Bank closed ISA in error

marymck

Hello my husband passed away recently and I contacted his bank (Nationwide) bereavement team. I followed their instructions to complete a form to close his Flexaccount and specifically asked that they keep his ISA in place until I decide what to do with this. That instruction was over the phone (I recorded the call) and in writing on the form, as they instructed me to do. I.e. I wrote on the form: "Please only close the Flexaccount at this stage, as I need more time and advice to decide about my husband's ISA".

I have just logged into my Nationwide account to find that they have closed BOTH my late husband's accounts (Flexaccount AND ISA) and transferred all the money to my Flexaccount.

Not good to discover this at any time, but especially so on a Sunday evening!

I shall of course phone the bereavement team in the morning, but where do I stand? It's their mistake. They went against my instructions. Can I insist they reinstate my late husband's ISA exactly as it was before their blunder, with no loss of interest and no complications or implications for ISA allowances for me? 

Eventually I will probably reinvest this inheritance in another ISA but he also has one with another bank, which I can't access until after probate. After probate I want to reinvest both these ISAs plus some cash from his drawdown pension in ISAs in my name but I believe it all has to be done in the same tax year and I have no idea how long probate will take.

I fear Nationwide have dropped me in the proverbial. 

xylophone

https://forums.moneysavingexpert.com/discussion/comment/81697699/#Comment_81697699

marymck

Thank you xylophone. I followed your link to the other thread. Of the links in that other thread  the first one - the government one - I had already read and I'm afraid I didn't understand it, as it seems to be written for fund managers and I couldn't get my poor head around it.

Maybe I'm tired, but I didn't really understand the rest of the thread either. Am I right in interpreting the comments on that thread as saying even though Nationwide has closed and cashed in my husband's ISA that I can still open one in my name up to that value with another provider? It's £42k. 

He also has another ISA of about the same value with NS&I but I have to wait for probate for that and also to access his drawdown pension. 

So I had planned to wait till after probate to do them all, leaving both his ISAs in place to maintain their tax free status until probate was granted and I could reinvest, which may not be this financial year. I thought I could only claim the additional ISA allowance (about 42kx2) in one financial year, not split it across two?

I also plan to add £20k (my annual ISA allowance) from his drawdown pension to the ISA pot as I believe I can cash in all the drawdown pension tax free.

I'm cross with Nationwide as I was already struggling trying to learn all these rules and now they've made it even more complicated.

I'm jolly glad I recorded our phone conversation though, it's pretty unambiguous!

friolento

In short, you can open an inherited ISA (APS ISA) for the £42k, in addition to a normal ISA for your £20k. You can also open a further APS ISA for the other inherited ISA money. The APS ISAs can be with providers of your choice, though each of these may limit you to just one APS ISA.


 https://moneyfactscompare.co.uk/isa/guides/the-rules-on-inheriting-isas/


Nationwide should not have paid out your late husband’s ISA to you and needs to revert the transaction. If they are being difficult about it, raise a formal complaint with them. 

marymck

Thank you friolento. That seems to confirm that it all has to be done in the same tax year, apart from the additional 20k. 

So I need to persuade them to reinstate my husband's ISA exactly as was. Then I can stick to my original plan and once probate is granted I can arrange a transfer of my husband's two ISA pots to two new ones in my name.

I'm feeling shaky now through stress and lack of sleep. I used Nationwide's online chat last night, before I posted here. It was a real person - Salman - not a machine. He told me the bereavement team office opened at 8am. I phoned on the dot.  They don't open till 9. A peachy start to the day. No wonder my hair's falling out.

p00hsticks

marymck said:

Thank you friolento. That seems to confirm that it all has to be done in the same tax year, apart from the additional 20k. 

I'm sorry for your loss.

I'm not sure where you are getting the idea that it all needs to be done in the same tax year from - the link provided states that .... 

You must apply for an APS within certain time limits. These are:

•  Within 180 days of beneficial ownership passing to the surviving spouse or civil partner for ‘in specie’ transfers (where investments are moved without selling them first)

• Within three years of the date of death for cash subscriptions
• If later than three years, within 180 days of the completion of the administration of the estate.

So you have three years from the date of death, or possibly longer if there are delays in obtaining probate and completing the administration.

I've literally in the last week arranged a transfer of my late father's cash ISA to my mother via an APS, eighteen moths after his death.  As he died just a few days before the end of the 2023-24 tax year, it would have been very unfair if it was something that was only allowed in the same tax year.    

marymck

Hi poohsticks. I knew I had 3 years to do it, which is partly why I'm so upset with Nationwide. But I thought that in order to use the APS it had to all take place in the same tax year and the link seemed to me to confirm that as the link also says:

"Any ISA funds transferred as an APS keep their tax-free status and count as a one-off ISA allowance that's granted to the surviving spouse or civil partner for that tax-year only."

So am I interpreting that wrong? Can I in fact reinvest some or all of my husband's Nationwide ISA in a new ISA in my name in this tax year, plus my 20k. And then do the same with his other  (NS&I) cash ISA in the next financial year?

p00hsticks

marymck said:

Hi poohsticks. I knew I had 3 years to do it, which is partly why I'm so upset with Nationwide. But I thought that in order to use the APS it had to all take place in the same tax year and the link seemed to me to confirm that as the link also says:

"Any ISA funds transferred as an APS keep their tax-free status and count as a one-off ISA allowance that's granted to the surviving spouse or civil partner for that tax-year only."

So am I interpreting that wrong? Can I in fact reinvest some or all of my husband's Nationwide ISA in a new ISA in my name in this tax year, plus my 20k. And then do the same with his other  (NS&I) cash ISA in the next financial year?

I didn't have to deal with multiple ISA's , just the one, but my understanding is that the APS works a bit like an ISA transfer. You apply for the APS  (in my case I also had to apply for a new ISA for my mum as she didn't have one) and once applied for it's effectively a one-off extra allowance for that tax year only. So once the transfer has completed mum's new ISA will have the £30k that was in Dad's Isa plus an extra £20k of her own money added to it this year, but next tax year she'll only be allowed to add her own £20k to it (assuming the current rules remain the same after the budget).    

So the 'for this tax year only' means that it's just a one-off additional allowance ,not something you get every year going forward. . 

marymck

Hi poohsticks that is what I thought i.e. it's a one off allowance. That's why I wanted to wait till after probate. I want to do both ISAs in the same tax year.

What you did for your mum is basically what I'm trying to do, but with two ISAs  rather than one.

I can't access his NS&I ISA without a grant of probate. 

When I first contacted Nationwide's bereavement team they said I needed probate to access any of his Nwide accounts. Because I had big bills to pay I later asked if they'd let me have an advance. The answer was no, but they now said I didn't need probate after all! 

So I arranged to close his Flexaccount but leave the ISA untouched and in place for now.

I don't want to rush to close the Nwide ISA because if probate doesn't get granted until the 2026-27 financial year and I've used APS in 2025-26 to reinvest my husband's Nationwide, I'm assuming I won't get another APS in 2026-27 for the NS&I one.

I've just spoken to Nationwide's bereavement team. They admit closing the ISA was their error but don't think they can reverse the transaction, just open a new ISA in my dead husband's name.  They're going to phone me tomorrow. I fear they're going to completely screw me with the Inland Revenue.

friolento

I don't believe you have to do both inherited ISAs in the same tax year.

You can choose different providers for the the APS, and each of the ISAs has its own legal time limits, as @poohsticks mentioned.

friolento

marymck said:

I've just spoken to Nationwide's bereavement team. They admit closing the ISA was their error but don't think they can reverse the transaction, just open a new ISA in my dead husband's name.  They're going to phone me tomorrow. I fear they're going to completely screw me with the Inland Revenue.

Good that Nationwide have admitted they made a mistake. Now it is down to them to fix the issue they have created - don't take any bull from them. As I already said, raise a formal complaint if they are being difficult. 

NB. The Inland Revenue ceased to exist in 2005. Only to be replaced by the HMRC, mind.