Grant Of Representation- The Risks Of Avoiding Probate Or Letters Of Administration

provisions to include in your Will

In his most recent blog, Wills & Probate Solicitor, Keith Baldock-Grimes discusses the issues that can arise from banks not seeing the ‘Grant of Representation’ prior to releasing funds…

Since the pandemic, banks and other financial institutions have been issuing large sums of money to family members without the need to see a Grant of Representation (‘Grant of Probate’ if there is a Will or ‘Letters of Administration’ if there is not). Whilst this might seem convenient, it brings risks that funds are received by the wrong people and perhaps a lack of proper accounting for Inheritance Tax.

Inheritance Transferred To The Wrong Person

Historically, financial institutions insisted on a ‘Grant of Representation‘ to ensure they were paying the funds to the correct person ie the personal representative of the estate. This was an important safeguard as the identity of the personal representative was confirmed by the Court. It may well be with the best of intentions to release funds to families quickly but as the sums are getting larger but there is the potential for unforeseen consequences.

Money could be issued to the wrong person without Grant of Representation, the beneficiaries under the Will or under the laws of Intestacy, might not know the funds have been paid out incorrectly– perhaps leading them to miss out on their share entirely. This could then lead to costly Will and estate disputes.

Inheritance Tax

The usual process is that money in the name of the deceased will only be released for the payment of the funeral account and Inheritance Tax directly to HMRC. You need to pay the IHT before you can get the Grant of Representation and the rest of the estate will be released when the grant has been issued. If large sums of money are freely released without ‘Grant Of Representation’ those in receipt may not then see the necessity to submit an Inheritance Tax return. Failure to submit the return and pay the tax due, where it necessary, is a criminal offence and so the risks are significant.

A Grant of Representation proves that the personal representatives have the legal authority to deal with the assets and liabilities of the deceased and to distribute in accordance with the terms of the Will (or the laws of intestacy if no Will is in place). Without this authority, money could be issued to the wrong beneficiary.

Banks have always issued small amounts of money without a grant. This was usually around £20,000-£30,000, but figures have recently rocketed, and the concern is that ordinary people are failing to observe the full procedures around grant of representation and may be committing crimes that they are not even aware of. Solicitors are often involved in the process as there are complexities to be anticipated and managed and the best advice for anyone in this situation is to get specialist advice.

How Can Timms Help?

If you need advice on this matter please feel free to contact me or one of my colleagues in the Wills and Probate team on 01283 214231 or via email at legal@timms-law.com.