When I first read that many high street banks had increased the amount of money they would be prepared to close an account with for a deceased customer I thought this was a good idea and would make it easier for families when the estates were small.
However, I started to think about this in more detail. Many people have several accounts in several banks, so what may appear a small estate to one bank as it only holds one account could actually be quite a substantial estate if the deceased had the same amount in 4 or 5 high street banks.
In addition it is not always the executors who register the death and hold the death certificate, in may cases a close family member would do this. They would therefore be able to go to the bank and close the accounts when they were in fact not legally entitled. This increases the potential for unscrupulous people to acquire assets to which they are not entitled.
What makes the situation worse is that no Grant of Probate has been obtained which means that the Will will not become a public document so those entitled to the monies may never know that they should have inherited the funds and what is worse, their ability to find out would be substantially reduced.
I do think in some cases this approach by the bank will be helpful. However, it does highlight the risks of having a blanket rule for all cases. Perhaps it would be best for each case to be decided on its own facts.
However, some banks and building societies will allow bereaved customers dealing with relatively small amounts of money to bypass this admin-heavy task and close accounts with just a death certificate.Each organisation has its own limit on how much it will release without a grant of probate but in general it used to be around £15,000 to £20,000.To help make life easier for those wrapping up a deceased relative’s estate, a number of High Street banks have now increased their limit.Lloyds Bank has raised its limit from £25,000 to £50,000 and Royal Bank of Scotland from £15,000 to £25,000.