When someone dies without a will in the UK, their estate—including any bank accounts—must be handled according to the rules of intestacy. This means that specific legal procedures are followed to ensure the deceased’s assets are distributed to their rightful heirs. But what happens to the person's bank account in this situation? This article explains the process, from account freezing to accessing and distributing funds, and who is responsible for managing the estate when there is no will.
When someone dies, one of the first steps is to notify their bank of the death. Once the bank is informed, they will freeze the deceased’s bank account to prevent any further transactions. This includes stopping withdrawals, direct debits, and standing orders. The only exceptions may be payments for essential expenses, such as:
At this point, no one can access the money in the account until the estate is settled, and the legal process of administering the estate begins.
If there is no will, the person’s estate is administered according to intestacy rules, and no one can access the deceased's bank account without first receiving the legal authority to do so. The next step is for the deceased’s closest relatives to apply for a Grant of Letters of Administration.
The person who applies for the Grant of Letters of Administration becomes the administrator of the estate. Once the grant is issued, the administrator can present it to the bank and request access to the funds in the deceased’s account to settle debts and distribute the remaining money to the beneficiaries.
The person applying for the Grant of Letters of Administration is usually a close relative, such as a spouse, child, or parent. If more than one person is eligible, they can either agree on who will act as the administrator or apply jointly.
The process involves:
Filing an application: You will need to apply to the Probate Registry for the grant. This involves completing a form and providing details about the deceased’s assets, including bank accounts, property, and debts.
Paying inheritance tax (if applicable): Before the estate can be administered, any applicable inheritance tax (IHT) must be calculated and paid. In the UK, inheritance tax is typically charged at 40% on estates worth more than £325,000. However, specific exemptions may apply, such as assets passed to a surviving spouse or charity.
Receiving the grant: Once the application is approved and the grant is issued, the administrator can present it to the bank to gain access to the funds in the account.
Once the administrator gains access to the bank account, they must use the money to:
Settle debts: Any outstanding debts, including credit cards, loans, or utility bills, must be paid off before the remaining funds can be distributed. The bank may pay off some debts directly, such as an outstanding mortgage with the same bank.
Distribute remaining funds: After all debts and taxes have been settled, the remaining balance in the account is distributed to the deceased’s relatives according to the rules of intestacy.
Under the rules of intestacy in the UK, only certain relatives are entitled to inherit the deceased’s estate, including money in bank accounts. The distribution depends on the deceased’s surviving family members and follows a specific hierarchy:
Spouse or civil partner: If the deceased is survived by a spouse or civil partner, they will inherit the first £270,000 of the estate, all personal possessions, and half of the remaining estate. The other half of the remaining estate is divided among any children.
Children: If the deceased had children, they inherit equally after the spouse or civil partner’s share is distributed. If the deceased left no spouse or civil partner, the children inherit the entire estate.
Parents, siblings, and other relatives: If the deceased had no spouse or children, the estate may pass to the next closest relatives, such as parents, siblings, nieces, or nephews, depending on who survives them.
If there are no surviving relatives entitled under intestacy law, the entire estate—including the money in the bank account—passes to the Crown (the government), a process known as bona vacantia.
If the deceased’s bank account was held jointly with another person, typically a spouse, the account will not be frozen. Instead, the surviving account holder usually continues to have access to the account, and the balance automatically passes to them under the principle of survivorship.
It’s important to note that this only applies to joint accounts. If the account was in the deceased’s sole name, it will be frozen until the estate is administered.
In some cases, probate or a Grant of Letters of Administration may not be needed if the value of the estate is low or the deceased’s finances were simple. For example:
Low-value estates: If the estate’s total value is below a certain threshold (typically around £5,000 - £50,000, depending on the bank), the bank may release the funds without a grant, provided that proper identification and paperwork are provided.
Jointly held assets: If the majority of the assets were held jointly with a surviving spouse or partner, probate may not be necessary, as these assets pass directly to the surviving partner.
In these situations, each bank has its own rules and may release funds without requiring a Grant of Letters of Administration. It’s best to contact the bank directly to discuss their specific requirements.
When someone dies without a will in the UK, their bank accounts are frozen, and the estate is handled according to the rules of intestacy. A Grant of Letters of Administration must be obtained by the next of kin, giving them the authority to access the funds and settle any debts before distributing the remaining money to the rightful beneficiaries.
If you're dealing with the estate of someone who has died without a will, it's important to follow the correct legal procedures to ensure the estate is managed properly. For more complex estates, seeking professional advice from a solicitor or probate expert can help guide you through the process.
For assistance with managing the estate of a loved one or understanding the rules of intestacy, contact a probate specialist to ensure everything is handled smoothly and in compliance with UK law.
