”
Probate also requires a different way of working, “You will be going into a sphere where you deal with families during a vulnerable and emotional time, so it requires empathy mixed with due skill and care.”
Step-by-step application
The application process for probate accreditation typically takes eight to 12 weeks to complete. “Applications go through several stages to make sure we offer the best customer service possible to firms but also do necessary due diligence,” explains Da Silva.
All the application forms, together with the most frequently asked questions, are available on ICAEW’s website. “The initial application is submitted to our regulatory support team,” says Da Silva.
The regulatory support team carries out a high level overview to check eligibility issues and see if anything is missing in the application. They then pass it for processing by a regulatory support adviser, who will contact the firm (if required) for any additional information or regulatory fees. It then goes through quality checking before going to a case manager for final consideration.
“ Very few applications have to go to ICAEW’s Probate Committee,” adds Da Silva. “For example, this may happen if we’ve never seen a firm’s structure before, and in these cases the process can take slightly longer, just because the committee only meets a few times a year.”
Common mistakes
The issues that arise during the probate accreditation process are similar to those for any regulated work. They include missing information on forms, firms failing to respond promptly to questions or requests, and the use of out-of-date forms.
“There is a particular issue unique to probate accreditation, however,” explains Da Silva. “For licensed firms, we require an application form for people who hold a certain percentage of ownership within the firm to make sure they don’t get involved in probate work if they are not authorised to do so.” This means not only do authorised individuals have to fill in an application, but also some non-authorised individuals, where they effectively sign to say they’re not going to get involved in probate. “This is something that often gets overlooked,” she says. “And we have to request a lot of these forms, which prolongs the process.”
For licensed firms, the due diligence includes Disclosure and Barring Service (DBS) checks. These are through a third party company and sometimes firms don’t respond promptly to the request for information to obtain the check (there is a 14-day window for a request to be activated). “So we sometimes have to request the DBS information two to three times,” says Da Silva, “which again prolongs the process.”
Diversity monitoring can be another stumbling block. Under the probate regulations, all firms – regardless of size – must monitor the diversity of the firm. “For smaller firms, it’s not something they tend to think about,” explains Da Silva. “And we often have to request that extra information during the application process.”
Continued eligibility
Once your firm is accredited, there are ongoing obligations. “A lot of the issues we pick up post-approval are around eligibility because of changes in firms’ ownership structures,” says Da Silva. “It’s the single most overlooked thing – almost everything we take to the Probate Committee we can pretty much draw back to that issue. But most of the issues can be resolved quite easily if firms tell us about these changes.”
“For example, if you add new people, and they are not authorised for probate, you need to make sure they have the right non-authorised owner status within a licensed firm,” she explains. Many of the changes within a firm must be reported within 10 business days. “So firms need to be aware of what forms they need to complete to ensure they stay eligible during that change.”
“Don’t wait until your annual return to tell us about these things,” adds Elaine Griffiths, Director of Regulatory Practice and Policy, ICAEW. “By then you’ll probably have gone beyond the 10 business days and could face a sanction if you’ve changed the setup of the firm, not told us, and you need to fill in forms to ensure continued eligibility.”
“The issue for non-authorised owners is unique to probate,” she adds. “So some firms, who are already audit or investment business-registered, might not be familiar with the additional probate eligibility requirement.”
Diversity monitoring is another ongoing obligation. “Smaller firms need to remember they should be monitoring this, even if their structure or the individuals within the firm don’t really change,” says Da Silva.
Accessing advice
Da Silva acknowledges that the probate application process might appear more daunting than some other regulated areas. “There’s a lot to think about on the application,” she says, “because of the risk of influence and the fact that it’s a legal service and a reserved service.”
“It’s also a relatively new area for accountants, so it may come across as more intimidating than it actually is,” she adds. “But we do whatever we can to help firms understand the process. Our regulatory support team is incredibly knowledgeable, so we urge firms to contact them if they have any queries or doubts.”
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