Executors/Administrators Bank Accounts - Why so difficult to open?

PennySF56

Why do many banks not offer, and others make very difficult to open.  Why are they not interest bearing?  More and more people are not using solicitors to obtain probate, but the banks are not giving an easy vehicle to open an Executor/Administrator account for Estate proceeds.  All the banks appear to have different rules for opening these kind of accounts, if they offer them at all.

Background

Our mother died in March leaving her Estate equally to her 3 children, my sister, brother and myself also named in her Will as executors, after a few small bequests. 

As the estate was worth under £1 million, no inheritance tax was due after transfer of her late husband’s NRB/RNRB to the Estate.  I had been administering her finances with LPA for a few years so felt confident to apply for IHT clearance and probate on behalf of the 3 executors.

We received IHT clearance end May and our probate application was acknowledged mid June.

In July we accepted an offer for her house.  Probate is likely to be granted by the end of September if within the current 16 weeks wait.  Solicitors have been instructed for the conveyance.

Opening an Executor Bank Account Because of the sale of the house, I feel it prudent to apply for an Executors/Administrators Bank account before Probate is granted, though clearly it is understood this would be inactive until receipt of the Grant of Representation.  We would then be in a position to exchange on the house with a bank account available for the receipt of the house proceeds as well as other funds frozen at a couple of building societies waiting issuance of Probate.  The Executors account would then be used to pay all outstanding creditors before settling of bequests, paying 20% tax on non ISA interest accrued since death, and finally equal distribution of the remainder to the 3 beneficiaries.  Our preference would be that all 3 of us to be signatories to the bank account, with requirement of 2 of us signing off payments over £1000

Nationwide and Skipton  My first approach was to the Nationwide where the biggest amount of her savings is being held.  They no longer offer Executors bank accounts (though I was told they used to).  I then approached Skipton BS who also hold some of her savings.  Same story.

Lloyds  I approached Lloyds where my mother used to hold a current account before her death.  This was closed and the money released on presentation of her death certificate.  On visiting my local Lloyds branch, I was advised to phone their bereavement service and given a booklet.  I phoned and was advised that they could start the process before grant of probate, but this needed to be done at branch level with all executors named on Probate needing to present themselves at a Lloyds branch together, at the same time.  My sister and brother live in different parts of the country, with my brother particularly a long way away currently with mobility issues After several phone calls with the staff giving differing interpretations of their rules, it was clarified that we could appoint 2 of us as signatories to the bank account who would have to present themselves together at branch, but if the 3rd executor was not a signatory to the account, only identification would need to be confirmed and this could be done separately at another Lloyds branch.  However, the first available slot at my nearest branch was over 4 weeks away.  My sister tried in her area and the wait was even longer….

HSBC  I was advised they do Executors accounts, but you need to currently hold a personal account.  None of us do.

Santander and Metro  Advised that they do not offer.

Barclays  Advised that they offer but can only start the process on issuance of the Probate Grant.

NatWest Initially, told no problem.  All executors could present themselves at different branches.  None of us presently hold bank accounts with NatWest, but I was quickly able to open one in my own name online.  I would then need to convert this account to an Executors Account by way of an Executors Mandate signed by all 3 of us, and at the same time I could add my sister and brother using their ADD NEW PARTY to EXECUTORS ACCOUNT Form.  My sister and brother would need to present themselves with this Form at their local NatWest branch and prove ID.  I was also advised this account would be immediately available to receive funds but the Grant of Probate would be needed before we could use it to pay out.  Hallelujah.  Sounded perfect.  But then hit a stumbling block.  You can only convert to an Executors Account before Probate by presenting both death certificate along with original or certified copy of the Will.  Of course, the original Will has been presented to the Probate office so not available.  Although I have a COPY of this Will, it is not certified. 

Why cannot these accounts be interest bearing?

I don’t know if this applies to all Executors Bank Accounts but both NatWest and Lloyds advised these accounts are not interest bearing and there appears to be no solution like a linked Savings Account to deposit funds.   If I had used a solicitor to obtain probate, they are able to use their own trust accounts and have to apply ‘fair’ interest.  Bearing in mind that it is advised you wait 6-10 months before distributing funds from an Estate in case of any challenges to the Will, it is unfair.

Solicitors Rules for Release of Proceeds

I also read, but this is not from my experience (yet!), where there is Probate, solicitors are loathed to release house proceeds to personal or standard bank accounts.  One solution more than one of the banks suggested, was not to bother with an Executors Account at all, but have the funds released into a standard joint account.  Most joint accounts with banks only allow 2 people,  so potentially my sister and I could open a joint account, but the Probate is being granted to all 3 of us, and without a PA15 resignation from my brother (which we don’t want to do), that again appears to be a stumbling block.

 

Any advice would gratefully be received.

 

 

 

Sarahspangles

You’ve highlighted the issues. In similar circumstances my OH and his brother used a standard joint account with a linked online savings account. For estate transactions only. I’m not sure what is special about an Executor’s Account.

The only issue that this created was that the interest on the linked savings  was reported to HMRC as being interest payable to OH/his brother. HMRC accepted a simple letter from OH that the interest belonged to the Estate, and the tax on interest was duly paid from the account before it was closed.

Barkin

When my Dad died in 2022 I just used one of my "spare" personal current accounts, and kept impeccable records for everything. 

JGB1955

Barkin said:

When my Dad died in 2022 I just used one of my "spare" personal current accounts, and kept impeccable records for everything. 

Likewise - as long as both/all executors agree, there isn't really a need for a specific Executor's account.  Some might suggest that, in the event of your early demise, the accounts become part of 'your' estate.  As long as you have kept good  records this isn't really a concern.

p00hsticks

JGB1955 said:

Barkin said:

When my Dad died in 2022 I just used one of my "spare" personal current accounts, and kept impeccable records for everything. 

Likewise - as long as both/all executors agree, there isn't really a need for a specific Executor's account.  Some might suggest that, in the event of your early demise, the accounts become part of 'your' estate.  As long as you have kept good  records this isn't really a concern.

Whilst true that in the event of your death the money would fall into your estate, it would be balanced by an equal and opposite debt owed from your estate to the one to which you were executor.

as to the headline question of why an executors account is so difficult to open - what's in it for the bank ? They probably see it as a a lot of paperwork for an account this is probably going to open for a relatively short amount of time (or alternatively left hanging around for years with insignificant amounts of money left in it) with no opportunity for upselling other products to the customer,,,,

DiamondLil

It's a few years ago, but I was able to open an executor account with TSB.

EssexExile

I used an executor account at Santander when my father-in-law died but did it all using my own account when Dad died.

Hattie627

I recently wound up my late mother's Estate. She died in August 2022. Scottish domicile. Simple Will leaving everything equally between me and my only sibling, both of us are also executors. 

I did (am doing) the winding-up myself on behalf of me and my fellow executor. 

After valuing Estate and paying inheritance tax (I managed to obtain release of sufficient assets into cash pre-probate to pay £68K IHT but that was a slow process) and getting IHT clearance, I applied for Confirmation (Scottish equivalent of grant of probate/administration). Applied to Scottish Courts Service in March 2023 and Confirmation granted within 7 working days, as per their service target (wonder why does it take so long to get probate in England? in Scotland the original Will, inventory/valuation of estate prepared by the executors and IHT paperwork are examined by a (non-legally qualified) commissary clerk, should take maximum of 30 minutes in most cases, if all ex facie in order, Confirmation document is granted and signed by the commissary clerk for issue to the executors, no judge involved, except maybe in very complex cases, often wonder what the probate process in England actually involves, other than delay, worry and expense?).

After Confirmation granted, I ingathered the remaining estate. I considered opening an executors' bank account but I knew it would be difficult and time-consuming, so didn't bother. Placed all realised cash proceeds in a spare personal current account in my own name, and distributed to my sibling and to myself from there. Kept meticulous records (absolutely key).

No house to sell (house being conveyed by the executors to me as an individual, as part of my beneficial share of the estate).  I'm doing the conveyancing work myself but hindered by Scottish Land Register people who don't like dealing with non-solicitors and are unhelpful to the point of obstructive, but I refuse to pay a conveyancing fee plus VAT). I will get there!

Two suggestions for OP:-

(1) Could the original Will be "borrowed" from probate registry for (say) 48 hours to enable a certified copy to be made? Is there a procedure for this? Maybe phone probate registry and inquire?
(2) Maybe speak to the solicitor you are instructing in the house sale; is an executors' bank account absolutely necessary for the paying out of the sale proceeds? Is there a way around this? Maybe if the executors sign a mandate to the solicitors instructing release of the proceeds to your personal account and undertaking to indemnify the solicitors should any claim later arise from any party?


Sorry to hear of your difficulties and kudos to you for taking on the administration of the estate. 


Edited to add: your conveyancing solicitor will be bound by stringent Client Money Account Rules. it may be that an executors' bank account is necessary for paying out the proceeds of the house sale under the Rules. If an executors' account is not required by the Rules, I can't see why there should be any difference between a personal account in your sole name and a personal joint account, so long as all executors have given a mandate to the solicitor to pay out to an account which is not an executors account.

Hoenir

PennySF56 said:

Bearing in mind that it is advised you wait 6-10 months before distributing funds from an Estate in case of any challenges to the Will,

 

 

Once probate is granted. Place a deceased estates notice in the London Gazette (and possibly also local newspapers). Creditors then have 2 months and 1 day to make a claim against the estate in England and Wales and an advised 6 months to make a claim against the estate in Scotland.  

badmemory

Are all executors beneficiaries & do they trust one another is the first question.  Then if there is available money then pay the debts, why wait.  Then as other money comes in give to the beneficiaries.  Keep good records so that you can share them as you go along.  When I did my mother's the money would come in & would be gone the same day unless it was too much for the bank to allow the transfer.  Believe it or not you can do a transfer at 11.50pm & then another at 0.05am.  I thought I would have to wait 24 hours.  If you have been managing the finances for a couple of years then the London Gazette is irrelevant.  Also even if something does crop up, which is unlikely, as beneficiaries & executors you are all responsible anyway so it is pretty much irrelevant.

I suspect that the whole business of the executors being the beneficiaries is one of the reasons why the banks no longer do those accounts.  If the executor is on the ball the money doesn't stay there long enough for them to make any money out of our money stuck there.

wmb194

PennySF56 said:

Why do many banks not offer, and others make very difficult to open.  Why are they not interest bearing?  More and more people are not using solicitors to obtain probate, but the banks are not giving an easy vehicle to open an Executor/Administrator account for Estate proceeds.  All the banks appear to have different rules for opening these kind of accounts, if they offer them at all.

Background

Our mother died in March leaving her Estate equally to her 3 children, my sister, brother and myself also named in her Will as executors, after a few small bequests. 

As the estate was worth under £1 million, no inheritance tax was due after transfer of her late husband’s NRB/RNRB to the Estate.  I had been administering her finances with LPA for a few years so felt confident to apply for IHT clearance and probate on behalf of the 3 executors.

We received IHT clearance end May and our probate application was acknowledged mid June.

In July we accepted an offer for her house.  Probate is likely to be granted by the end of September if within the current 16 weeks wait.  Solicitors have been instructed for the conveyance.

Opening an Executor Bank Account Because of the sale of the house, I feel it prudent to apply for an Executors/Administrators Bank account before Probate is granted, though clearly it is understood this would be inactive until receipt of the Grant of Representation.  We would then be in a position to exchange on the house with a bank account available for the receipt of the house proceeds as well as other funds frozen at a couple of building societies waiting issuance of Probate.  The Executors account would then be used to pay all outstanding creditors before settling of bequests, paying 20% tax on non ISA interest accrued since death, and finally equal distribution of the remainder to the 3 beneficiaries.  Our preference would be that all 3 of us to be signatories to the bank account, with requirement of 2 of us signing off payments over £1000

Nationwide and Skipton  My first approach was to the Nationwide where the biggest amount of her savings is being held.  They no longer offer Executors bank accounts (though I was told they used to).  I then approached Skipton BS who also hold some of her savings.  Same story.

Lloyds  I approached Lloyds where my mother used to hold a current account before her death.  This was closed and the money released on presentation of her death certificate.  On visiting my local Lloyds branch, I was advised to phone their bereavement service and given a booklet.  I phoned and was advised that they could start the process before grant of probate, but this needed to be done at branch level with all executors named on Probate needing to present themselves at a Lloyds branch together, at the same time.  My sister and brother live in different parts of the country, with my brother particularly a long way away currently with mobility issues After several phone calls with the staff giving differing interpretations of their rules, it was clarified that we could appoint 2 of us as signatories to the bank account who would have to present themselves together at branch, but if the 3rd executor was not a signatory to the account, only identification would need to be confirmed and this could be done separately at another Lloyds branch.  However, the first available slot at my nearest branch was over 4 weeks away.  My sister tried in her area and the wait was even longer….

HSBC  I was advised they do Executors accounts, but you need to currently hold a personal account.  None of us do.

Santander and Metro  Advised that they do not offer.

Barclays  Advised that they offer but can only start the process on issuance of the Probate Grant.

NatWest Initially, told no problem.  All executors could present themselves at different branches.  None of us presently hold bank accounts with NatWest, but I was quickly able to open one in my own name online.  I would then need to convert this account to an Executors Account by way of an Executors Mandate signed by all 3 of us, and at the same time I could add my sister and brother using their ADD NEW PARTY to EXECUTORS ACCOUNT Form.  My sister and brother would need to present themselves with this Form at their local NatWest branch and prove ID.  I was also advised this account would be immediately available to receive funds but the Grant of Probate would be needed before we could use it to pay out.  Hallelujah.  Sounded perfect.  But then hit a stumbling block.  You can only convert to an Executors Account before Probate by presenting both death certificate along with original or certified copy of the Will.  Of course, the original Will has been presented to the Probate office so not available.  Although I have a COPY of this Will, it is not certified. 

Why cannot these accounts be interest bearing?

I don’t know if this applies to all Executors Bank Accounts but both NatWest and Lloyds advised these accounts are not interest bearing and there appears to be no solution like a linked Savings Account to deposit funds.   If I had used a solicitor to obtain probate, they are able to use their own trust accounts and have to apply ‘fair’ interest.  Bearing in mind that it is advised you wait 6-10 months before distributing funds from an Estate in case of any challenges to the Will, it is unfair.

Solicitors Rules for Release of Proceeds

I also read, but this is not from my experience (yet!), where there is Probate, solicitors are loathed to release house proceeds to personal or standard bank accounts.  One solution more than one of the banks suggested, was not to bother with an Executors Account at all, but have the funds released into a standard joint account.  Most joint accounts with banks only allow 2 people,  so potentially my sister and I could open a joint account, but the Probate is being granted to all 3 of us, and without a PA15 resignation from my brother (which we don’t want to do), that again appears to be a stumbling block.

 

Any advice would gratefully be received

So open an account with HSBC and when that's ready open an executor's account.