Estate Expense Funding is a probate loan to help beneficiaries and executors working through the administration of an estate.
When an individual passes away, the family and friends of the deceased will be grieving. To add to this, there is a number of tasks that have to be carried out at this difficult time. These include the funeral, packing up personal belongings, obtaining probate and winding up the affairs of the deceased.
Banks release up to £5,000 without evidence of obtaining probate
To facilitate this process, banks have released funds up to a certain threshold to Executors or relatives using the proof of a death certificate, without requiring proof that probate has been granted. In recent years there has been a worrying upward trend in the limits under which banks will release funds without evidence of probate. These thresholds have now skyrocketed under Covid-19.
Under S1 of the Administration of Estates (Small Payments) Act 1965 (the Act), a Grant of Probate is not required when somebody dies with assets worth under £5,000. The figure was originally £500 but was changed in 1984 by way of a statutory instrument.
Completing the probate process for estates valued over £5,000
If an estate is worth over £5,000 then a Personal Representative (PR) will need to apply for probate by submitting an application to the Probate Registry. If successful, the Registry will issue the Grant of Representation, which confirms that the PR has the authority to administer the estate.
When banks and building societies release monies without requiring proof of probate, this allows the formal processes to be bypassed. Despite the Act clearly setting the threshold for probate at £5,000, it is silent on the release of funds from bank accounts. Most banks in the UK raised their thresholds in 2015. The move was to enable families to wind up financial affairs more easily, which is an understandable motive.
In 2012 the Law Society, developed together with the British Bankers’ Association and the Society of Trust and Estate Practitioners (STEP), published the Banking Practices Protocol on Estate Administration. The Protocol’s purpose was to provide clarity on the role of banks following the death of a customer. However, the document does not recommend any designated threshold for dispensing account funds without proof of probate.
Threshold amount for sums released without proof of probate varies across different financial institutions
Regardless of the overall increase in 2015, there is no standard figure at which financial institutions insist on evidence of probate. There is still huge inconsistency across the sector, with thresholds ranging from £5,000 to £50,000. Institutions also seem to differ as to the practical application of the threshold. Some apply it to the overall value of the estate; others apply the limit to the figure held by that individual bank. Where institutions release funds on the basis of the amount they hold, rather than the total estate, it can result in particularly high sums being released without probate.
Furthermore, when looking at NS&I, they will let you know if a Grant of Probate is needed after completing a form on their website. However, if the total NS&I savings are £5,000 or over you will be asked to produce a Grant of Probate and the Director of Savings also reserves the right to request a Grant of Probate for savings of any value.
If you, or family or friends here in Cyprus or in the UK, require assistance with administering an Estate, wish to appoint Professional Executors or create a new UK will please contact us, or submit one of the forms below and we will contact you promptly.