Interest on savings not paid after death

Dido53

I was disgusted to learn, when I went to the bank today to report my mother-in-law's death, that no further interest will be paid on her savings accounts at Barclays. Evidently her accounts will be frozen - other payments can still go into her accounts, but nothing can be paid out, and the bank will pay no interest from the date of the death. As there is some £170,000 in savings accounts - and it will clearly be some weeks before I can obtain probate and deal with her Will - Barclays are on to a nice little winner! Is this true for all banks?

ChiefGrasscutter

That surprises me.
'twas not so when I was last an executor - though that was some years ago.
Interest was still accumulating post the date of death.
I believe the situation re cash ISA's might be slightly different, they will probably no longer be tax free post death.
I recall from when I was doing it the executors had to submit an income tax return to indeed account for income received between the date of death and the date when the money was paid out to the benefeciarys by the executor.

The accounts are frozen when the Bank is informed that the holder has died and they will only unfreeze them and pay out upon sight of the grant of probate when they will pay the executors. The "freezing" an account in respect of operations (ie S/O's, DDebits, cheques etc) is totally seperate from continuing paying interest on the capital in the account.
You will be able to pay monies in (ie those which are due to the deceased and which should properely be included in the capital valuation of the estate at the date of decease).

Perhaps things have changed........

CLAPTON

No this doesn't seem to be correct.
Although I have experience of Barcalys other bank/building societies do add interest although it does from part of the estate;

I would phone Barclays and speak to their estate department (or whoever deals with the situation ) and ask again.

cazzmal

I dealt with my mother's estate two years ago and if my memory serves correctly no interest is paid after death.

CLAPTON

my written records show that the following paid interest after the death although outside the estate

NS&I
Nat west
Halifax
Nationwide
Britannia


Dividends on shares were withheld until probate and then paid in full

Baldur

Stroud & Swindon's FAQs show that interest on their accounts continues to accrue http://www.stroudandswindon.co.uk/savings_faqs.aspx

What happens if the deceased held a savings account with Stroud & Swindon?

The deceased's account(s) will continue to accrue interest. However any instructions to transfer interest to a bank account will be cancelled and the interest will be added back on to the account.

Icesaver

I had to deal with my Mother's estate at the start of this year, she only had money with HSBC no interest was paid to the account after her death

CLAPTON

Icesaver wrote: »

I had to deal with my Mother's estate at the start of this year, she only had money with HSBC no interest was paid to the account after her death

was that an interest bearing a/c?

withnell

Interest up to date of death is paid and taxed in the deceased's income tax return. Interest IS paid from date of death but is taxed at 40%.

opinions4u

It's up to the individual bank whether or not they pay interest after death.

Personally I think it is a pretty nasty act to change an interest paying account in to a non-interest paying account at a point in time that basically stops anybody from being able to move the funds. It stinks.

withnell wrote: »

Interest up to date of death is paid and taxed in the deceased's income tax return. Interest IS paid from date of death but is taxed at 40%.

At the time of death an individual loses their personal allowance (edit: from the beginning of the following tax year). Tax will be due on any income generated by the estate after death. It will only be at the 40% rate if the income for that tax year moves it in to the higher tax bracket though.

withnell

opinions4u wrote: »

At the time of death an individual loses their personal allowance. Tax will be due on any income generated by the estate after death. It will only be at the 40% rate if the income for that tax year moves it in to the higher tax bracket though.

No, because after death it instantly becomes estate income, and has nothing to do with the personal allowance, hence 40%!