Willwriter A was a sole trader who had been offering storage and free rewrites to his clients for over 20 years – he had over 4000 clients paying by standing order for varying amounts each year. Unfortunately his health started to deteriorate quickly and due to the fact he had offered free rewrites to his clients, no one wanted to take on his client bank as a Willwriter due to the huge responsibility. Furthermore, due to the payments being taken by standing order, they couldn’t be transferred to another receiving account and as the sole trader account would close upon the death of Willwriter A.
His family were a little disappointed to find that the value of his client bank had all but vanished and that they were faced with the liability of storing the client files and maintaining indemnity insurance in case there was a claim against Willwriter A’s estate for negligence.
If this situation sounds familiar or potentially could be, please get in contact as we would be able to assist you in ensuring that the best is done for your clients and your family.
I am 59 years old and a sole trader of a Ltd company who offers will storage and free reviews/updates so the above scenario relates to me. I have been informed that my will bank (some 450 files) should be valued at 3 times the annual fee charged should I retire or cease trading through ill health and that firms would be queuing up to purchase my will bank.
Would like your thoughts/advice ref this.
Regards Mark H
Thank you for your comment
Three times income is probably a good starting point for the sale of a law firm, but as the above case highlights, your business comes with an obligation to carry out updates to Wills at no cost – ie work for no money. This obligation will limit the market for your business (for instance, as we are not Willwriters, we would not be able to buy your Willbank) and it will likely impact on the attractiveness of your business. Some thought also needs to be given to how payments are made by clients for the storage and free update of their Wills. Is it by standing order – in which case can you transfer the account receiving the payment to the buyer without the client having to complete a new mandate? Or is it by direct debit, in which case what are the ongoing costs or providing this facility? Finally there is the liability for the Wills that have been written to date – which need to be insured until the clients have died or made new Wills. Is this an obligation that will remain with you and your family, or are you looking to transfer this as well? Obviously the latter will further impact on the sale price. If you can get someone to pay you three times income for your Will bank, rip their arm off!
Regards
Jane
Many thanks for your input on this Jane. I didn’t realise some of the pitfalls in this scenario.
Regards Mark.
Hi Mark, yes it can be a mine field, especially when trying to retire and reduce liabilities. If you do not find a buyer for your business and storage, please do not hesitate to contact us and we may be able to work with you to reduce responsibilities for you and your family
Kind Regards
Jane
Many thanks for that Jane, I will bear that in mind.
Regards Mark
HI Mark, i am in a similar situation, but as a Limited company i can sell the entire company, this would include the bank accounts so there is no problems with the continuing storage payments. you also get better tax relief selling the company rather than the Will bank. Also remember the value of the documents in Storage, i have pretty much stopped looking for new clients, but i am kept very busy with current clients wanting Power of Attorney, Trusts and Probate, which all has a value far higher than your storage amount.
Hi Terry, thanks for your thoughts, and yes you are probably correct – you have an asset there ready for sale when you want to retire. Unfortunately not everyone in this profession has thought that far ahead and when they are approaching the time they want to retire, they are finding a few issues with selling their business or client banks. If they have offered “free rewrites” or “life time storage” etc then it makes the business very hard to sell on, because of the obvious head aches involved. Also, with regards to payments being taken from clients, a lot of companies set their clients up on a standing order payment which is impossible to change without the clients permission.
Hi Chris, i personally don’t have a problem offering free rewrites etc as part of my custody service. its a very small percentage who need to change their wills and usually because something has happened out of control because I always write the wills to cover all types of scenarios so they are not left open to frequent changing or amending.
Also as well it is an opportunity to gain more business for example the clients are older and may want to add LPA’s now or even a funeral plan which I have come across a few times, and assuming you drafted the original will then its not time consuming.
Hi Chris, i have been approached by a local law firm, who have made an offer for my company, mainly because they like the fact that a person paying for storage Will keep their Wills with you. if they need changes they come to you, If i didn’t charge they would go somewhere else and the will in my storage would be revoked, and i would end up like most of the Solicitors i know, storing revoked Wills that they have no idea of there status. they have offered around 12 times my storage income, because i showed figures of new work that have come from clients in storage, i.e. LPA’s, Probate, Trusts, and referrals from their friends and family, all of this was based on the last 5 years income, then we looked at this average based on age of clients over the next 30 years. So i believe its not about selling your storage, its about what the value of that storage is in new business terms and not the yearly storage amount ohterwise you are underselling your business…. Terry
Hi Terry
That is brilliant news for you. Clearly you do not offer free rewrites
and have obviously got a very good business model that is attractive to a potential purchaser.
We offer exit strategy help for individuals and firms who are not in as fortunate as you. Happy retirement to you
Jane
Hi Jane, that’s the point, “i do offer free rewrites” so maybe in your exit strategy you look at the value of storage with free rewrites. we have over a thousand Wills and probably do half a dozen rewrites per year, but we can charge more for Storage with rewrites. i understand everyone is different, but rewrites aren’t the liability you seem to think. regards Terry
Hi Terry, if you have been offered 12 times your income (assuming that’s annual income) then that is tremendous as I have always been led to believe the going rate is around 3 times. I have around 450 client files in my safe keeping facility each paying between £30 and £35 per annum which is approx £15,000 a year so if i got that deal then it equates to £180,000! and i could retire now! Are my calculations correct Terry.
Regards Mark.
Hi Mark, i worked out what i have earned from (just) my storage, income, meaning what they pay me for storage per year and what comes out of that storage in LPA’s, Probate, Trusts, referrals from storage clients. I didn’t include any new work not deriving from clients in store. i looked at the storage figure for the past 7 years, and worked out the Average year. i then took this to the next 30 years, based on an average age of 85 i could work out what i should get each year. with this ammunition for future growth and payments i made a proposal to the law firm, who then offered me what would have been 12 times my Storage only payment. which was about 3 t 4 years gross income. by showing the 30 year figure based on proven track record of income, it was easier to sell to the law firm its true value, i am happy(ish) with the offer, and they are gaining 30 years work. and that is the real value of charging for Storage, and i believe it is the free changes that holds the client to us. hope this helps.
Hi Mark, Everyone’s business model is different and offering free rewrites has obviously worked for you. We have however found that other firms offering free rewrites have had great difficulty getting a good price when they try to sell the business because the purchaser is reluctant to take on that responsibility. In some cases they have simply closed the business. It is interesting that what works for one firm doesn’t always work for all firms. I am pleased you have benefited from offering the free services though.
Hi Terry, leading on from the law firm who have made the offer to take over your “storage bank” would it be possible for you to let me have their details to discuss the same.
I don’t know where you are based and if they only want to work within a certain region but I am very keen in exploring this opportunity either now or for a future consideration. I am based in West Yorkshire.
Regards Mark.