Executor's Bank Account

sliga

Please be wary if you ever have to open an executors account

Following the very distressing loss of my mother last year, my brother and I opened an executors account with HSBC, the bank she had used for many years.

Having finalised the estate administration I thought I should ensure that all the interest had been paid in to the account. When I examined the statements more closely I saw that what we had was a 0% interest account. Perhaps this is something I should have noticed before, but it never occurred to me that it would be necessary to check.

I went in to the branch today to query this and was told that they don't pay interest on any of their current accounts. When I asked why they had decided that was the most suitable account I was told that was generally what executors wanted and that they normally ask if executors would prefer a savings account. Neither my brother or can recall being asked this, if we had been, we would have taken that option. I had assumed that the bank would have a duty of care to provide the best service they could - I was wrong.

I have no idea how much interest has been lost over the past 10 months, but with something around £130k being paid in, I am sure it is considerable. I am left feeling angry, cheated and somewhat stupid.:(

Don't get caught out - check and double check that you are getting the best deal

xylophone

It is normal for executors to want a current account so that distributions, whether interim or final, can be made.

datostar

Accounts designated 'Executor Account' are always current accounts and very few current accounts pay interest nowadays. They have the advantage of allowing cheques payable to the deceased or 'Executor of xxxxxx' to be paid in and payments out are easily facilitated. If you use a savings account you may find that cheques have to be reissued in your own name to be paid in; the account is in your personal name so becomes part of your estate if anything was to happen to you, with implications for your own executor who would end up administering two estates (and potential inheritance tax). Also you would be liable for personal income tax on the interest earned.
I did chance this with my late father's estate and put the bulk of the funds into a new savings account in my own name, combining this with the use of a 'spare' and little-used current account, transferring funds between the two as necessary. I did have to arrange for a couple of cheques to be reissued in my name to be able to pay them in.
I don't think you can blame the bank in this. In fact, not all are willing to even provide Executor Accounts. You could always have opened a savings account as well (with the provisos above) and shuffled funds around.

dzug1

Executors' accounts are business accounts, where it is even less likely than personal ones that interest will be paid - indeed it is a concession that no charges are made.

mdrandall

Plus executor accounts have limited facilities.

I recently opened one with the Coop (deceased bank) and made at least 20 online electronic transfers to pay bills etc which worked just fine.

Then for some random reason the Coop revoked the internet banking facility saying I had to use cheques or telephone banking. No reason given apart from it's in their terms and conditions of executor accounts - daft! So I have to spend money on posting cheques or ringing their customer service line and they need an employee on the phone and someone to process the cheques.

Luckily I have made most of the transfers I need to get the estate in order but I'm still thinking of closing the account and moving it to a bank that works in this century.

xylophone

If you don't want to send cheques through the post, could you make the cheque(s) payable to yourself and pay in at your own bank - when cleared, immediately send electronic payment to beneficiary/beneficiaries under reference "exor estate XXX". Keep immaculate records for audit.

sliga

Thanks everyone.

As the sole heir, maybe I should have just put it in to a personal account in my name and made payments from that.

jonesMUFCforever

Why has it taken so long to distribute estate funds to make this an issue?

opinions4u

Take a look at HSBC's savings rates.

Then you'll realise they're not exactly keen on paying interest on a savings account either.

datostar

jonesMUFCforever wrote: »

Why has it taken so long to distribute estate funds to make this an issue?

Often it's because of the leisurely pace of HMRC in settling the deceased's tax affairs. 12 months isn't unusual. Once I was absolutely sure that there were no outstanding debts and that tax liability would be limited (on my own calculations) I made an 'interim distribution' of most of the estate and kept some back until the income tax was settled. When you write to them about anything, allow a month for a reply. I expect they give priority in their massive workload to the affairs of the living, which isn't a bad thing.

dr_adidas01

jonesMUFCforever wrote: »

Why has it taken so long to distribute estate funds to make this an issue?

I take it you've not had to deal with someone whom has passed away affairs? Hence your very impertinent question, it can take quite a while to sort out unless your estate is worth £5,000 then things are a bit more easier.

HMRC are very slow at dealing with anything when it comes dealing with a deceased persons tax affairs. You legally have to inform them that someone has died it then takes them about 2 months from experience to acknowledge this, then you have to fill in all the tax forms to see if the deceased owes any tax or if any tax if due back, again that can take many months to sort out, not to mention the issue of probate.

All this while your trying to deal with the loss of a loved one, makes the whole process very distressing.

All in all it took over a year before everything was sorted and the deceased wishes and legacies could be carried out.

I have every sympathy with datostar, the system really does need a major overhaul to make it simpler and easier.