Probate limits

[Wilberforce]

Hello,

We’ve been told that all financial organisations are boundby the Administration of estates (small payments) Act 1965 and that it has aprobate limit of £5k. However, they all seem to ignore this supposed statutoryrequirement and set their own, often high, limits for when they will pay out toexecutors without probate (eg Barclays bank, NS&I, Nationwide buildingsociety, Spanish Santander, etc). Whatgives them the authority to ignore the law?

Thanks

[enaid]

Re: Probate limits

I think THIS explains it very well and actually if you think about it £5,ooo is not a great amount in this day and age especially for funeral costs and although most banks will pay on receipt the funeral expenses I would imagine discretion also comes into play with that.

[Wilberforce]

Re: Probate limits

Thankyou for taking the time to reply, Enaid. Still confused, however! If the Act doesn’t apply to banks and building societies, why do they quote itand who does it apply to?


Also, the article is quite old –1994 – and thresholds have increased significantly, eg Halifax £50k. Italso says that NS&I has no flexibility but that has changed, too: ithas a discretionary limit of £15k

The BBA, of which NS&I is a member, is also rolling out a Bereavement codeof practice for members by the end of this year which confirms that firms settheir own limits.

[enaid]

Re: Probate limits

Yes, 1994 and people were struggling then with the rules and nothing has changed as yet.
Just my personal opinion, I think many rules can be bent to suit. The same with this, banks have used discretion because the rules are so outdated, but I also think if they thought anything untoward was happening on a deceased account they could use the rule until probate was granted. Like I say just my opinion and i do think this works both ways but it does needs looking at and bringing up to date.

[des8]

Re: Probate limits

My understanding was that the Act did not apply to banks and building societies & ins, cos, and they could use their discretion.
Over the years there have been attempts by financial institutions to standardise their approach and agree a limit above which all such institutions would require sight of probate, but all have failed.
They are of course perfectly within their rights to refuse to release assets below £5000 limit without sight of grant of probate

[Wilberforce]

Re: Probate limits

Thank you Des8. That would explain why they set their own limits (but not why they quote it as something which binds them (then ignore it with their own limit!). Very strange!) Do you know who the Act does apply to, please? Thank you

[enaid]

Re: Probate limits

The figure of £5,000 was set out in the Administration of Estates (Small Payments) Act 1965. However, it does not compel an asset holder to make a payment and there may be circumstances where the asset holder still requires a Grant of Probate. This Act does not apply to banks or building societies or insurance companies. They can exercise their discretion. Today most of the high street lenders will release assets providing they do not exceed £15,000, subject to their own criteria. It will usually involve providing evidence of the death, a copy of the Will (if applicable) the identity of the claimant and either the signing of an indemnity or the swearing of a statutory declaration

So looks like it applies to anyone else who holds someones assets, not sure how many of them there could be but suppose premium bonds, gambling accounts maybe in the mix.

[des8]

Re: Probate limits

I believe it applies to "governmental" institutions such as National Savings, the Bank of England, DWP etc.
Individuals (which would include companies such as banks) holding assets can give them to whom they please.
If they don't take care of course, and give them to the wrong person without seeing a grant of probate they risk being taken to court.
(An earlier poster on this site did have to take a bank to task for giving assets away to the wrong person).
That is why if they do release assets prior to a production of a grant of probate, they generally expect to see a will, identification and the recipient to sign an indemnity.

That is how I have understood the various acts to work, but I have never been able to pin down the exact parts, so I might be mistaken!

[des8]

Re: Probate limits

If you look at the 1965 Act Schedule1 lists various other acts which are amended by this act.
If you trawl through it I think you'll find to whom it applies
EG http://www.legislation.gov.uk/id/ukp.../29/schedule/2 which leads you to ; Nationa Savings Bank Act 1971 Sec 8 payment on death without representation

[Wilberforce]

Re: Probate limits

Thank you. This is really interesting if somewhat confusing!

Things must have moved on since 1971 as NS&I set its own threshold of £15k as a ‘business decision’ a few years ago. The Gov.uk site refers to NS&I as “a state owned savings bank” so maybe it’s now classed as an ‘individual’ and why it can set its own limit like other banks & building societies?

The BBA Bereavement code of conduct is due to come into force at the end of the year and confirms that firms agree their own limits: NS&I is a member so presumably it will have to follow the code? Presumably so too will all other members?

[des8]

Re: Probate limits

I'm easily confused!

[Wilberforce]

Re: Probate limits

If you are then what chance for the rest of us mere mortals?! Some of the firms seem a bit confused too. I really appreciate the information everyone’s shared so far and if anyone else has any other info, it would be received with much interest. It’s fascinating!