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Sunday, October 6, 2013

How does an executor collect a small bank account without probate?

How does an executor get a small bank account out of the deceased's bank without going through probate? When a small amount of money is at stake, going through the courts to obtain probate could well drain that small account, leaving nothing for the beneficiaries. A frustrated reader wrote to me to ask about an alternate procedure that was proposed by the bank which held a small account in the name of a deceased. Her question and my answer appear below:

"I have been appointed executor of a will of a friend. The only asset is a bank account of only $2,500. The bank is not willing to release this account to me and are saying that without probate the beneficiaries will have to consent to the funds being released to me. I don't understand this thinking.  This has all been very frustrating to me. The bank has been very difficulty from the beginning and is to blame for this lengthy delay. If you can provide direction on where to go from here it would be appreciated. It doesn't make sense to go to court for a Grant of Probate on such a small amount."

You're right that it doesn't make sense to get a grant of probate for such a small amount. In this case, the cost of getting probate would eat up the entire account. Believe it or not, the bank is trying to do you a favour and provide you with an alternate method of getting the money out without the expense of getting probate.

The process you describe is standard among banks. To understand the thinking, you must realize that a grant of probate is a court order that indemnifies a bank who pays out one person's bank account to another person. With a grant of probate, the court is telling the bank to go ahead and that the bank will not be sued if the beneficiaries (who after all, are legally entitled to the funds) come to the bank and try to claim the money. Now you're asking the bank to give you someone else's money without that legal protection.

The deceased's will tells you what to do with the money, but it doesn't protect a bank or anyone else who gives you the money in the first place. The signatures the bank is talking about would be on an indemnity form. It means that the people who would inherit the money agree that it may be paid to the executor.

This may not have been explained to you properly at the bank, or perhaps you simply didn't understand what was said. It's never really easy to work with the intersection of money and law.

I hope this explanation will help you to understand what you are being asked to do, and why.


3 comments:

  1. Billing methods vary, but will attorneys often charge flat rate fees for creating or revising a will, since most wills take about the same amount of time. To handle probate, lawyers generally charge an hourly rate or take a percentage of the estate they’re handling.

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    Replies
    1. I've worked in both eastern and western Canada, and it seems that the vast majority of wills are prepared for a flat rate quoted in advance. When wills become complicated because of complex assets and business structures, lawyers will charge by the hour.

      Lynne

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  2. Hiring a lawyer who specializes in wills, estates, trusts, and probates is a very sensible decision, as it will help ensure that
    everyone has a satisfactory and fair resolution that is in accordance with what their loved one would have wanted. Probate Lawyers Sydney

    ReplyDelete

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