Intestacy rules, can they be challenged?

TheBanker

cc1901 said:

No she is not a homeowner and has never had a job…hoping I can still get the money, it’s not a fortune but most going to my children.
I was on hold to citizens advice yesterday for over and hour and then it cut off to get advice re enforcing the judgment 

Do you think the money is still in her bank account? If so you could try to obtain a third party debt order. There are some details on the link below, but you probably ought to wait until you actually have the judgement and she's failed to pay before making your next move. I'm not sure if this is the kind of thing Citizens Advice can help with, you may need to speak to a solicitor for advice about enforcing a court order. 

https://www.gov.uk/government/publications/third-party-debt-orders-and-charging-orders-ex325

Keep_pedalling

cc1901 said:

No she is not a homeowner and has never had a job…hoping I can still get the money, it’s not a fortune but most going to my children.
I was on hold to citizens advice yesterday for over and hour and then it cut off to get advice re enforcing the judgment 

I think you are getting a bit ahead of yourself just wait until you have the judgement, you never know it might scare her enough to get her to pay up, but if she no longer has the money and she has no assets then you are going to find that recovery is going to be difficult if not impossible.

The sad thing here is that both of you want the inheritance to go the grand children so it might have been worth thinking about the fairest way to split the money regardless of the intestacy rules. Personally I would have been happy to split it evenly provided I it was actually going to the grand children and not to sit in her bank account or pay off her debts. In practice that might be rather difficult to achieve if she is on means tested benefits as that would be classed as deliberate deprivation of assets and failing to declare it would be benefit fraud.

Malthusian

Keep_pedalling said:
So what you are saying is that banks should only pay out to someone holding LOA or probate..

Can you quote when I said that?
What I am saying is that banks should only pay out to random dudes who turn up saying "Can I have your customer's money please" if they are prepared to cover the loss on the rare occasions it goes wrong for them. Like this one. Which they do, all the time. Fraud costs the banking industry hundreds of millions of pounds a year, it's a cost of doing business.
A fraudster withdrew a load of money from my account some time ago because they'd cloned my card. The bank didn't say "Well if we reimbursed everyone whose money we wrongly paid to someone else, we'd have to get rid of debit cards and go back to insisting you turned up in person to withdraw money, so sucks to be you, next time be more careful with your choice of bank".

This is not a case of the bank releasing the money to someone who it should not be released to

Yes it is. If the sister had only withdrawn half the money the bank could rely on "no harm no foul" as nobody would have lost out, but she didn't. If she had letters of administration it would be a case of the administrator failing to distribute the estate properly, but she didn't and she wasn't the estate's administrator. 

Malthusian

P.S. While I don't think the bank's defence - "she was the deceased's daughter so had the right to apply for letters of administration, and nobody else had, so she should be treated as if she actually did have letters of administration, which means we discharged the estate's liability when we paid her the estate's money" - stands up, I am only about 65-70% confident.
My fundamental position is that the OP should make a formal complaint and take it to the Ombudsman if necessary, so they can find out who is right. Even the Ombudsman sides with the bank, they will lose nothing. 

Keep_pedalling

Malthusian said:

Keep_pedalling said:
So what you are saying is that banks should only pay out to someone holding LOA or probate..

Can you quote when I said that?
What I am saying is that banks should only pay out to random dudes who turn up saying "Can I have your customer's money please" if they are prepared to cover the loss on the rare occasions it goes wrong for them. Like this one. Which they do, all the time. Fraud costs the banking industry hundreds of millions of pounds a year, it's a cost of doing business.
A fraudster withdrew a load of money from my account some time ago because they'd cloned my card. The bank didn't say "Well if we reimbursed everyone whose money we wrongly paid to someone else, we'd have to get rid of debit cards and go back to insisting you turned up in person to withdraw money, so sucks to be you, next time be more careful with your choice of bank".

You said “ They both have the legal right to apply for letters of administration - AIUI the sister hadn't. If merely being the child of the deceased gave you the right to turn up and start withdrawing money then we wouldn't have letters of administration in the first place.”

A child is not some random person, it is someone who is entitled to administer an intestate estate, and in England that is all that is required (it is different in Scotland). 

This is not a case of the bank releasing the money to someone who it should not be released to

Yes it is. If the sister had only withdrawn half the money the bank could rely on "no harm no foul" as nobody would have lost out, but she didn't. If she had letters of administration it would be a case of the administrator failing to distribute the estate properly, but she didn't and she wasn't the estate's administrator. 

How is a bank supposed to know how many children the deceased had and how much they could give out to each? that is totally impracticable. As long as the bank have established that the persons identity and their relationship to the deceased they have done nothing wrong under the system as it currently exists 

TBagpuss

Keep_pedalling said:

Malthusian said:

Keep_pedalling said:
So what you are saying is that banks should only pay out to someone holding LOA or probate..

Can you quote when I said that?
What I am saying is that banks should only pay out to random dudes who turn up saying "Can I have your customer's money please" if they are prepared to cover the loss on the rare occasions it goes wrong for them. Like this one. Which they do, all the time. Fraud costs the banking industry hundreds of millions of pounds a year, it's a cost of doing business.
A fraudster withdrew a load of money from my account some time ago because they'd cloned my card. The bank didn't say "Well if we reimbursed everyone whose money we wrongly paid to someone else, we'd have to get rid of debit cards and go back to insisting you turned up in person to withdraw money, so sucks to be you, next time be more careful with your choice of bank".

You said “ They both have the legal right to apply for letters of administration - AIUI the sister hadn't. If merely being the child of the deceased gave you the right to turn up and start withdrawing money then we wouldn't have letters of administration in the first place.”

A child is not some random person, it is someone who is entitled to administer an intestate estate, and in England that is all that is required (it is different in Scotland). 

This is not a case of the bank releasing the money to someone who it should not be released to

Yes it is. If the sister had only withdrawn half the money the bank could rely on "no harm no foul" as nobody would have lost out, but she didn't. If she had letters of administration it would be a case of the administrator failing to distribute the estate properly, but she didn't and she wasn't the estate's administrator. 

How is a bank supposed to know how many children the deceased had and how much they could give out to each? that is totally impracticable. As long as the bank have established that the persons identity and their relationship to the deceased they have done nothing wrong under the system as it currently exists 

Have you actually ever been in a position of complaining to or claiming from a bank in this situation?

The bank chose to take the risk that the person who they paid the money to might not be being truthful. OP has lost out as a result of them choosing to take that risk. That is the basis on which OP can make a complaint. Even allowing for the times that he bank may have to pay out in cases like this, it's still likely to be more costs effective for them to not require probate in low value cases. 

And most banks require the person to whom they pay the money to sign a form of indemnity precisely because they (the bank) is potentially liable for paying the wrong person. 

Keep_pedalling

TBagpuss said:

Keep_pedalling said:

Malthusian said:

Keep_pedalling said:
So what you are saying is that banks should only pay out to someone holding LOA or probate..

Can you quote when I said that?
What I am saying is that banks should only pay out to random dudes who turn up saying "Can I have your customer's money please" if they are prepared to cover the loss on the rare occasions it goes wrong for them. Like this one. Which they do, all the time. Fraud costs the banking industry hundreds of millions of pounds a year, it's a cost of doing business.
A fraudster withdrew a load of money from my account some time ago because they'd cloned my card. The bank didn't say "Well if we reimbursed everyone whose money we wrongly paid to someone else, we'd have to get rid of debit cards and go back to insisting you turned up in person to withdraw money, so sucks to be you, next time be more careful with your choice of bank".

You said “ They both have the legal right to apply for letters of administration - AIUI the sister hadn't. If merely being the child of the deceased gave you the right to turn up and start withdrawing money then we wouldn't have letters of administration in the first place.”

A child is not some random person, it is someone who is entitled to administer an intestate estate, and in England that is all that is required (it is different in Scotland). 

This is not a case of the bank releasing the money to someone who it should not be released to

Yes it is. If the sister had only withdrawn half the money the bank could rely on "no harm no foul" as nobody would have lost out, but she didn't. If she had letters of administration it would be a case of the administrator failing to distribute the estate properly, but she didn't and she wasn't the estate's administrator. 

How is a bank supposed to know how many children the deceased had and how much they could give out to each? that is totally impracticable. As long as the bank have established that the persons identity and their relationship to the deceased they have done nothing wrong under the system as it currently exists 

Have you actually ever been in a position of complaining to or claiming from a bank in this situation?

The bank chose to take the risk that the person who they paid the money to might not be being truthful. OP has lost out as a result of them choosing to take that risk. That is the basis on which OP can make a complaint. Even allowing for the times that he bank may have to pay out in cases like this, it's still likely to be more costs effective for them to not require probate in low value cases. 

And most banks require the person to whom they pay the money to sign a form of indemnity precisely because they (the bank) is potentially liable for paying the wrong person. 

I have been in the position of closing down bank accounts without probate or LOA and was in the same situation as the OPs sister. I also have a brother who was not involved in winding up my mother’s estate. In both cases case the banks did not pay the wrong person, but in one case the person they payed failed to distribute the estate as they should have done. Even if that person had applied for LOA they could still have failed to distribute it correctly.

The important thing in my view is that the OPs sister was entitled to administer the estate so the bank had no reason to refuse to release the funds in the account to her, once they had established her identity and her relationship to the deceased. This is how it is done in 100s thousands of estates every year, and if banks are going to be held responsible for the actions of rogue administrators I can’t see it continuing that way which is going to make life difficult to the vast majority of administrators of small estates who don’t try to disinherit their siblings.

Malthusian

In both cases case the banks did not pay the wrong person, but in one case the person they payed failed to distribute the estate as they should have done.

And in the second case, what happened when the administrator or the beneficiaries who lost out took the bank to the Financial Ombudsman after the bank refused to make good their losses resulting from the bank's cavalierness?

Even if that person had applied for LOA they could still have failed to distribute it correctly.

True, but it's a lot more difficult for thieving heirs to permanently deprive the estate of its money that way, as the other potential administrators have time to file an objection with the court and stop them getting the legal right to manage the estate.

 This is how it is done in 100s thousands of estates every year

Resulting in millions of staff costs saved every year on the hundreds of thousands of estates where "no harm, no foul" applies, and the bank is saved the bother of making the administrators come back with letters of administration and paying specialist staff to verify them and then pay out the money to an account in the name of the estate. 

and if banks are going to be held responsible for the actions of rogue administrators I can’t see it continuing that way which is going to make life difficult to the vast majority of administrators of small estates who don’t try to disinherit their siblings.

Rogue administrators are extremely rare, and I don't see any evidence that banks are more likely to stop making "no harm no foul" payments to get dead accountholders out of the door quickly, than they are to withdraw credit cards because they have to stump up for identity fraud and cloned cards (which happens far more often).

In some cases where an LOA-less sibling helps themselves to a bank account, no loss occurs to anyone because there are other assets in the estate which cannot be accessed simply by waving around a death certificate, and the administrator can deduct the money that went walkabout from the light-fingered beneficiary's share of other assets.

If it's true that letters of administration are legally a meaningless piece of paper that the Probate Office gives out for fun, why do the banks impose a limit (varying per bank) above which they require LOAs to pay out to a child (or whoever has the right to apply)? If the right to apply for an LOA is legally as good as an LOA, then either they're entitled or they aren't. 

The correct answer is "because they are limiting the bank's liability in cases like this one where it goes wrong". The fact that the limit varies by bank confirms that it does not exist in law.

Sea_Shell

"Rogue administrators are extremely rare"

Well, we seem to hear about plenty of them on here, so they're not THAT rare!!    And they're just the ones that get posted about.

Personally, I think it's more common than we'd like to think, sadly.

Malthusian

Let's flip the scenario on its head. Let's say your parent dies intestate and leaves you an estate which consists of nothing but £300,000 in a bank account. You are an only child so no possibility of defrauding anyone. In an ideal world you would want to get the funds paid out without waiting months for letters of administration and paying a probate fee.
How far will the argument "I am entitled to apply for letters of administration therefore I do not need letters of administration" get you in persuading the bank to release the funds?