The Problem With Heir Hunters Is They Charge Percentage-based Fees, Right?
Much has been written that would lead us to believe that the problem with heir hunters is that they charge percentage-based fees to the heirs. Is that right?
It is the opinion of this writer that the problem we should be concerned with is that administrators are not permitted a reasonable period of time to account for heirs before the heir hunters are able to. If the administrator or their investigator are able to properly notice heirs, then it stands to reason that after the fact the heirs wouldn’t believe it necessary to sign heir hunters’ percentage-based fee contracts.
The reader may wish to consider that if after a reasonable period of time the administrator and their investigator has still not found all the heirs and further efforts on the part of heir hunters leads them to heirs, then at that point a distribution to those heirs should be preferable to escheating those funds. Therefore, percentage-based fees may be alright in cases where the administrator has already published and searched.
In many cases, administrators may prefer to authorize an investigator to conduct searches where his compensation results from a percentage-based fee contract. In those cases the known (or unknown) facts may prevent an investigator from being able to provide a meaningful quote or the administrator cannot agree in advance to what may appear to be excessive costs. These difficulties arise in cases where extensive searches are required in various foreign countries making it virtually impossible to accurately estimate the amount of effort and expense that may be required to locate heirs (if any). For those cases percentage-based fees may be right.
It is the administrator’s responsibility to exercise reasonable due diligence in an effort to properly notice all the heirs. However, previously known heirs may think it unfair to them that the cost for an investigation to locate unknown heirs is to be shared by them as an expense to the estate. For those cases percentage-based fees may be right.
When the problem with heir hunters is properly identified as their interference with administrators’ investigations then clearly the solution is permitting those responsible a reasonable period of time to complete their duties, which virtually eliminates the need for further argument on the issue of percentage-based fees.