Complication caused by death of beneficiary

[CryptoPlankton]

This is really a scenario that requires a knowledgeable reply rather than speculation please:

A 90 year old single man dies intestate. His only known relatives are his brother and his brother's son. His nephew has a registered Enduring Power of Attorney for his father and applies for probate on his behalf. This is granted and, as per the intestacy rules, he starts to arrange for his uncle's assets to be passed to his father. However, his father dies (about three months after his uncle) before this process is completed. Some of the estate has been passed to his father, some is in his own name (where it is awaiting confirmation of the opening of an NS&I account in his father's name before being moved into it) and some has as yet not been moved at all. The nephew is the sole beneficiary of his father's will (and only living relative).

The surviving character from this story is going to get legal advice as his uncle's estate was significant enough to increase his father's estate beyond the IHT nil rate band (there had been talk of a Deed of Variation with the solicitor involving the Court of Protection). What he'd like to know now is what to do with the various strands of his uncle's estate? Clearly, the part that has been passed to his father should be fine where it is until his estate is dealt with. Similarly, the part still in his uncle's name can wait. However, he is sitting on an uncomfortable amount in his own account. Although the NS&I account became available two day's after the father's death, clearly he cannot transfer into this account even though NS&I have not yet been notified of his father's death. He will ultimately inherit the money, but is there anything he can do before probate has been obtained - even if it is just to redistribute the funds to reduce the risk of having a large sum in one account? Also, how should these three phases of the distribution of the uncle's assets be treated when declaring the father's assets on the probate application?

Any informed views would be very welcome!

Thanks, CP

[Clitheroekid]

Also, how should these three phases of the distribution of the uncle's assets be treated when declaring the father's assets on the probate application?

Dealing with what seems to be the easiest question first there is no difference between the `three phases' for probate purposes. The assets that had been inherited but not yet transferred are just as much a part of the father's estate, and therefore included in full on his probate papers.

However, he is sitting on an uncomfortable amount in his own account.

I don't really understand this comment. If it's in his account already he must have sole control of it, so if he's not happy why doesn't he just move part of it elsewhere? And why is it an `uncomfortable' amount. If it's because it's a large sum it would be quite the opposite to most people!

But in general terms, other than a withdrawal to pay inheritance tax he won't be able to move any money until probate of his father's Will is obtained. However, there's no reason why that should take long - perhaps a month or so if he gets a move on.

[Lootman]

However, he is sitting on an uncomfortable amount in his own account.

I don't really understand this comment. If it's in his account already he must have sole control of it, so if he's not happy why doesn't he just move part of it elsewhere? And why is it an `uncomfortable' amount. If it's because it's a large sum it would be quite the opposite to most people!

My assumption would be that the amount in the account exceeds the amount that is protected under the government's compensation rules - about 70K as I understand it. As you suggest, since the son has custody of this amount, he can split it between accounts or otherwise re-allocate it if that is a concern.

But in general terms, other than a withdrawal to pay inheritance tax he won't be able to move any money until probate of his father's Will is obtained.

It is not that an executor "won't be able to move any money until probate of his father's Will is obtained". But rather that, insofar as such monies are in the custody of financial institutions, then those institutions may be unwilling to release the funds until probate is granted.

However, if that does not apply, and it sounds like it may not apply in this case, then an executor may absolutely move monies and other assets around. The authority granted to an executor by virtue of a Will applies at the point of death, and not upon grant of probate. If, as in this case, the son has both sole POA and sole executorship, then his authority is seamless and continuous.

He just has to be sure that assets are not directed in a way that may cause problems later if those assets have a prior claim on them.

[Clitheroekid]

It is not that an executor "won't be able to move any money until probate of his father's Will is obtained". But rather that, insofar as such monies are in the custody of financial institutions, then those institutions may be unwilling to release the funds until probate is granted.

Ok, for all practical purposes he can't move the money without probate. It's an academic difference.

However, if that does not apply, and it sounds like it may not apply in this case, then an executor may absolutely move monies and other assets around. The authority granted to an executor by virtue of a Will applies at the point of death, and not upon grant of probate. If, as in this case, the son has both sole POA and sole executorship, then his authority is seamless and continuous.

Again, whilst this may be technically true it doesn't happen in the real world. If you try getting Barclays or Hargreaves Lansdown or AXA or indeed any financial institution to release assets to you simply by saying you're the executor, your authority derives from the Will and that you want the assets released before probate's issued you will get precisely nowhere.

Likewise if you were to try and sell property making the same point. It's purely theoretical.

So irrespective of what legal theory says there is not a `seamless and continuous' authority. It stops at death, and for all practical purposes only resurrects at the point of probate being issued.

[CryptoPlankton]

Many thanks, CK. I'd just like to clarify one thing, if I may:

The "uncomfortable amount" does indeed refer to a large sum in his current account. You ask why he doesn't just move it elsewhere. Does this mean that, provided all the relevant monies currently in their three names are declared in the probate application, he is at liberty now to reallocate the part that is in his name for his own long-term benefit (being the sole beneficiary)? Or are you suggesting he should restrict this to something like opening another current account and so just keeping it in a more secure (but still readily accessible) way until probate is granted? It isn't vitally important, but really a case of trying to deal with it all in as efficient a way as possible.

TIA

CP

[Lootman]

Again, whilst this may be technically true it doesn't happen in the real world. If you try getting Barclays or Hargreaves Lansdown or AXA or indeed any financial institution to release assets to you simply by saying you're the executor, your authority derives from the Will and that you want the assets released before probate's issued you will get precisely nowhere.

Likewise if you were to try and sell property making the same point. It's purely theoretical.

So irrespective of what legal theory says there is not a `seamless and continuous' authority. It stops at death, and for all practical purposes only resurrects at the point of probate being issued.

My point was that a grant of probate is required not by virtue of any law limiting what an executor can and cannot do, but rather around the more prosaic and bureaucratic reason that, for certain purposes that you listed, third parties require a grant of probate.

There are practical circumstances where an executor may act without that grant. For instance, in the case of my mother's affairs, I had immediate custody of all her physical assets. I took what I wanted to keep, sold anything else that was of value, and gave the rest away to charity. I didn't need a grant of probate to do that.

Also, I had used my POA to move her financial assets to my own account. Upon her death, I was released from the obligation to use those assets only for her own welfare, and was free to distribute them according to the terms of the Will, again without waiting for probate to be granted.

It's all semantics if you like, but absent a third party demanding proof of probate being granted, an executor is free to distribute all assets as soon as the deceased dies. And anyone who, as in this case, has sole POA and is the sole executor and who is the sole beneficiary, would be prudent to ensure that happens, to avoid needless cost, delay, risk and bureaucracy. Although I realise that would reduce your income stream . . .

Moderator Message:
Please stick to the OP's original questions, and avoid irrelevant ad homimems directed at other posters. (chas49)

[melonfool]

The stuff about wills and executors deriving their powers from the will is irrelevant to the OP's uncle as he died intestate - thus the OP (his father in fact, but the OP acting under the POA he had for his father) will (presumably) be a court appointed administrator, not an executor.

Plus POA stops with death surely? You cannot use POA to move money around after someone has died. Well, not legally.

Bit complicated when the money has gone into the OP's personal account, the bank won't know which is his own and which is the estate's awaiting probate.

Realistically, as the OP is the only surviving relative, no-one is going to complain about how it is handled though as long as the tax is paid properly.

Mel

[DrBunsenHoneydew]

Isn't the "uncomfortably large amount" covered by the £1 million for 6 months rule for FSCS protection?
That scheme does cover Inheritances and Proceeds of a deceased’s estate held by their Personal Representative.

[modellingman]

Isn't the "uncomfortably large amount" covered by the £1 million for 6 months rule for FSCS protection?
That scheme does cover Inheritances and Proceeds of a deceased’s estate held by their Personal Representative.

This is the link to the "temporary high balances" section of the FSCS website: https://www.fscs.org.uk/what-we-cover/q ... -balances/

[Lootman]

The stuff about wills and executors deriving their powers from the will is irrelevant to the OP's uncle as he died intestate - thus the OP (his father in fact, but the OP acting under the POA he had for his father) will (presumably) be a court appointed administrator, not an executor.

Yes, I was assuming that the father did have a Will and that the son is the executor for that estate, but it was not explicitly stated.

Plus POA stops with death surely? You cannot use POA to move money around after someone has died. Well, not legally.

True, although Crypto made a point of stating that the Bank has not yet been notified of the father's death, so the bank will regard the POA as still being valid. That statement led me to believe that the son might intend to use the POA to close the account, in lieu of notifying the Bank abut the death. Technically not allowed, as you note, but if the son is the executor and beneficiary anyway, not a lot of harm would be done if he did.

More generally, it can cause problems if a bank account is closed or suspended too quickly after death. There could be pension payments that are still owed and to be paid, and there may be direct debits to pay bills that would otherwise clutter up probate. In the past I have generally waited a week or two before closing an account in such circumstances, while I took care of such details.

[PinkDalek]

True, although Crypto made a point of stating that the Bank has not yet been notified of the father's death, so the bank will regard the POA as still being valid.

I don't think Crypto mentioned the Bank(s) having not been informed one way or the other and he will know the EPA is no longer valid.

What he did say was "some is in his own name (where it is awaiting confirmation of the opening of an NS&I account in his father's name before being moved into it)". This being some of the monies from the intestate Uncle.

Hopefully someone will suggest to him what to do with the monies sitting in the nephew's account, which was destined for the, newly opened, Father's NS&I account, if anything. This is referenced in his second post in the topic here (which has yet to receive a direct reply):

viewtopic.php?f=2&t=3271&p=31617#p31617

Crypto might also tell us if his concerns are about the FSCS limits or whether it is the fact that, at present, the monies are sitting in current account and earning no interest (unless it one of those that does).

[Clitheroekid]

Does this mean that, provided all the relevant monies currently in their three names are declared in the probate application, he is at liberty now to reallocate the part that is in his name for his own long-term benefit (being the sole beneficiary)?

Sorry, as PD has correctly pointed out I'd overlooked this question.

The short answer to your question is yes. As he effectively owns all the money I would take the pragmatic view that he can deal with it as he sees fit.

[Lootman]

I don't think Crypto mentioned the Bank(s) having not been informed one way or the other

No, he was quite clear, here:

"NS&I have not yet been notified of his father's death"

[PinkDalek]

I don't think Crypto mentioned the Bank(s) having not been informed one way or the other

No, he was quite clear, here:

"NS&I have not yet been notified of his father's death"

NS&I are not a bank https://www.nsandi.com/why-save-with-us.

This may be pedantic to you but is relevant given what you said earlier.

[Lootman]

NS&I are not a bank https://www.nsandi.com/why-save-with-us.

This may be pedantic to you but is relevant given what you said earlier.

You are right, that is pedantic. But CK has since supported the idea that the son can take a "pragmatic approach" here since it is all his money ultimately anyway, so I believe the issue has been settled.

[CryptoPlankton]

Thank you very much for all the replies. The concern was a little of both - i.e. the FSCS limits AND the possibility of making better use of the funds. I was unaware of the "temporary high balances" protection so thank you to the two contributors who mentioned it. And, once again, thank you to CK for his reply to my final question.

I would just like to say that the whole point of posting here was to avoid anything illegal (or even remotely unethical) being done - there was never any question of attempting to use the POA after it ceased to have legal effect.

I very gratefully consider my queries fully answered.

CP