The problems with Banks Boosting Withdrawal Thresholds for Probate

24th August 2020 Will Disputes

Recently banks such as Lloyds and Natwest have announced that they will increase the amount of money that they will release from a Deceased persons bank account to those who are dealing with the Deceased’s estate without sight of a Grant of Probate or Grant of Letters of Administration. The aim of this change has been to provide greater ease and simplicity for grieving families during the coronavirus pandemic and lockdown, however this change could also put the Deceased’s funds at greater risk of fraud or misappropriation.

Usually when someone passes away the person responsible for dealing with their estate will need to apply for a Grant of Probate (if there is a Will) or a Grant of Letters of Administration (if there is no Will), unless the estate is very small. This process can take a number of months and will incur a fee. Usually, from the time the bank are notified that an individual has passed away until a Grant of Probate or Grant of Letters of Administration is presented to the bank, funds belonging to the Deceased will be frozen. These measures help to protect against misappropriation of the funds belonging to the Deceased by ensuring that they are distributed to the correct individual who has the legal authority to deal with the Deceased’s assets.

In an effort to make this process easier for the relatives of someone who has passed away, some banks have increased the limits on the amount of money that they can release from an account without requiring sight of the Grant of Probate, in some cases to as much as £100,000. Instead, a relative of the Deceased simply has to present a Death Certificate in order to gain access to the funds in the bank account of the individual who has passed away. This could increase the risk of fraud, abuse and misappropriation of the Deceased’s assets

In particular, some of the risks that can occur as a result of the banks increasing their limits are:

1. Increased risk that funds may be released to someone who is not entitled to them.

Without a Grant of Probate or Grant of Letters of Administration, there is no proof that the individual who attends the bank with the Deceased’s Death Certificate is legally entitled to receive the Deceased’s funds. Therefore, there is a real risk that the Deceased’s assets could be misappropriated. Once this happens, it is much more difficult for those who are entitled to the assets under the Deceased’s Will or the Intestacy Rules to obtain the funds as they are no longer held by the bank.

2. An old Will could be presented to the bank

If the bank requires sight of the Grant of Probate, this is an important preliminary step to ensure that the person seeking the funds has the legal authority to do so. Without sight of a Grant of Probate, there is a risk that someone could present an old version of a Will belonging to the Deceased to the bank resulting in the release of funds to the wrong person. It is for this reason that sight of the Will alone should be insufficient evidence for banks to consider when releasing the funds of a Deceased individual.

3. Increased risk of disputes.

Due to the increased risk of fraud and abuse that has been highlighted above, this can create the potential for future disputes. If this occurs, this undermines the aims of the banks in raising their thresholds, as it can ultimately create a greater burden on the individuals who are dealing with the Deceased’s estate and has the potential to lead to costly legal battles to recover funds. Whilst it may be that the individual in possession of the funds voluntarily gives them to the Deceased’s Personal Representative, in our experience it is far more likely to cause problems in gathering in the assets or recovering them in the event that the person taking possession has already spent them. As well as the financial cost, legal proceedings can also create further emotional strain for loved ones of the Deceased and can result in drawn out lengthy legal proceedings.

In conclusion, the requirement for the banks to have sight of a Grant of Probate or Grant of Representation before releasing the funds of someone who has passed away is a safety measure to protect the Deceased’s estate from fraud and abuse. Whilst this does create a heavier burden on those who are dealing with the Deceased’s estate, it also acts as a safeguard against those who may seek to obtain the funds from the Deceased’s bank account who are not entitled to them. Therefore, the action of the banks in raising their thresholds to as much as £100,000 means that the financial assets of those who pass away are more susceptible to fraud and has the potential to lead to litigation as a result of these changes.

If you consider that funds have been taken unlawfully from a Deceased’s estate in this way, you ought to act quickly. Our team have specialist experience in disputes of this nature and will be able to assist.

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Ian Johnston is an Associate Solicitor located in Manchester in our Will and Trust Disputes department

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