Banks are warned against releasing large sums before grant of probate

Financial institutions are releasing up to £125,000 from estates to bereaved relatives without requiring a grant of probate, according to Solicitors for the Elderly (SFE).

The SFE has raised concerns that the practice risks abuse, fraud and inheritance tax disputes.

Traditionally banks and building societies have released up to £10,000 without probate. Probate is the legal process for administering a person’s estate (e.g. dealing with money, debts, and personal possessions) and their wishes after death.

In recent years that £10,000 limit has risen steadily. And policies put in place to help bereaved families during the Covid-19 pandemic has seen further easing without an industry standard limit being agreed.

The practice of releasing limited sums is to help ease the burden on the relatives of those who die with modest or simple estates.

An old couple enjoying a drink and the view of a river

Wills are in danger of being bypassed

Rosemary Johns, a specialist probate solicitor with Birchall Blackburn Law, says: “There has to be a balance between the need for grieving relatives to address financial burdens quickly and that of the wishes of the deceased in their Will.

“We are concerned that large sums of money could be released to relatives who have no legal authority over a deceased’s estate and the wishes of the deceased, as set out in their Will, are in danger of being bypassed. Significant amounts of money could be given to people who aren’t legally entitled to it.”

A code of conduct on the treatment of deceased clients’ estates, including the release of money before probate was agreed in 2017 by banks and building societies. But a universal standard on the limits for releasing bank accounts after death was not agreed and at the moment different institutions operate different policies.

Financial institutions are often under pressure to release funds to grieving relatives who are concerned about paying bills and frustrated by delays. Banks and building societies are expected to support grieving families with sensitivity and respect but this can discourage financial institutions from questioning a relatives handling of a deceased’s estate or any perceived wrongdoing.

Release of money before probate agreed

Further easing of the bereavement process has occurred in the wake of the Covid-19 outbreak because of the impact on face-to-face meetings and the subsequent delays waiting for probate to be granted. Banks and Building Societies have also offered more options to report bereavement without going into a branch and lifting restrictions on the deceased’s accounts at report stage rather than waiting for a death certificate.

Rosemary Johns adds: “This has obviously been necessary to ease the burden on families at an extremely difficult time but solicitors are concerned that there is no continuity and less safeguards – including a set limit on releasing funds – that opens up the process to challenges, abuse and wrongdoing.”

If you have any questions or would like to discuss obtaining Probate to make sure your loved one’s wishes are carried out in their Will, please don’t hesitate to get in touch with us.

Further reading:
What is probate?
Should I apply for probate during Covid-19 pandemic?