Report on the authorisation system for administrators of estates
06. juni 2012
On May 31st the Danish Competition and Consumer Authority issued a report on the Danish authorisation system of administrators of estates. The purpose of the report is to examine the effect on competition of the authorisation system set out in the Danish Act on Division of Estates might have.
The estate of a deceased is always settled and surrendered to potential heirs or a surviving spouse. All estates will to some extent be treated by the probate court. A large share of all estates is quickly settled –often with the heirs doing the work. In other cases an administrator who is appointed by the probate court settles the estate. The administrator is an impartial third party who will settle the estate instead of the heirs themselves settling the estate.
An administrator has to be authorised by the court –only under special circumstances can an unauthorised administrator settle the estate. According to the Danish Act on Division of Estates (DSL) a number of requirements have to be fulfilled in order to be authorised. For example only lawyers can be authorised and there is only a limited number of authorisations in each court district. The administrator’s fee is taken from the value of the estate and it is therefore indirectly the heirs who pay the fee in the end.
The report concludes that the current limitation in the number of authorisations in each district probate court and the requirement that an authorised administrator has to be a lawyer are both elements of the authorisations system that restricts competition. A long with the practice of the probate courts when assigning the estates to the administrators and the limited possibility for the heirs to replace the administrator, it reduces the administrator’s incentive to compete on important on factors as price and quality. This creates a risk of the heirs are paying more than necessary for the estate settlement. The report concludes that the restraints on competition can be relieved by following the recommendations of the report for instance revoking the limitation in the number of authorisations.
Download the report's summary and main conclusions