Confused about probate and bank accounts

BryanTomson

My wonderful Dad is sadly very ill and likely does not have much time left.

He has talked me through his will and named me as executor of his estate. I decided to have a look into probate requirements now to maybe avoid any surprises or unnecessary delays down the line.

I’ve read the MSE guide but found myself very confused over some of the implications (I admittedly do not have a great brain for financial things.)

He will leave behind two properties and various other assets:

1st house - to be split 4 ways between 2 sons and 2 stepsons

2nd house - to be split 2 ways between 2 sons 

All other assets including pension, life insurance, money in multiple accounts, personal possessions to be split 5 ways (2 sons, 2 stepsons, 1 sister-in-law)

The total value of all the above is in the region of £450k

I understand that I will need to get a grant of probate to distribute the assets.

What I am confused over is the fact that many banks only require a grant of probate to close accounts containing over 50k. At least two of the accounts are below the threshold required by the individual bank for probate - does this mean that the money can be withdrawn before probate is obtained, or, because they are part of a larger total estate, will we need to wait for probate before anything can be withdrawn?

Any advice would be very much appreciated.

poppystar

It will depend on the institution and their rules. I certainly got money before probate but someone on here the other day was saying that once the bank found they were applying for probate they had to wait. Is there a reason you will need more immediate access to the money?

BooJewels

I'm sorry to hear of the situation you're in.  Most of us here have more than one of those t-shirts.

Generally speaking, all assets are consolidated before distribution.  So you'd close down bank and savings accounts and put these funds (the bank will usually transfer them to an allocated account) into a central bank account that you use for management of the estate (i.e. kept separate from your own money), settlement of debts etc.  There will be expenses out of the estate - maybe insurance and utilities for the properties, surveys before sale, maybe repairs etc.  The bank can settle funeral expenses directly, if you need that doing sooner.

When all assets are realised - properties sold etc., then you do your final accounts and distribute in line with the details of the will.  Often, if you have small fixed amount bequests and there are sufficient funds in the estate, or they're material items, these can be done sooner in the process, but any residuary beneficiaries (i.e. they get a percentage) you usually wait until everything is settled - you can't know how much they'll get otherwise.

There are of course, different ways of doing this depending on the details of the estate and particular bequests, but you should be able to get bank account balances (below their threshold) into the estate account before Probate.  Due to lockdowns etc., I delayed applying for Probate for almost a year, but needed to pay bills on the property in that time, so one of the first things I did was open a specific bank account and got all monies transferred into it.  Make sure that you speak to the Bereavement department of the banks when you need to sort this out, they are well versed in this process, sensitive and very helpful.

ETA:  you don't need the Grant of Probate to distribute the assets (if he just had cash, you might not need Probate), but it authorises you to undertake tasks like selling the properties, getting at cash above a particular limit, cashing in premium bonds, ISAs, selling shares and the like.  The Grant is a legal document that states you have the authority to do these things.

BryanTomson

Thanks very much for your helpful replies. The reasons I could do with more immediate access to some of the money are partly to pay bills on the properties before they are sold, and partly due to personal financial circumstances after having to cut down hours at work to support with care (and I was on a low wage to begin with), I may be running into difficulties with cashflow.

He may be able to gift me some money now, but I would need to make sure that got accounted for when it comes to distibuting the rest, which is a headache when tax is taken into account too!

macman

Houses split 4 ways/2 ways? Or do you mean the proceeds of those properties are to be split 4 ways/2 ways? 2 very different things. Much better to liquidate the entire assets and then if any beneficiaries wish to purchase one of the properties, they can do so from the estate.
Yes, if the banks do not require probate then you can transfer the funds, but as executor you have legal responsibility for ensuring the sound administration of the funds: which essentially means that you must not commence any distribution before you have assessed the debts and made provision for them.

p00hsticks

BryanTomson said:

All other assets including pension, life insurance, money in multiple accounts, personal possessions to be split 5 ways (2 sons, 2 stepsons, 1 sister-in-law)

The pension and life insurance policies are likely to fall outside the estate = if you haven't already, make sure he's specified to the companies involved who he intends the beneficiaries of those to be, as you can't assume that the distribution will necessarily be as per the will.

Assuming that the pension is a DC one (DB pensions usually terminate on death if there is no surviving spouse), then who gets the money is usually at the discretion of the trustees, and they will take into account the circumstances such as the expression of wishes, the will and the remaining surviving relatives. I found that they asked for some documentary evidence of the will, birth & death certificates etc, but it was then paid out quite quickly.

BryanTomson said:

Thanks very much for your helpful replies. The reasons I could do with more immediate access to some of the money are partly to pay bills on the properties before they are sold, and partly due to personal financial circumstances after having to cut down hours at work to support with care (and I was on a low wage to begin with), I may be running into difficulties with cashflow.

If the properties are unoccupied and the intention is to sell them ASAP, then you may find that the utility companies are willing to just let a debt build up on the properties until they are sold. Speak to the bereavement departments of the relevant companies when the time comes. His main residence will be exempt from council tax until six months after propbate is granted - not sure about the second one.

If you are in urgent need of money personally prior to the estate accounts being finalised, I'd suggest that you make any interim payment to all the intended beneficiaries equally, rather than just yourself.

BryanTomson said:

which is a headache when tax is taken into account too!

I'm not sure what tax you are thinking about - with an estate of the sort of value there may well not be any inheritance tax due.

msb1234

I second not worrying about bills form the properties being paid promptly. My mums estate has about 9K outstanding debt and they all know it won’t be paid until the house is sold, which could be a few months down the road.