Do Banks Pay Interest On Executor Accounts

JGB1955

Ballard said:

If you did find an alternative account which paid interest I’m curious as to how they would allocate the interest payments. Presumably, because the ultimate beneficiaries would be individual there would, at least potentially, be tax to pay. The bank won’t know what proportion needs to be allocated to who so how would they report it?

The 'estate in administration' is responsible for making a tax return and paying any tax due.  As executor I had to pay tax on dividends received before my father's estate was distributed.  The estate has no personal allowance.

Rob5342

wmb194 said:

What's the legal status of an executor's account? Is it actually just an account in the name of an executor(s)? I.e. there isn't anything about it that's special. IIRC there's no legal requirement to have one that's termed an, 'executor's account.'

As far as I understand it's held in the name of the executors. I think the only thing that's special about it Is that you can set up the authorisation required to be from any.combination of the executors that you choose. In most cases that will probably make administering the estate more difficult and it would be easier just to use the personal account of one of the executors.

Rob5342

HA57 said:

blue.peter said:

I'd have thought that it must be pretty rare for an executor account to be open for more than a short while. Isn't the norm for the executors to have to wait for probate before most of the estate can be realised and the money paid to the bank account, and then distribute it pretty much immediately? The bank will have some costs in setting up the account, administering it and then closing it down. Those costs are, presumably, recouped through the little bit of interest that they might make on the funds. That is, I think, how they can afford to offer such accounts. Describing this as theft seems a little extreme. I'd imagine that most trustees would be glad not to have to pay charges.

So your situation - where what sounds like substantial* funds are sitting in what amounts to a current account for several months - is pretty unusual. I can't see banks doing something special for a rare situation.

Having said that, have you tried to get a savings account alongside the main account? Executors are a type of trustee, and I think that banks offer savings accounts to trustees.

*At least several hundred thousand pounds, given your statement that interest would be thousands/month.

  If that's not theft, what should I call it?

An accurate description would be to say that's it's a deal you agreed to and that the bank are honouring, but you've since decided you want a better deal.

unforeseen

The two times that I have had executor accounts, the banks would only give standard, non interest earning, current accounts

km1500

there is no legal requirement to have an 'executors account'

transfer the money wherever you wish in the interim - even a high interest savings account in your name

as long as you account for everything your executor duties are fulfilled

Zanderman

unforeseen said:

The two times that I have had executor accounts, the banks would only give standard, non interest earning, current accounts

Same here, had exec accounts with both Lloyds and HSBC and in both cases the accounts were set in stone as simple current accounts, no other options available. 

Not actually a problem, unless money kept in for some time.  But a little frustrating if it is. 

The sooner it can be given to beneficiaries the better, as it is their money, and it's up to them to get the best from it (it's not really the executors job to do this).

lohr500

According to this website, which may or may not contain accurate info, there is no need to open an executor's account 

https://finalduties.co.uk/what-is-an-executor-account/

If isn't a legal requirement, then as suggested by others, why not open a separate easy access savings account with one of the MSE top pops that accepts high value deposits.

As executor I believe you should have an FSCS temporary high balance protection of £1M for up to 6 months.

blue.peter

Zanderman said:

... and it's up to them to get the best from it (it's not really the executors job to do this).

Debatable. The executors are, in effect, trustees. As such, they have a duty of care to the beneficiaries, which broadly means that they must act in the best interests of the beneficiaries and avoid loss to the estate. It's certainly arguable that they should look after the estate pretty much as if it was their own money, which would include getting some return on money held, if practicable (though not at the expense of risking a loss). That's what the OP is wanting to do. Unfortunately, it appears not to be practicable.

As someone has already suggested, an interim distribution sounds like a good idea in this case.

Rostellan

Hi, Did you find a solution to your problem as I have a similar situation. As an Executor to an estate I am concerned about my personal Income tax. I have obtained grant of Probate and received the savings from the financial institutions. I used an old Nationwide Flex account to receive and pay out funds. The problem is with my MIL's flat which has structural problems. This is likely to cost a lot and take some time 1-2 years? I have distributed half of the savings funds the remaining half is contingency for the repairs. The retained £150k is in the Flex account which does not pay interest but if do invest it to gain interest it will be reported as my personal income. Nationwide do not offer Executor accounts, all institutions offer Gross interest not Net except for NS&I PSB's. Do I need an interest bearing Executor account with another bank? From your post above is it worth it for the interest that I will receive? Should I leave the money in the Flex account and receive no interest? Any advice or options please! 

Zanderman

Rostellan said:

Hi, Did you find a solution to your problem as I have a similar situation. As an Executor to an estate I am concerned about my personal Income tax. I have obtained grant of Probate and received the savings from the financial institutions. I used an old Nationwide Flex account to receive and pay out funds. The problem is with my MIL's flat which has structural problems. This is likely to cost a lot and take some time 1-2 years? I have distributed half of the savings funds the remaining half is contingency for the repairs. The retained £150k is in the Flex account which does not pay interest but if do invest it to gain interest it will be reported as my personal income. Nationwide do not offer Executor accounts, all institutions offer Gross interest not Net except for NS&I PSB's. Do I need an interest bearing Executor account with another bank? From your post above is it worth it for the interest that I will receive? Should I leave the money in the Flex account and receive no interest? Any advice or options please! 

It's not clear from your post why you're keeping money back to repair MiL's flat? If you have probate you can distribute the estate completely to the beneficiaries. Someone must be inheriting the flat (and also that £150k) and so surely it is up to them to repair the flat or sell it.  Or repair it and sell it later.  No need, surely, for the £150k to still be held in an executors account at all. Why not give it to whoever is the beneficiary? Executors accounts are primarily for distributing the estate, not for maintenance.