Executor account or keep money in a seperate current account

CDW

My Dad has some bank accounts which will require a grant of probate, we know inheritance tax will be due, largely from the value of the property. There are two bank accounts beneath probate threshold, that clearly still contribute to the value of the estate, and the banks have said we can close them down. The sensible approach to me is to pay this into a separate current account so the money is not accruing interest in my name and where it can be used for legitimate estate expenses - ongoing utility bills, property maintenance in the lead up to putting it on the market, house insurance etc…with records and receipts clearly kept. To put this money into an executor account would tie out down again until probate is granted. Am I correct in my thinking? Are there any issues I have overlooked. thanks.

p00hsticks

No, I've done exactly as you have - just used a separate bank account of my own and keep clear records of what's gone in and out.

Most banks don;t offer executor accounts anymore, and the one that I know of (Nat West) only turns it from a personal account to an executor one after probate has been obtained.

Technosaurus

Sounds eminently sensible @CDW especially as it sounds like the amounts will be large.

My brother and I just had the most bog standard basic joint current account for Mum & Dad's estate, it wasn't an 'Executor' account as such but it was opened for that specific purpose, and we both had access should we want to check what was in or draw anything out. Also makes it easy for tax purposes on any interest accruing (the basic account didn't pay any)

Given IHT is in play so potentially several hundred thousand pounds, this does potentially throw the curveball of perhaps starting multiple basic accounts to ensure you have full FSCS protection…

p00hsticks

https://forums.moneysavingexpert.com/discussion/comment/82141204#Comment_82141204

It sounds as if the bulk of the estate value is in a property, and the FSCS have a temporary high limit protection value of £1.4 million for six months, so multiple accounts may not be necessary.

Cubicsrube

My co-executor and I opened a new nationwide current account in joint names (she held an account there already, as had our parent). They knew what we were using it for and were incredibly helpful.

We funded it with the under-probate value cash. All expenses on the property were paid out of this account until it was sold, then the proceeds were paid in, along with the funds from selling down her investments. This made it very easy for me to just look at the transactions in the banking app to compile the estate accounts.

danco

If one follows the procedure of just having an ordinary current account, are there any declarations or formal statements that are advisable?

I am thinking of the situation where the executor dies, and it needs to be clear that the funds are not part of the executor's estate.

Or where the funds in the account attract interest, andHMRC needs to accept that this interest is income of the estate, not income of the executor

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82141953#Comment_82141953

I certainly can comment on the impact of placing interest bearing estate monies in an account in the sole name of the executor, where there is no account designation identifying the funds as belonging to the estate.

HMRC will have no idea and take the BBSI report of interest by the bank at face value and tax the executor as if it were their personal monies. We have had reports ( and complaints) on this forum from posters where this has indeed occurred to them, and the hassle involved in getting HMRC to reverse this. Bear in mind the executor has a separate duty to report and pay tax on the interest at estate level and on occassion such interest is entirely tax free if under the £500 estate threshold.

Best advice to avoid this occurring is simply do not have interest bearing monies in an undesignated account.

As to how to safeguard such monies being confused with the executor's personal monies should they die mid administration, probably not a major issue if there is a co executor aware of the situation. However more of an issue in the case of a sole executor operating in isolation and no one ( especially their own executors ) aware of what they are doing.

danco

https://forums.moneysavingexpert.com/discussion/comment/82142021#Comment_82142021

So, one should name the account as something like "Executor re deceased", is that it.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/82142641#Comment_82142641

Absolutely, some kind of marker that ensues no one can confuse the account as being personal to the executor concerned.

It is all very well setting up a convenient account in your own name that you know is purely for executorship business, but think objectively about how such an account would be interpreted by third parties who have not been briefed of its purpose.

Also one has to be that much more meticulous with an undesignated account to ensure you yourself do not inadvertently intermix personal with estate transactions. I tend to be a little concerned of that risk, when people suggest opening secondary personal accounts for estate administration purposes.

NedS

I have a dormant personal account at NatWest that I plan to use for this purpose (I move £1 in and out once a year to keep it active). I understand the account can be "renamed" in the App, although this is just a superficial name label applied for convenience and holds no legal significance. I hold no other accounts with NatWest so am unlikely to confuse it as my own, and the account pays no interest (as is the case for most basic current accounts) so there should be no tax complications from any interest income.

I understand NatWest are one of the few high street banks that do still offer executor accounts. If we still had a branch on the high street, I may be tempted to call in and open such an account, but that is getting increasingly difficult.

KxMx

I currently have an account (a new one that I opened with a bank I've never had an account with) to manage Mum's estate in my name.

I have a spreadsheet of transactions and haven't mixed it with my own accounts in any way.

If ever questioned I can produce the spreadsheet and a death certificate.

Everything would match so I'm not overly concerned.