Heir Search Interview

Heir Search Interview

Article posted in Practice on 4 May 2016| comments
audience: National Publication, Two Hawks Consulting, LLC | last updated: 5 May 2016
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Summary

Finding lost or missing heirs is an important task. This interview with the head of HeirSearch.com provides useful tips for professionals and helps tell the pros from the cons.

Click here to listen to the audio version of the interview.


Randy:     Good afternoon, this is Randy Fox and I am with Tim Rodenbush, the head of a firm called HeirSearch. Tim and I are going to talk today about what his company does which is to find missing heirs, generally, and how that might be useful knowledge and how they approach the business differently than other folks. Tim, thanks for being here.

Tim:     It's my pleasure, Randy.

Randy:     HeirSearch is in a very unique niche area of estate planning. Most of our readers probably have a general idea of what's involved, but can you just give a broad overview of what the genealogical search industry is and what you do everyday?

Tim:     I'd be glad to do that, Randy. HeirSearch.com is a division of International Genealogical Search, Inc., a corporation that for many generations, some forty-five or longer than that now, nearly fifty years, has been providing professional search services to probate attorneys and trust companies, primarily through the United States and Canada but as well around the world, locating missing heirs and beneficiaries usually in intestate matters or in trust matters where we need to find beneficiaries exist. We're called upon by the probate attorneys and the trust officers when their own internal resources fail to establish who the rightful heirs are, the location of the beneficiaries. I'm sorry.

Randy:     No, you go ahead.

Tim:     It's a type of detective work in a way. Though genealogical is the nature of the work, typically our firm wouldn't be going back more than perhaps a hundred years at the maximum to bring forward the family members who would be the rightful heirs or beneficiaries today, whereas in genealogy, as I'm sure your listeners would be aware, particularly those who are the hobbyists who enjoy that work in genealogy, you could go back hundreds of years, in fact, I suppose theoretically a thousand years. In the heir search business, typically it isn't necessary to do that because you may go back to the grandparents of a deceased person and move that information forward, but you certainly wouldn't be going back to great grandparents or great great grandparents, etc.

Randy:     Sure. Once you do that, how do you find the missing heirs? What process do you go through to track them down?

Tim:     We would begin with the view that we're going to need to document all of the information that is available, both public and private, the public records being through the census records, birth records, death records, marriage records, and the like, so that we would piece together evidence that would exist on a public record level and through other resources and interviews with individuals in locations where family members have lived. We would put private records together as well. An example of a private record would be a R.L. Polk city directory, which some of the older listeners, such as myself, would be familiar with, for more than a hundred years past. There were, throughout the United States and Canada, city directories published annually or every second year that would canvas communities and publish who was the head of the household, how many people lived there, not really like a census, not in that detail, but they would provide local information and then publish it on a regional basis in a very large series of books. In our library, we have thousands of them ourselves that we maintain, although they're not published any longer because the internet put that industry out of business. We would look to those types of private records to see whether or not the information that existed in the public records, like in the census, was mostly supported by information we would see in private records that were recorded as well.

We then build a genealogical chart that would establish through those public and private records the family tree, and we would go about following each one of those family lines to establish who is alive today, and then predicated on what a state law would be as to who would inherit. That could vary from state to state. We would provide a complete and comprehensive report as to who the existing family, who is living today, and what their lineage was from the past.

To give a example, we were looking for heirs to an estate where you have let's say an eighty year old woman who just passed away who's husband had died previously, we would establish whether or not there were children of that marriage, whether there were prior marriages of that woman, whether there were any children born of that woman in the past. If there were not and we are satisfied through a preponderance of the public and private records that exist that there were no children and we needed to establish then whether there were any siblings of the deceased who were still alive. If there were, that may legally end our search at the instruction of our client in that jurisdiction. On the other hand, if she had siblings and those siblings are deceased, we would then be looking to see whether any of those siblings had issue and where they are and if they are alive, and if not, whether they had any issue.

We would build a comprehensive family tree in that given example, present that to our client who in turn would instruct us as to whether or not our job was complete in terms of who would take in that jurisdiction from an inheritance standpoint. That's one example. There's a broad spectrum of examples you could give.

Randy:     This sounds very arduous and time consuming. Is there a typical, it begins on this day then it ends thirty days, sixty days, ninety days, a year?

Tim:     Seldom would it take a year. There have been the odd time when it has and I think I'd have to go back a considerable time to recall. I think we had a situation where we had to document some seven or eight hundred different heirs, or people within that genealogy. When I use the term heirs, most of those folks were deceased. That particular case did take I think a little bit better than a year, but typically you're looking at sixty to a hundred and twenty days, perhaps a hundred and fifty days depending upon the complexity.

Another side to what we do may be what is called a direct search. There may be a named individual, a will that was written thirty years ago, and the person now passes and the state attorney asks friends and/or family, assuming family exists, who this person is that the deceased named in the will and an answer typically would be, "We don't know". It could be a family friend, it could be a professional associate from decades past. They'll have a name and then they may have a general location, and our job would be to locate the person and identify and establish the relationship between the decedent and that person. That's the extreme the other way where we're not building a family tree. We probably do 5 or 10% of our work is on direct searches looking for one, or two, or several, sometimes, named individuals who are not family members.

Randy:     There's a double caution here for the professional community. One is to make sure that no one dies intestate, and the second is to clearly identify every beneficiary in every document so we can put Tim out of business, right?

Tim:     (laughs) In fact, that's well put. Having said that, another 10 or 20% of the work that we do is where there have been, it's not an intestacy, and where all of the funds in the estate are distributed other than to family, perhaps to a charity, and where the jurisdiction where the person passed requires that notice to heirs be provided. That would suggest that the attorney handling the estate has a legal requirement to provide notice to family members, and sometimes those family members aren't available, their whereabouts are not known. That person may have amassed a certain amount of wealth and decided to leave it all to a charity, and may have been estranged from family for decades. We'll be called upon in those circumstances to also build a family tree through our genealogy techniques that would allow for the state attorney to provide notice that there's a distribution to be made other than to what would typically be the heirs under an intestacy. That's a significant portion of our business, is for that purpose as well.

Randy:     Sort of to let them know that they're being disinherited and it's intentional. I believe most states have a period of time where they can claim back against the estate or make an argument that they should have received the money.

Tim:     There's always a possibility. To comment on that, I guess it would be state by state. We're not involved in the distribution of any of the funds nor are we generally privy to other terms of the will. That's a point well taken.

Randy:     Thanks Tim. Let's just switch gears for a second here. I read recently the Justice Department was investigating your industry, I don't think you particularly, in fact, I know for a fact that you run your operation completely differently than what the Justice Department was investigating, which was this anti-competitive price fixing scheme that was going on among some of the other search firms. Can you get into that a little bit? I found that fairly interesting.

Tim:     It was very interesting, but not surprising, that ultimately that the Department of Justice would look at that because for decades I understood generally that the majority of folks who are in the heir search business are in the business looking for windfall profit. That's because frequently there are large estates where they're in an intestate situation where there could be a distant relative who has no knowledge really of the deceased being a person who would have the wealth nor would have been in a position to leave any meaningful amount of money to them.

What happens is that heir search firms scour, if that's the correct term, court records to see where intestacies have been filed and what they then do is they start a foot race amongst themselves to get to locate the missing heirs as quickly as they can and enter into contracts to provide them with percentages of the heirs' inheritance which would range between 30 and 50%, typically. What happens is that they will approach the people who are likely to be the heirs, who they believe to be the heirs, and they would suggest to them that time is of the essence and that they sign a contract with them and they will, they, the heir search firm, will protect their interests, engage an attorney on their behalf, and represent them ensure that they receive their inheritance in due course.

The Department of Justice, to my understanding, began looking at this two, or three, or several years ago because there was an anti-competitive aspect to what was going on, as I understand it, in that the heir search firms in this foot race where many different firms are often looking for the same heirs because there may be several hundred thousand dollars or more at stake in terms of windfall profits. They agreed, allegedly, to not compete with one another when the heirs are being signed up, so instead of it being a competitive marketplace where one firm would say I'll do it for 40%, the other says I'll do it for 35%, the other says no I'll do it for 30, and work it down to something that is in the heir's best interest. They colluded, according to the Department of Justice, and on that basis, two or more firms have recently plead guilty to those charges. One has paid a significant fine, I think of some $800,000 on the civil side, and to my knowledge there's been no criminal conviction yet, although there has been guilty pleas handed, but there's no sentencing that has taken place yet. I suspect that other news will be forthcoming in that regard in 2016 and maybe into 2017 because my understanding is the Department of Justice is continuing its investigation with the cooperation of those who have plead guilty, which is, I guess, a normal procedure.

Randy:     Go ahead, and then I'll ask my question. Go ahead.

Tim:     I was just going to add one point to that. Even though it was anti-competitive with collusion in the fees, even a reasonable fee that was competitive would still have been, in most cases, multiples of what the fee could have been. An example of that that I will give is that our firm and others, but particularly ours, will charge by the hour, and where a search may take, as an example, a direct search might take twenty hours to complete with a fee of, in this example, of $3,000, assuming an hourly charge of $150 an hour. If you have an estate where the inheritance is $100,000, even a 10% fee of $100,000 is $10,000, but more typically it's 30 to 50%. A percentage-based search firm would be looking for a $30,000 to $50,000 windfall fee, whereas a search firm such as HeirSearch.com, we'll do that for, as an example, for a $3,000 ...

Randy:     Ten or fifteen times more.

Tim:     Ten or fifteen times more, and so the Department of Justice is looking at the anti-competitiveness of the industry, but it wasn't looking at the fairness of the industry, which is the way that we look at it. We are a for-profit company and we make a profit, a reasonable profit, but we're not looking for windfall.

Randy:     It's interesting that you make the differentiation between how you charge, which is an hourly fee, and how other firms are charging, many other firms are charging. I suppose it affects the smaller sized searches much more than the larger sized searches, because if you get down to $3,000, or 30% of $10,000, you end up at about the same place. I can't imagine too many of those estates being able to afford buy or anybody.

Tim:     The smaller estates are generally ignored by the percentage-based heir search firms for the obvious reason. Even a $20,000 or $30,000 estate usually can afford to have a reasonable amount of effort put forth where necessary. Obviously, you get to a point where if you have a $3,000 estate and a full blown genealogical search that would be required, there's no way it could be cost justified, but they represent the minority, the estate minority.

Randy:     Is there a licensing requirement for heir search firms?

Tim:     We do hold a license, we're required as a private investigator license in the state of Florida. Generally speaking, genealogy is not requiring of a professional license. There are other licenses that if you hold an office or an employee in a given state, there are other civic licenses that you would require, but there's no professional license generally that's required.

Randy:     Thanks.

Tim:     Not to suggest that private investigators who do heir search work wouldn't hold such a license, but it's not a requirement, in my opinion, to hold a license.

Randy:     Thanks. It was a curiosity to me because I could go down to the courthouse tomorrow and start searching records and looking for people is what it sounds like. This is not an industry that limits access to people that have expertise. Just something most people don't even know exists, probably.

Tim:     It's in the background. In my experience, which is now some fifty years of experience, that it wasn't new fifty years ago. This has been going on for centuries, certainly the last hundred or hundred and fifty years. There are percentage-based search firms that started back in the 1920s in America and are generational in terms of the families who are involved in them. It's not something that's new. It's not generally understood, the fee methodologies. There's fortunes that have been made in the heir search business because of those windfall profits.

Randy:     That's a little disturbing. Let's move to something happier.

Tim:     All right.

Randy:     Who have you helped? Give me a success story or two where it's really made a difference.

Tim:     There's been hundreds of thousands of heirs located by our firm over the decades. One single case that comes to mind is a little hard to pick one. We established a family member of, actually it was of one of our clients, an attorney, that it turned out that the search that we completed located an estranged family member of the client himself. After several months of searching, when we ultimately made the report, which our researcher reported to our client saying, "I suppose we made your day today giving you this information which included a close family member that you'd been estranged from for more than twenty years." He said, "No, you didn't make my day, you made my life."

Randy:     Wow.

Tim:     It was one that stayed in my mind for quite some time. Hundreds and hundreds, literally hundreds of stories, that with privacy in mind we can't…

Randy:     Yeah, no. I'm not asking for names.

Tim:     Happy in almost every case.

Randy:     That's the part I'm looking for, the happy ending part. Tell me about how what you do would have an impact on a non-profit or a charitable organization. Any stories there or any great results?

Tim:     I'm thinking about, as you posed that question, I think the most obvious would be where, and I alluded to that earlier, where the person who decides that when they pass that they want to leave all or a portion of their estate to a charitable organization, and they want to be sure that everything that they have worked so hard for to provide to the charity ends up with the charity and isn't challenged. Before the person passes away, it could be a good idea for those attorneys who are representing such a person to ensure what the state regulations and laws would be for notice, and to undertake a search in those circumstances where notice can be provided at the time and as part of the probate's procedure so that there's no uncertainty as to a later challenge by someone who decides that they hear about funds that have been delivered to a charity and they feel that they wish to contest that will. We have had a number of circumstances over the years where as soon as a person has passed, there's been a direction for us to undertake a search to ensure that notice is formally given.

Randy:     Again, I've seen and read number of cases where unknown heirs have come forward and tried to challenge. It's always good for everyone to be as thorough as they can be, especially if there's a late in life charitable bequest, or something that just needs extra attention.

Tim:     I agree.

Randy:     Tim, in wrapping up, any final words of wisdom for us in the planning community?

Tim:     There's always the internal efforts that can be undertaken without any need for a third party involvement. When that fails or when there's further efforts needed to ensure that all heirs are accounted for, there are firms such as HeirSearch.com who are available who will provide such services at a reasonable cost and a prompt and professional manner.

Randy:     Tim, thanks for your time today and for the interesting conversation.

Tim:     Thank you, Randy. It was a pleasure.

Tim has been the company’s president since 1983. When he originally coined the HeirSearch.com slogan WE FIND MISSING HEIRS A BETTER WAY® to him it meant that HeirSearch.com fees were always reasonable and never based on a percentage of the heir’s inheritance. The company’s commitment to A Better Way philosophy has made HeirSearch.com the premier non-percentage based heir search firm in the industry.

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