ISA Transfers on death of a spouse etc

Shylock_249

Please:

I’m trying to understand how ISAs are transferred to a spouse on death and still retain the tax-free wrapper.  Some points/questions:

Points:

We have NO children. I’m 76 my wife is 75.

I have six different ISA providers; my wife has five.

Each ISA amount is above the banks probate limit ranging from 5 to 50k.

I’ve managed to reduce the number of ISAs held to the above numbers by transferring our Stocks and Shares ISAs into cash ISAs and making ISA transfers from some providers into Virgin Money ISA, one is still in process.  Our Virgin ISAs will be: self - 180k, wife - 210k.  I understand this is well above the FSCS figure but I believe Virgin to pretty secure having been taken over by Nationwide. My 6 other ISAs amount to 224k, my wife’s 226k. We have 552k in taxable accounts, 57k in one variable account and 495k fixed, all in joint names – no need for probate?

In total we have 1.4million in cash accounts.

We have made wills, we wouldn’t die intestate.

Questions:

Do all banks/building societies HAVE to allow transfers, can they reject a request?

What happens if they reject a transfer, is there any redress?

If a fixed rate ISA was due to mature on say 1st June but the holder died before that date and they were able to give maturity instructions beforehand would the bank follow its normal procedure and transfer the ISA into a variable rate of say 0.5% and the surviving spouse have no say into the matter until they have probate in their hands?

Does the Probate Office, on request, send out more than one copy of the certificate? I shouldn’t think banks would accept a photo copy.

Is the procedure relatively easy and does it vary from bank to bank?

Is there an idiot’s guide to ISA transfers and probate?

I read but couldn’t understand something about a surviving spouse being able to use their dead spouse’s ISA allowance, how in practical terms could that be done?  The suggestion was that it was for only one year (unless I’m mistaken). If both of us used the full 20k allowance on the 1st day of the financial year and one of us died on 1st July, I’d guess that there would be NO availability?

TIA

 

Keep_pedalling

On the death of one spouse, the surviving spouse effectively gets an additional allowance equivalent to the value of the deceased spouses’ ISA. Even if the provider won’t allow a transfer the whole lot can be cashed in and invested in new ISAs in the name of the surviving spouse.

Limiting where you invest just to avoid needing probate is really pointless, applying for probate is not difficult and it will make life easier for the executors of the surviving spouse. We have gone the other way, one S&S ISA each, probate will be required but only one provided to deal with. 

As for time scales, the inherited ISA allowance must be used within 3 years of death. 

Do you have lasting powers of attorney in place? If not that is something that should be high on your list of things to do, especially for finance. 

eskbanker

Shylock_249 said:

I’m trying to understand how ISAs are transferred to a spouse on death and still retain the tax-free wrapper.  

[...]

Questions:

Do all banks/building societies HAVE to allow transfers, can they reject a request?

What happens if they reject a transfer, is there any redress?

Just to clarify, there is no concept of ISAs being transferred as such from one person to another - ISA transfers are only made between products held by the same person.

The separate Additional Permitted Subscription process covers the basis on which the surviving spouse can use an allowance equivalent to the value of the deceased's ISAs:

https://www.gov.uk/guidance/manage-additional-permitted-subscriptions-into-an-isa

goodread

You apply for probate online, and one of the questions you are asked is how many copies of the grant certificates you require. They were only £1.50 each last year. In practice you just need a few because when you send them on to the banks etc you can always ask for them to be returned once they have taken a photocopy.

Each bank has its own threshold for requiring probate but we found that as one asked for it the others did too. 

Newly_retired

Not too difficult to arrange for a cash ISA. Even before Probate was granted, I was able to open a new cash ISA with Lloyds, the same bank where my husband 's ISA was held, which I also happen to have a bank account with. I was then able to transfer the exact amount of his ISA into it, thanks to the additional spousal allowance, on top of my already used £20K allowance for the tax year.  Once this was all set up and documented, I then transferred the ISA into one with another provider at a better interest rate. The additional allowance is only documented once, it does not need to follow the money.

Wrinklybiker

Copies of probate, death certificate or any other similar document can be obtained as a certified copy by taking the original to a government job centre where most will do them free of charge. 

Shylock_249

Wrinklybiker said:

Copies of probate, death certificate or any other similar document can be obtained as a certified copy by taking the original to a government job centre where most will do them free of charge. 

That's very interesting thanks.  My local Lloyds Bank stopped certifying documents some years ago.

bubieyehyeh

When I helped a relative with this, we found it easiest to open an additional permitted subcription ISA with the same provider, and then request the transfer. The rates on the APS ISAs were generally crap, so once they had transferred they are effectively another ISA, and we transferred them to a higher paying ISAs.

If the current provider does have a APS ISA, you can open a APS ISA with some other provider and transfer to that.

We found you didn't need to immediately do anything for Fixed rate ISA, we waiting till they were approaching maturity, and then asked for APS transfer at maturity. I'm not sure if they wouldn't have charged a early access fee doing it earlier, we didn't since the Fixed rate ISAs were at much higher rates than what was available at the time.