interest not given to savings account of deceased

staffydog

My mums sister passed away last month, my mum & dad were left the excecuters, after bills any remaining money in her savings account was to be shared.

My mum has got access to the account ok and everything but. . . the bank (and im not sure which, a high street one tho) have told my mum that they stopped applying interest to the account as soon as they were informed of the death.

Can they do this? they have the money, what difference should it make!

Any thoughts please?

System

I believe that accounts are frozen on the death of the holder (unless joint accounts) so the bank is correct

CLAPTON

I'm rather surprised at that.

In general banks/building societies do freeze accounts at the time of the death and update the interest at that time so there is a proper figure for probate purposes.

However, the accounts usually continue to accumulate interest although maybe at a different rates e.g. ISAs become 'ordinary' a/cs and lose their tax free shelter and notice a/cs sometimes just become the 'standard instant access' account.

Maybe its in the specific T&Cs of the account but I would query it again.

Primrose

I would certainly query it because some years ago when my father died, one building society tried not to pay any interest on an account frozen at his death. I went back to them as Executor and told them that I would be making a formal complaint about this and lo and behold, when the cheque finally arrived interest had been added.

Stephen_Leak

!!!!!! wrote: »

I believe that accounts are frozen on the death of the holder (unless joint accounts) so the bank is correct

AFAIK, joint accounts are frozen, unless the surviving holder has Power of Attorney.

Cook_County

Frozen until POA arrives is mandatory, paying zero interest is not. Move the money elsewhere until you have probate; even within the same bank if nothing else can be achieved.

noh

Stephen_Leak wrote: »

AFAIK, joint accounts are frozen, unless the surviving holder has Power of Attorney.

Joint accounts are not frozen on the death of one of the holders.

From http://origin.direct.gov.uk/en/RightsAndResponsibilities/Death/Preparation/DG_10029468


"Money in joint accounts

The deceased person may have held money with another person in a joint bank or building society account. Normally this means that the surviving joint owner automatically owns the money. "

Stephen_Leak

noh wrote: »

Joint accounts are not frozen on the death of one of the holders.

From http://origin.direct.gov.uk/en/RightsAndResponsibilities/Death/Preparation/DG_10029468


"Money in joint accounts

The deceased person may have held money with another person in a joint bank or building society account. Normally this means that the surviving joint owner automatically owns the money. "

Noted with thanks.

Mikeyorks

staffydog wrote: »

Any thoughts please?

The explanation from the Bank has been poor and / or your parents have misunderstood. When they advised of the death of your aunt the account (sole account -judging from your post) was frozen - as post #2.

At which time the Bank cancelled all SOs and DDs on the account / cancelled any R85 which was in place - and suspended (not stopped) the addition of any Interest.

When your parents prove entitlement to the funds in the account (via 'probate' - if they are executors) - the full interest due to date of closure will be added to the account. Even if an R85 to enable gross interest had been in place - the interest will have tax deducted. And this even if some of the interest accrued prior to date of death. This is as a consequence of the R85 lapsing at date of death - allied to the fact that interest is taxable when paid, not when accrued :-

http://www.hmrc.gov.uk/taxback/question23.htm

http://www.hmrc.gov.uk/taxback/question25.htm

Your parents (earlier suggestion) can't move the funds until they've proven entitlement to them. The only way they can access any of the money is if there are urgent bills to be paid. Most Banks will draw a cheque in such cases - and debit it from the final account. But they tend to characterise 'urgent' as funeral expenses / tax / VAT. They will not normally extend to paying domestic bills such as CT / gas / electricity.