WA’s Public Trustee under microscope after charging $370 an hour to transfer ownership of shares
The toughest time in Barry Adamson’s life was when his wife of sixty-plus years, Maxine, died in May.
Key points:
– WA’s Public Trustee charged Mr Adamson $19,000 to manage his wife’s estate
– An estates lawyer says she was “astounded” over the bill
– A review into the Trustee’s self-funding model is underway
But little did the retired Perth engineer know the second-worst time was soon to follow.
A few months after her death, he received a bill of more than $19,000 from the WA Public Trustee to manage her estate.
Aside from administrative issues like applying for probate, the main work was changing a bank account and seven shareholdings from her name into his.
Included in the bill was an estimated 280 hours of work to do the relatively simple task of making off-market transfers of her shares in big ASX-listed companies.
“I’m 85 now and I just found that the most stressful period of my life was when my wife passed away,” he said.
“The second most stressful part of my life has been dealing with the Public Trustee.”
Public Trustees around Australia have been under public scrutiny over accusations they have mismanaged the funds of vulnerable people they have been appointed to help.
After watching the ABC Four Corners report in March, the Adamsons decided to remove the Public Trustee as the executor of their estates – but Mrs Adamson died before they could amend their wills.
Mr Adamson’s experience since then raises the question of whether the Public Trustee is meeting its obligation to manage deceased estates for the advantage of beneficiaries, as executors of wills are required to do, or its obligation to raise revenue to fund its operations.
Mr Adamson and his late wife had drawn up mirror wills with the Public Trustee 10 years ago, leaving everything to each other, and appointed the government body as the executor of their estates.
“Our main aim was to take away stress from family and friends to appoint an executor,” he said.
“That’s the reason we went to the Public Trustee, thinking they’re in the business and they would be compassionate.”
When she died, Maxine Adamson held shares worth almost $220,000 in seven companies listed on the ASX: Austal, the Bank of Queensland, Bendigo Bank, Coles, Fortescue Metals Group, Wesfarmers and Tian An Australia.
The Public Trustee estimated it would cost more than $16,000 – or about 7.4 per cent of their total value — to change the shares into her husband’s name.
Like a law firm, the Public Trustee charges for work in six-minute increments, which the agency labels as one unit of effort.
$370 an hour to transfer shares
The work of changing the name of Mrs Adamson’s shares was estimated to take about 280 units of effort (28 hours), or 40 units per share – which works out at about $370 an hour.
The Adamsons’ granddaughter Renee Adamson, a bookkeeper, was shocked at the bill for managing the estate.
She believes she could have changed the names on the shares and bank account for a fraction of the time and cost.
“It’s simple — it would have taken me an hour, a couple of hours if I was doing it the whole way through like going to the bank with them, that sort of thing,” she said.
“It’s not rocket science.”
Ms Adamson encouraged her grieving grandfather to raise questions with the Public Trustee.
After finding it difficult to get answers via phone calls and emails, he said he requested a review of his fees via the customer feedback section of the website.
Bill halved after questions raised
Not long after, the Public Trustee agreed to use its powers to waive fees and almost halved the bill for the transfer of shares.
“As you have expressed such a strong response to the Fee Estimate provided to you, the Director Trustee Services …reviewed the administration and has agreed there are grounds for a fee waiver of the fees relating to some shareholdings,” the estates business manager wrote.
This manager told Mr Adamson the shareholdings were being managed by a broker, which “usually reduces the effort involved”.
“As a result, it has been agreed to waive 30 units of effort (or three hours) for each shareholding – which will reduce the Fee Estimate by $8,295.”
A stockbroker told the ABC that even this reduced fee appeared to be a high amount for an off market transfer.
The ABC was told by WA’s Department of Justice the Public Trustee charged $313 an hour for the transfer of bank accounts and shares.
This work was handled by estate managers and other administrative staff.
“The transfer of bank accounts typically takes two hours.For the transfer of shares, four hours,” a spokeswoman said.
Estates lawyer ‘astounded’ over bill
Brisbane-based estates lawyer Lucy McPherson said she has seen a national trend of Public Trustees overservicing deceased estates, which naturally led to overcharging.
She said it was “astounding” to hear how much Mr Adamson was charged for the management of an estate with a simple asset structure.
“Certainly, I would think that’s more than double what would be required in that situation,” she said.
If a Public Trustee was appointed the executor of an estate, she said, they had a professional duty to keep the costs of managing the estate as low as possible.
“An executor of an estate has a duty and obligation to maximise the benefit of the estate for the beneficiaries,” she said.
“And part of that obligation is to ensure that costs are minimised in the administration process.”
The WA Public Trustee administers almost one in 20 of all deceased estates in WA.
It is a self-funding agency, meaning it needs to cover its own operating costs through fees, charges and investment revenue.
In the last financial year, its income was around $27 million, including $23.8 million in fees from estates and trusts.
Review of funding model recommended
WA’s Auditor General, Caroline Spencer, recently examined the files of 39 deceased estates as part of an audit of the WA Public Trustee’s fees and charges.
She found that these clients were charged according to the published fees.
“The Public Trustee communicated its deceased estate fees well, provided clients with clear explanations, and where possible, quoted on likely fees,” her report said.
But she questioned whether its fees for managing trust accounts on behalf of vulnerable clients reflected the work involved in managing them.
She also recommended a review of the Public Trustee’s self-funding model, which is now being undertaken by the Department of Treasury.
It follows a review commissioned by the Public Trustee into its fees and charges in 2020.
“The review was conducted by Marsden Jacob Associates, whose 27 July 2020 report found that the Public Trustee’s current ‘work effort’ fees regime is “fair, reasonable and appropriate in most instances,” the Department of Justice spokeswoman said.
“The Public Trustee also further engaged Marsden Jacobs Associates to review its fees to determine how they could be improved, simplified and more easily understood.”
The spokeswoman said that any clients with concerns could contact the Public Trustee directly, the Department of Justice’s customer feedback system or, if they were still dissatisfied, with the WA Ombudsman.
In Mr Adamson’s case, he has gone as far as removing the Public Trustee as the executor of his estate.
After 40-plus years as a public servant who handled multimillion dollars contracts, Mr Adamson is used to dealing with bureaucracy but said even he was shocked by the way the Public Trustee did business.
“I was staggered,” he said.
“I’m an engineer and all my working life I’ve worked with fairly large contracts and I’ve never been associated with fee discussions like this at all.”
Warning for others
Mr Adamson is worried many of his peers would not feel as confident as complaining about overcharging as he was.
“The thing that concerns me is that probably nine out of 10 people are not that way inclined,” he said.
“And because it’s a big government department handling many hundreds of millions of dollars, I would think people would get intimidated fairly quickly.”
His granddaughter is also concerned there is little scrutiny or oversight of the Public Trustee’s services and charges.
“If you see the Public Trustee anywhere near your assets, run as fast as you can,” she said.
“They will take how much they want, and they will justify it.
“And because they’re lawyers, they will put it in a language which a lot of people can’t understand.”
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