When banks pay out ‘Probate Funds’ too early! PART I

When individuals and loved ones pass away, families and friends of the ‘Deceased’ are understandably stricken with grief. Unfortunately, there are also a number of tasks that have to be carried out at this very difficult time; these include ‘Planning of the Funeral’, ‘Packing up the belongings’ and ‘Winding up the Affairs’ of the ‘Deceased’.

‘Winding up Financial Affairs’ involves identifying and closing down the ‘Bank accounts’ of the individual. These closing balances should be brought into the ‘Estate’ of the ‘Deceased’. The total amounts can then be distributed to the ‘Beneficiaries’, either under a ‘Valid Will’ or, if the ‘Individual’ died without one, under the ‘Rules of Intestacy’.

To ‘Facilitate’ this process, banks have for many years released funds up to a ‘Certain threshold’ to ‘Executors’ or ‘Relatives’ on the basis of a ‘Death Certificate’, without requiring proof that ‘Probate’ has been granted. In recent years there has been a worrying upward trend in the ‘Limits’ under which banks will release funds without ‘Evidence of Probate’. These ‘Thresholds’ have now skyrocketed throughout the ‘Coronavirus Pandemic –  Covid-19’, and as a result of these ‘Estates’ falling under the radar, ‘Probate Practitioners’ are missing out on thousands of ‘Estate Administrations’ every year. At the same time as this, the ‘Department of Work and Pensions’ (DWP) may be missing significant ‘Repayments’ due to them.

This article examines the ‘Legal Background’ for this ‘Practice’, as well as the ‘Risks and Consequences’ of releasing ‘Large Sums Of Money’ in the absence of ‘Probate’. It will also highlight and identify the risks to ‘Beneficiaries’, who may not realise there are ‘Debts’ that need to be repaid.

‘Standard Procedure’ for ‘Estate Administration’ over £5,000.

Under ‘Section 1 of the Administration of Estates (Small Payments) Act 1965 (the Act)’, a ‘Grant of Probate’ or ‘Letters of Administration’ is not required when an individual dies with assets worth under £5,000. The figure was originally £500, and was substituted with £5,000 by way of a ‘Statutory Instrument’ in 1984. If an ‘Estate’ is worth over £5,000 then it is normal practice for a ‘Personal Representative’ to apply for ‘Probate’ by way of an application to the ‘Probate Registry’ which is part of ‘HM Courts & Tribunal Service’. If the application is successful, the ‘Probate Registry’ will issue the ‘Grant of Representation’, which confirms that the ‘Personal Representative’ has the authority to ‘Administer the Estate’.

Since 1858 this process has always been open and transparent, with ‘Annual Indexes’ made publicly available for inspection in one form or another. In todays ‘Modern and more Technically Advanced World’ the same ‘Transparency’ and the ‘Opportunity for Oversight’ is maintained via publication on the ‘Governments Website’.

If you would like any further advice, please do not hesitate to contact us:
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