Intestacy rules, can they be challenged?

Keep_pedalling

Malthusian said:

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?

With an estate that size you have no choice you have to apply for probate. What you seem to be arguing is that where probate is not required the banks are responsible for the criminality of a person who has the right to administration of the estate after they have obtained the funds. 

What do you suggest the bank should have done in this case?  and do you think this should be the case with all estates? 

Malthusian

Keep_pedalling said:

With an estate that size you have no choice you have to apply for probate. 

It is entirely the bank's choice whether they make you apply for probate. (As opposed to just paying you the money and saying "What's the worst that could happen", as they probably would if the account was £30,000.) There is no limit set in law which says that an account of £300,000 requires letters of administration to have legal authority over it, but an account of £30,000 can be paid out on a "first come first served" basis. 
In paying the customer's money to someone who had no legal authority to deal with the account, the bank are relying on "no harm no foul"; if all the beneficiaries get paid, no-one is going to complain "'ere, you technically shouldn't have paid us this money and should have made us pay probate fees and wait for months". Unfortunately harm has occurred.
The bank can't have it both ways by claiming "the right to apply for letters of administration is legally as good as having letters of administration" when they're trying to get themselves off the hook for a loss they've caused, and claiming "it isn't" when they're trying to limit their liability for larger accounts.

What you seem to be arguing is that where probate is not required the banks are responsible for the criminality of a person who has the right to administration of the estate after they have obtained the funds. 

The person in this case had no legal right to give instructions on behalf of the estate. That is conferred by letters of administration, which she didn't have. (This is still an assumption but I hope the OP would have told us by now if she did.)

As I have said before, if the person actually did have the right to administer the estate (because they had letters of administration) the bank would be in the clear and I wouldn't be suggesting a formal complaint.

What do you suggest the bank should have done in this case?

Made good the loss that has resulted from their "sure, have our accountholder's money even though you don't have legal authority, it's only £XX,XXX so what the hey" policy.

boingy

Sea_Shell said:

"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.

It's impossible to judge based on the forum, because only people with a problem or a grievance will go to the trouble of registering and posting on here and asking advice. So we're only seeing the small percentage that do go wrong rather than the vast majority that go smoothly.

Keep_pedalling

Malthusian said:

Keep_pedalling said:

With an estate that size you have no choice you have to apply for probate. 

It is entirely the bank's choice whether they make you apply for probate. (As opposed to just paying you the money and saying "What's the worst that could happen", as they probably would if the account was £30,000.) There is no limit set in law which says that an account of £300,000 requires letters of administration to have legal authority over it, but an account of £30,000 can be paid out on a "first come first served" basis. 
In paying the customer's money to someone who had no legal authority to deal with the account, the bank are relying on "no harm no foul"; if all the beneficiaries get paid, no-one is going to complain "'ere, you technically shouldn't have paid us this money and should have made us pay probate fees and wait for months". Unfortunately harm has occurred.
The bank can't have it both ways by claiming "the right to apply for letters of administration is legally as good as having letters of administration" when they're trying to get themselves off the hook for a loss they've caused, and claiming "it isn't" when they're trying to limit their liability for larger accounts.

What you seem to be arguing is that where probate is not required the banks are responsible for the criminality of a person who has the right to administration of the estate after they have obtained the funds. 

The person in this case had no legal right to give instructions on behalf of the estate. That is conferred by letters of administration, which she didn't have. (This is still an assumption but I hope the OP would have told us by now if she did.)

As I have said before, if the person actually did have the right to administer the estate (because they had letters of administration) the bank would be in the clear and I wouldn't be suggesting a formal complaint.

What do you suggest the bank should have done in this case?

Made good the loss that has resulted from their "sure, have our accountholder's money even though you don't have legal authority, it's only £XX,XXX so what the hey" policy.

I need to rephrase my last question - What do you suggest the bank should have done when the OPs sister requested the funds?

Malthusian

Keep_pedalling said:

I need to rephrase my last question - What do you suggest the bank should have done when the OPs sister requested the funds?

Whatever they liked, not my risk analysis to make. 
It does strike me that waiting two weeks after a relative presents the death certificate and signs the piece of paper, to see if anyone else comes forward asking for the money (or even, as in this similar but not identical case, the estate's executor, the only person they should be paying out to), and then paying out the account balance to a relative, would still achieve the goal of saving everyone unnecessary faff applying for probate for simple cases with modest balances. While considerably reducing the chance of the money disappearing, and of all the stress that results. 
(If a second relative turns up looking for the money, and says "Don't pay it to him, we'll never see it again", then for intestate estates the bank has to bring the shutters down and let the courts sort out who gets letters of administration.)
For the vast majority of cases where there is no dispute, an extra two weeks is neither here nor there.
But I'm musing here, apparently the banks don't see it as necessary and it's their liability.

cc1901

No letters of administration and due to the size of the estate (and no property) no probate.
I had notification from the county court on Thursday that they ruled in my favour so have a judgment- she has 2 weeks to pay….

Alderbank

cc1901 said:
No she is not a homeowner and has never had a job

I had notification from the county court on Thursday that they ruled in my favour so have a judgment- she has 2 weeks to pay….

...or perhaps a little longer if she tells the court she has never had a job and can only afford to pay 50p a month

Spendless

Keep_pedalling said:

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.

Exactly. My Mum could do exactly that (not that she would) and probably would get away with it. Mum is sole executor to my Nan's will, the estate too small to go to probate. There are 3 beneficiaries, 1 is an estranged relative who also fell out with my Nan after the will was made. This relative IMO believes 3 things, that Nan changed her will, that there's  possibly no estate left due to 8 years of care home fees or that Mum is deliberately withholding money from her. The relative would have to employ a solicitor to ask what the contents of Nan's will was and it could come back that she was no longer in it or there's no money left, so she wouldn't pay a solicitor. The truth of the matter is there are potentially still 2 bills to be paid from Nan's account and until that is dealt with, Mum isn't sharing out the money.