Heir hunters: don't get ripped off

Heir hunters, genealogist researchers or probate detectives are set up to find people who may be in line to inherit some or all of a deceased relative's estate. Given approximately 70% of the population dies without having made a will, tracing potential beneficiaries is big business, not least because it's pretty rare to die without at least one relative still alive.

Most of us go about our daily lives without pondering the fate of relatives we've never met or even know about.

However, for heir hunters it's a full-time job. These firms will scrutinise the government-produced lists for names of people who have died without leaving a will, known as an intestate estate, or where the beneficiaries can't be easily traced. In this regard, they can offer a valuable service, providing they treat potential beneficiaries fairly - which, unfortunately, many fail to do.

How do they operate?

Heir hunters rely on a range of resources to find beneficiaries, starting with a list of those who died leaving an intestate estate. This list is published every Thursday by the HM Treasury Solicitor and comprises the name, dates of birth and death and place of death of the deceased person.

The heir hunter's next step is to build a family tree and start tracing relatives. They expect the trail to be cold but the pressure is on to get results, as they will invariably be in competition with other firms. Incidentally, they do have time on their side in one way, having 12 years from the date of the estate holder's death to lock down a claim.

After 12 years, the value of an unclaimed estate becomes the property of the Crown or the Duchies of Cornwall or Lancaster. Before then, these authorities protect the estate and the interest earned on it for any beneficiaries.

How much do they charge?

Many heir hunters charge a percentage of the pot owed to beneficiaries. This is often between 10% and 30% (plus VAT), although there are examples of even higher commission rates being charged. Other firms charge a time-based fee of from a few hundred pounds to a few thousand.

Unlike with percentage-based contracts, the amount you would pay depends on the complexity of the case rather than the value of the estate. So a client who's entitled to a £300,000 inheritance could pay £90,000 (plus VAT) if a percentage-based fee is in place but might only pay over a few hundred pounds if a time-based contract is in place.

It seems obvious to avoid paying on a percentage basis but many people do because they were contacted out of the blue, being caught off guard, and because the heir hunter was economical with the truth. For example, the heir hunter may say they can't divulge the value of the estate, which would indicate what you'd end up paying. Alternatively, they might be vague about the number of other potential beneficiaries, which could lead you to think you're entitled to a larger slice of the inheritance than is the case.

Some heir hunters may want to keep this information to themselves, so you don't go it alone and cut them out of the process. They may even say you have to sign a contract with them – which isn't true. It's also worth remembering that if you pass on a sibling's contact details, they will also be contacted and advised to sign what could be a costly agreement – even though you've done all the work.

You could argue that heir hunter firms contact people who would otherwise remain unaware of their inheritance, and deserve to be rewarded. Or you could conclude they get richly paid for little work. But in any case, it's still worth knowing what you are getting yourself into.

Nick Beetham, from Title Research, a genealogical research specialist that finds missing beneficiaries but does not charge percentage fees, told us: "My advice to beneficiaries would be don't sign anything until you have the same information as the heir hunter, so you know what the deal is."

He added: "With a commission-based firm, the fee in cash terms is determined only by the value of the estate and could be thousands of pounds. Whereas with a time-based fee-charging company – which would not be asking you to sign anything – the cost to the estate could be a few hundred pounds. Think twice if you're asked to sign an agreement and definitely don't make upfront payments."

Will you lose out?

Thanks to the Treasury Solicitor's list and subsequent adverts in newspapers, not to mention heir hunters, there's a fairly good chance of being united with your inheritance – especially if it's a substantial sum – which will get more firms on the trail. Of course, you have to be realistic, as it's not uncommon for there to be 20 or more living beneficiaries – all of whom would have a stake in the estate.

You also have to be sensible, as you could receive a larger inheritance than you are due because other beneficiaries haven't been traced. For this reason, the administrator or heir hunter may recommend you take out 'missing beneficiary indemnity' insurance.

This cover is designed to protect you should further beneficiaries be discovered after you've received a large slab of inheritance, which you'd need to pay back. Clearly, this could be tricky if you've spent it on a house extension or a Caribbean cruise. Always be willing to talk through the pros and cons of this insurance and take on board the administrator's opinion.

How to trace a long-lost relative's estate

Just because a company contacts you out of the blue claiming you're due a windfall doesn't mean you have to go with it. You could go it alone or shop around for a better firm, so don't sign anything, especially if it won't divulge the name of the person you may be inheriting from or the size of the estate – which would be vitally important if it is charging a commission fee.

Every week the government publishes a list of people who have died intestate – people who have passed on without leaving any clear trace of who their estate should go to. If you think you may be in line for an inheritance, check on the Bona Vacantia website (bonavacantia.gov.uk).

While you are in the mood, check your family history, looking for surnames that are different, such as your grandmother's maiden name. This will help you identify the all-important sugar daddy or mummy.

If you find a name that chimes, contact the HM Treasury Solicitor's office for the administrator's details.The administrator is responsible for distributing the estate, so they are obliged to consider your claim for free. Ask for the value of the estate and how many other beneficiaries you may end up sharing the bounty with.

You may need to get a copy of the 'grant of letters of administration' from the London Probate Registry. This will cost you £6 (call 020 7947 6939).

Make sure you have evidence of your claim, such as your family tree, you can get this confirmed from the General Register Office (gro.gov.uk). If all this sounds like too much effort or you hit a brick wall – which is possible and one reason why experts operate in this field – you could approach a time-based firm to help.

It should give you a fair price based on the amount of information that's available and the amount of work that would be involved. In short, don't discount heir hunters, just choose carefully.