Transcript
Katie: When it comes to cash, people often assume it's the simplest part of their finances. But that's not always the case. How often do families discover savings that they didn't even know existed during the probate process?
Ed: So more often than not, families will come across cash accounts during the probate process that they're not aware of. And it's very easy for this to happen. Cash accounts over multiple providers set up over a long period of time – and it's the same with ISAs, premium bonds, all those sorts of products –
that over a long period of time can very easily be forgotten about.
Katie: And what does it mean for an executor when cash is held across multiple savings accounts?
Ed: The role of the executor in the probate process is to document, find, put together all of these different cash accounts, ISAs, all the different assets.
And quite often, only the property is thought about. The executor really has to dive in and find all of these different assets and report this to HMRC. And HMRC don't take the excuse of 'I didn't know that existed' when it comes to Inheritance Tax.
Katie: So you might take on the role as an executor because of the passing of a loved one, without really realising the length of time the process can take,
the complexity of that process, and actually the stress it can cause.
Ed: Yes Katie, that's exactly the issue. The executor is quite often not a professional executor like you said. It's a member of the family and the executor is going through that same grieving process whilst having to do quite a complex process, which can be made a lot harder and a lot longer, and add layers of cost into it if you don't know where all these cash accounts and different policies are – especially when it spans across many different banking eras and generations.
Katie: I think cash often gets forgotten because people feel it's safe and simple, and it shouldn't be an issue as part of this process until obviously, for tax purposes, it very much becomes one.
Ed: Yes and knowing where they are, how to access them, and how to value them for the executor is really important.
Katie: And is it the number of accounts or simply not knowing where those savings are held that cause the issues?
Ed: So it's a mixture of all of these. I think when it comes to cash, it's the time period that those accounts probably have been set up. It's very easy for records to either have not been kept or lost over that period of time. It's up to the executor to go and find out and access all of these various different accounts. And when they’re spread across lots of different providers, it can take a lot of time.
Katie: So it strikes me that none of this is unusual. It's more a function of the fact that the financial system wasn't set up to handle this level of complexity for cash around the probate process.
Ed: Yes, exactly. And that's why it's probably almost more important just to chat about this with your beneficiaries and explain where your cash accounts are, and what providers they're with. And also the same with your ISAs, premium bonds, those sort of things, and make your beneficiaries and your executor aware of where these assets are – and most importantly, how to access them.
Katie: That's really helpful Ed. Thank you so much.