Death Duty of Care. Am I right or wrong

[taken2often]

It has come to my attention that the following is an Industry Technical Standard and I say that is wrong.

If someone, anyone writes to a Financial Provider enclosing a Death Certificate and asking for Valuations of all accounts. The Provider will do this.

I maintain that the Provider can only supply this information to an Executor or Court Appointed Administrator. They need to see the Will or perhaps a letter from a Solicitor stating that they were representing the Executor or had been appointed by the Courts.

They appear to think that because they cannot hand over funds without a will or Probate, that it is ok to tell any Tom, Dick or Harry the valuations. This could cause legal claims that could make them liable due to negligence.

They are having some difficulty understanding this.

Any comments

[Lootman]

My first thought is that the actions taken immediately after death are often not performed by the executor of the will, or other type of PR. Rather they are performed by the next of kin.

The most obvious example is the organisation of the funeral, which often happens before an executor has started work. And the associated task of registering the death.

Another is notifying the financial institutions with which the deceased had an account, not least to fund the funeral.

So I think there has to be some flexibility here. And the bank officer will deal with anyone who has a reasonable connection to the deceased e.g. spouse, child, parent, sibling.

[Clitheroekid]

If someone, anyone writes to a Financial Provider enclosing a Death Certificate and asking for Valuations of all accounts. The Provider will do this.

I maintain that the Provider can only supply this information to an Executor or Court Appointed Administrator. They need to see the Will or perhaps a letter from a Solicitor stating that they were representing the Executor or had been appointed by the Courts.

Firstly, the Provider should not provide valuations to someone who has no authority to request them. You are basically correct in saying that such information should only be provided to the deceased's Personal Representative, either an Executor if there's a Will, or an Administrator if they died intestate.

However, there is a practical difficulty in the case of an intestacy. In order to apply for a Grant of Letters of Administration the proposed Administrator needs to obtain details of the deceased's estate, and may even have to arrange payment of Inheritance Tax, but unlike an Executor (whose authority derives from the Will, and therefore starts at the date of death) they have no legal authority to do so until the Grant is issued - a chicken and egg situation.

So in practical terms the Providers seem to deal with such requests on an ad hoc basis. They all seem quite happy to supply information to a professional, such as a solicitor or chartered accountant, but I suspect they would require some evidence of entitlement in the case of a lay person.

However, perhaps surprisingly, an increasing number of banks and financial institutions seem quite happy to pay money out without a Grant at all, simply requesting the recipient to sign a form saying they are entitled to the money and that they'll pay it back if someone turns up with a better title. Although I'm sure this is often a sensible and pragmatic way of dealing with a small estate the potential for fraud is huge, particularly as the maximum sums to which this policy applies seem to be increasing rapidly - as much as £50,000 in some cases.

[hiriskpaul]

I have been dealing with the estate of my wife's uncle. Prior to getting probate I had to deal with all of these to get account valuations:

HSBC
Barclays
Coventry BS
NS&I
Hargreaves Lansdown

I also had to contact Computerserve, Link and Equiniti regarding share certificates, and a few others such as local authorities, 4 different pension providers, a charity to ask whether Gift Aid had been applied for and a few others.

I just stated I was the executor and provided a death certificate where appropriate. No-one asked to see the Will, but I think a couple of pension providers asked what my relationship to the deceased was. They did not ask for evidence.

HMRC sent me details of pension PAYE payments for the 2021/22 tax year to help me do the tax return!

Thought nothing of it at the time, but it is surprising how much information I was able to retrieve armed just with a death certificate.

[gryffron]

You have to obtain a valuation in order to obtain probate. So the valuation must come first. I agree this does seem open to fraud as anyone can obtain a death certificate. Seems like the dead don’t have as many rights as the living.

But I’m not sure how they could do it better. How could they guarantee a will was valid? Not their job. Probate office decides that.

Yes, all the banks and share places seem to have different rules for this. Many of the banks <£10k seemed to send the money upon request. And very quickly. Once they’ve seen a death certificate they seem quite keen to wash their hands as quickly as possible.

Gryff

[Lootman]

You have to obtain a valuation in order to obtain probate. So the valuation must come first. I agree this does seem open to fraud as anyone can obtain a death certificate. Seems like the dead don’t have as many rights as the living.

But I’m not sure how they could do it better. How could they guarantee a will was valid? Not their job. Probate office decides that.

Yes, all the banks and share places seem to have different rules for this. Many of the banks <£10k seemed to send the money upon request. And very quickly. Once they’ve seen a death certificate they seem quite keen to wash their hands as quickly as possible.

On the other hand the probate process is cynically structured to offer nothing to the next of kin, but rather exists to protect only creditors of the estate.

[hiriskpaul]

You have to obtain a valuation in order to obtain probate. So the valuation must come first. I agree this does seem open to fraud as anyone can obtain a death certificate. Seems like the dead don’t have as many rights as the living.

But I’m not sure how they could do it better. How could they guarantee a will was valid? Not their job. Probate office decides that.

Yes, all the banks and share places seem to have different rules for this. Many of the banks <£10k seemed to send the money upon request. And very quickly. Once they’ve seen a death certificate they seem quite keen to wash their hands as quickly as possible.

Gryff

I would have thought that banks, etc. should at least attempt to verify the identity of the person making the request.

Actually I think Hargreaves Lansdown will do this if you are not an existing client. I provided my name, address and client ID and they were happy. They were the only ones who did though.

[gryffron]

I would have thought that banks, etc. should at least attempt to verify the identity of the person making the request.

Nope. Almost no one asked for ID. Although the recipient’s name is on the probate certificate. But as I said, banks universally (in my case at least) didn’t ask for probate. Investments did (generally larger amounts)

All payments by BACS/cheque though, so I guess they’re safe on identity/money laundering grounds

Gryff

[hiriskpaul]

I would have thought that banks, etc. should at least attempt to verify the identity of the person making the request.

Nope. Almost no one asked for ID. Although the recipient’s name is on the probate certificate. But as I said, banks universally (in my case at least) didn’t ask for probate. Investments did (generally larger amounts)

All payments by BACS/cheque though, so I guess they’re safe on identity/money laundering grounds

Gryff

Yes, that's my experience. the banks and building societies all provided account valuations, including accrued interest with no checks at all. They were all joint accounts, so probate not required, but they did not bother to check with the widow whether they should provide me with the account balances.

[Pheidippides]

It has come to my attention that the following is an Industry Technical Standard and I say that is wrong.

Hi,

I understand why you think that this approach from financial institutions is inappropriate.

I'd like to offer a counter opinion.

I don't think that it is a case of right or wrong. After a bereavement, on top of the grief associated with the death, the last thing that a grieving relative needs is more legal hoops to jump through in order to even begin the process of dealing with the resulting estate. In my opinion, the fact that financial institutions make the process simple is actually an example of a sensitive and pragmatic approach overcoming the normal paralysing rule-following that all financial institutuions seem to specialise in with every other kind of transaction, query or application.

I do agree that, potentially, this preceived laxity could lead to fraud. However, the likelihood of a fraudster trying to interfere with a process that surviving relatives will be actively dealing with at least some part of the estate. My experience of multiple "bereavement teams" has been uniformly positive.

Regards

Tet

[stewamax]

After my wife's death in December, I obtained valuations at the date of death from the many investment banks she had accounts with. The death certificate sufficed, with a covering letter that matched my name and our address details on the death certificate and stating that I was sole executor.

As an aside, since probate is intended to prove the validity of the Will, any actions taken before probate by an executor are IMO questionable. The Will appoints the executor/s but it may be held to be invalid by the probate registry; perhaps it is legally invalid or perhaps a few weeks after initial filing, another later Will is filed assigning a different executor.

[Lootman]

As an aside, since probate is intended to prove the validity of the Will, any actions taken before probate by an executor are IMO questionable. The Will appoints the executor/s but it may be held to be invalid by the probate registry; perhaps it is legally invalid or perhaps a few weeks after initial filing, another later Will is filed assigning a different executor.

I would not characterise as questionable "any actions taken" by an executor prior to the granting of probate. In fact an executor has to do all kinds of things to even get to that point.

Rather that the executor should be careful to not expose himself to a personal liability by performing any actions that are potentially irreversible. By that I mean distributing part or all of the estate and then later discovering that such disbursements were invalid.

In many cases the executor is also the beneficiary and in that situation there is less risk.

[stewamax]

The 'aside' point I was trying - obviously unsuccessfully - to make was that:

- a Will assigns one or more executors
- the validity of a Will is not confirmed or disproved until the grant of probate
- hence the selection of executor/s by that Will is also not confirmed or disproved until probate

The Will itself could be legally invalidated by the registry (not witnessed, for example) or, before the grant is made, another later Will might appear with different executors.

[Lootman]

The 'aside' point I was trying - obviously unsuccessfully - to make was that:

- a Will assigns one or more executors
- the validity of a Will is not confirmed or disproved until the grant of probate
- hence the selection of executor/s by that Will is also not confirmed or disproved until probate

The Will itself could be legally invalidated by the registry (not witnessed, for example) or, before the grant is made, another later Will might appear with different executors.

I do not disagree with any of that. However as a practical matter if you believe in good faith that the will that names you as executor is valid then all you can do is proceed with the process until the grant is either given or denied.

I do wonder how common it is for the probate office to deny a grant, unless it is something obvious like no witnesses. I get the impression they mostly rubber stamp the grant if the paperwork looks right. Rather than performing independent research to verify the information on the forms is correct.

Also bear in mind that many times the probate office does not get involved at all. Of the three times I have been an executor, twice no probate process was needed and I could do everything without the grant being applied for.

[stewamax]

Also bear in mind that many times the probate office does not get involved at all. Of the three times I have been an executor, twice no probate process was needed and I could do everything without the grant being applied for.

Certainly good if you don't need probate. One little problem though is that even those banks (all of them in my recent experience) that will provide an account valuation at date of death insist that the account balance will not be released until they are presented with a grant of probate. You almost need a document from the probate registry saying that "probate was not required"!

[taken2often]

All very interesting points. Why I have some knowledge of this area is due to two things. The first one i did the estate of a friends sister who did not leave a will. Her brother of the same name and address was accepted by the court. In Scotland Probate is known as Confirmation. At that time the Value of an estate not requiring confirmation was 35k. This was ignored by all and they forced Confirmation if an account had more than 5/6k.
By forcing confirmation this alerted DWP who gets a copy, and they made a unexplained claim of over £800. The other thing in Scotland if there is no will you have to show that you have paid DWP and also pay £250 for an Insurance bond incase a claim come out of the woodwork. The cost of the Bond may relates to the size of the estate. All has to be in paid before Confirmation. Of course if a property is involved then Confirmation will always be required. So always have a will even though you think you have nothing of value.

The second thing is that for the past 7 years I have been having a notional Death I fill the IHT 400 and all the schedules that relate to my estate. From this you find out that you need to keep detailed records of income and your expenditure. Very important if you gift out of income. You need to keep a record of all gifts. In your will you need to state wether IHT should be paid by the estate for the past 7 years otherwise those who benefited will be asked for any tax due. The most important thing is Probate will not be confirmed unless HMRC confirms you have paid IHT within the first 6 months.

The Executor can instruct the sale of any property or assets etc before probate as long as the funds are paid directly to HMRC. Those who do not know about this sometimes borrow funds to pay IHT. I do not know if it is possible for a solicitor to loan these funds, if so they would have little incentive to finalise the estate. Even so if you do not keep good records it is a dripping roast for them.

My warning to the provider was that they should only give valuations to a proven Executor or Administrator,was based on this possibility. Someone who may or may not be a beneficery knows that the deceased has an investment account. They send a letter with a copy of the Death Certificate and ask for a valuation. Three accounts SIPP, ISA and taxable account ( Only the Nominated in The SIPP should get a notional value of their share). So this person gets the valuation and uses this information to make a claim against the estate,any reason will do. The Executor will have a lot of work and cost sorting this out. So they decide to claim the Provider for negligence for issuing confidential information to any Tom Dick or Harry. So does the Industry Standard cover you for expenses and compensation. That is the question.

Bob