FSCS protection for estate funds

Flugelhorn

Margot123 wrote: »

I don't think they permit executor accounts as such, but then there is actually no reason to have one in the first place. What I have done is open the account in my own name but 'name' the account as 'Estate of ??? ??? Deceased'.
.

That is a good idea, - there is the option to name the NS&I account separately and that would make it clear. Mine isn't an execs account, just somewhere to put pension lump sum at the moment and will be moving money from the execs account there in time as beneficiaries are paid out

I recently had the option to name an online Building Society account and that one ended up as "Swiss Bank Account" - always fancied having one

badmemory

chiny wrote: »

I recently was advised that "it is good practice not to distribute the estate until... 10 months after Grant of Probate... because... claims [by others]".

Nothing like ensuring a few ongoing fees.


If you have had anything to do with the persons finances in the past then you know if they have debts & if anything else is likely to come out of the woodwork - but 10 months is 4 months longer than neccesary.


You could always do a partial distribution. If there a 4 residual beneficaries then you could distribute 20% to each retaining 20% if some random stranger put in a claim for a share.

chiny

OK, I did query my solicitor on the 10 months but the reply was not clear. At £££/minute, I'm not asking for more clarity; I'll simply accept the advice.

The reply from my solicitor noted the difference between issuing and serving a claim. Timescales on the justice.gov.uk web site and various law firm web sites do discuss timescales, including the 4 months for service.

No doubt 99.9% of the time, probate does not throw up a problem but I certainly can't afford to find out the hard way. Having said that, the partial distribution idea might be helpful to the more impoverished beneficiaries while not leaving me exposed.

NonGeographicalMan

chiny wrote: »

I understand that temporary large holdings are covered only for a "main residence"; says the FSCS web site.

Unless things have changed since you wrote this in 2018 the FSCS website at https://www.fscs.org.uk/your-claim/temporary-high-balances/?gclid=EAIaIQobChMIkcyZkKOU5AIVAuDtCh0zuwWgEAAYASAAEgLDUvD_BwE actually says:- "Certain life events could have caused a temporary high balance in your bank account, including:

Real estate transactions (property purchase, sale proceeds, equity release - relating to your main residence only);
Benefits payable under an insurance policy;
Personal injury compensation (unlimited amount);
Disability or incapacity (state benefits);
Claim for compensation for wrongful conviction;
Claim for compensation for unfair dismissal;
Redundancy (voluntary or compulsory);
Marriage or civil partnership;
Divorce or dissolution of their civil partnership;
Benefits payable on retirement;
Benefits payable on death;
A claim for compensation in respect of a person's death;
Inheritance;
Proceeds of a deceased's estate held by their personal representative.

So as someone who is currently an executor of my mother's estate I read this last but one bullet point as saying that all funds of the estate held in a proper executors account up to £1 million are covered (including real estate transactions, or property as we Brits normally call it) and I expect they would probably be ok in an ordinary account dedicated to this purpose too as long as it was being run by a personal representative or executor of the estate. I see no indication at all that the proceeds up to £1 million of an estate administered by executor are in fact restricted just to the proceeds of the deceased's main home.

However the issue I'm currently having is that the first big payment from the property will have entered the Executors account 6 months ago in a few days time, even though other money like share and ISA sales turned up quite a lot later on.

So what I haven't been able to get any clear answer from on the FSCS helpline in Scotland so far on the 0800 number (which I feel is very poor quality as staff all seem to be not very financially literate minimum wage suspects and in some cases seem really quite hostile to callers who clearly have a lot more money than them) is whether if the money is now paid out from the Executors account to the two beneficiaries (who happen to also be Executors but there is also a third not very active non beneficiary Executor) if the up to £1,000,000 protection for 6 months for temporary high balances does not then kick in again?

As the legal capacities of the executors and the beneficiaries are legally different and the bank accounts will be different then surely if the executors pay out funds to the beneficiaries then the 6 months of temporary high balances protection then kicks in all over again?

But the advice from the FSCS helpline is so vague and unclear (they only want to stick to the 6 months and £1,000,000 of cover rule for high balances and don't want to understand that executors and beneficiaries are different legal persons so two lots of protection may apply) I have now had to pose the question by email to their CEO, who has now responded passing on the question to their COO for reply.

However I didn't realise about the £1,000,000 protection in a National Savings account so I might well go down this route as the just over £600,000 I will be paying out for myself might not be invested anywhere else for quite some time. Of course the Executors account is with RBS and RBS has also now been restructured in such an aggressive and conservative way it is very unlikely to go belly up in any impending financial crash but nonetheless one never absolutely knows for sure. And don't forget I also previously had £20,000 in an FSCS covered Icesave account that I had to reclaim the money on thanks to the advice of MSE Martin that the Icelandic Banks were definitely sure and safe as houses................;):eek::rotfl:

EDIT:- Actually according to https://www.nsandi.com/our-products there is no £1,000,000 NS & I protection limit and so "However much you invest, all of your money is 100% safe with us as we’re backed by HM Treasury." So this would save a lot of hassle compared to opening 8 different saving accounts with different financial groups but I will have to check on the comparative interest rates....................

Malthusian

NonGeographicalMan wrote: »

As the legal capacities of the executors and the beneficiaries are legally different and the bank accounts will be different then surely if the executors pay out funds to the beneficiaries then the 6 months of temporary high balances protection then kicks in all over again?

Correct.

If the "Proceeds of a deceased's estate" temporary high balance protection is about to expire, then the funds need to be distributed to the beneficiaries, diversified or moved into NS&I (if they will set up executor accounts) urgently. If you lose the estate's money due to sticking all of it into a bank account without FSCS protection then you will be personally liable.

Once the funds are distributed to beneficiaries they get their own temporary high balance protection under "Inheritance". And it's no longer your problem.

Keeping an estate's money secure is not something you should be consulting FSCS call centre workers about. They are there to answer the phone and move money from A to B, they are not experts on the COMP handbook.

EDIT:- Actually according to https://www.nsandi.com/our-products there is no £1,000,000 NS & I protection limit and so "However much you invest, all of your money is 100% safe with us as we’re backed by HM Treasury."

The £1 million limit is the maximum amount you are allowed to hold in Income Bonds, which is the most popular NS&I product to use for this purpose, as it is easy-access and pays a decent rate of interest.

This is occasionally over-simplified to "NS&I covers you up to £1 million". £1 million covers most people and people who need to move multi-million pound sums around in cash would probably look at some kind of specialist insurance or use a money market fund. But you could also technically invest it in multiple NS&I products. Its just that other NS&I products tend to be less attractive than Income Bonds, and once you are investing across multiple NS&I products, you've lost the simplicity advantage of "just stick it all in NS&I Income Bonds".

And don't forget I also previously had £20,000 in an FSCS covered Icesave account that I had to reclaim the money on thanks to the advice of MSE Martin that the Icelandic Banks were definitely sure and safe as houses...............

Martin's advice turned out to be correct.

It's funny how so many people who successfully had their cake and ate it by getting extra interest from the Icelandic banks, then being bailed out by more conservative savers when they went bust, resent the people who helped them get their double helping of cake.

NonGeographicalMan

Mathusian,

I feel that the FSCS temporary high balances scheme is there to cover ordinary middle class people (as opposed to the mega rich with yachts in Monte Carlo and several other harbours and bank accounts in Switzerland and the Cayman Islands etc) handling ordinary amounts of money. Presumably the reason the FSCS does not cover unlimited temporary high balances is to stop huge amounts of money piling up with poorly structured and high risk taking depositors that are then much more likely to all go belly up all together during a financial crash and cost the FSCS scheme a load of money? Alternatively not covering more than £1,000,000 is a politically correct move so as to be seen to be only covering ordinary families (as the savings of not covering up to £10,000,000 temporarily are surely not that great).

Unfortunately in the South East of England £1,000,000 is not enough to cover executors of estates of fairly average middle class people as many ordinary comfortable 5 bed homes in the South East are worth up to circa £1,300,000 and with investments and other holdings on top the temporary high balances cover surely ought to be around at least £2,000,000. Also 6 months to administer and distribute an estate from Grant of Probate is not adequate to cover all circumstances in my view and so I think the temporary high balances cover ought to be for 12 months and cover at least £2,000,000 (a point I will be making in an email to their very new CEO).

Regarding Icesave I believe those who deposited with Icesave in places like the Channel Islands that were not covered by the FSCS did lose all or most of their money. Also no interest was paid by the FSCS to me and other depositors in the period till they paid out so this in addition to the fear and stress of worrying the money was totally lost totally negated any small advantages of chasing Icesave's somewhat higher deposit interest rate.....

Regarding the FSCS Helpline I'm sorry but I think they should have an escalations tier that can cover such queries as its not exactly rocket science and only requires someone who has a vague understanding of legal concepts to deal with these issues (if they are doing it day in and day out this same question about temporary high balances on deceased person's estate and executors vs beneficiaries is bound to arise time again and so should actually be covered in their own descriptive document on the subject.)

As it happens I'm a beneficiary as well as an executor and my sister has already decided the money was covered again if paid out to her own bank account (even though she had nothing conclusive on paper to say that from the FSCS) and insisted on being paid out before we reach the deadline (she is also an executor and there is a third non beneficiary executor as well).

In my own case given timescales till the deadline the lowest cost way to distribute (avoiding a CHAPS fee) is to my own personal account with NatWest (where the Executor account is also held) as there is no monetary limit on free instant transfers from the Executor to the personal account (really there ought to be as the legal owners of the money are not the same but basically no bank in the UK seems to properly handle Executor accounts in terms of them having a proper separate IT status on their system from normal joint accounts set up by couples and also probably they shouldn't agree to link them to a non Executor account's existing online banking setup)

But I was nervous that if not distributing to one of the other two other places that I hold personal accounts (Nationwide and Metrobank) that I would be more likely to receive an objection by the FSCS, if required to actually pay out, that the 6 months did not apply again in my own personal account at the same bank (although not the same branch but linked through online banking) as the executors account...………..