When assets get frozen, who suffers? The beneficiaries are the ultimate sufferers but along the way. the executors may also find themselves in a bind. Here’s an old but interesting story from an online newspaper:
KEITH WEBB found he had a battle on his hands after he was appointed an executor of his late uncle’s estate in April.
To help to pay initial death duties of £105,000 he asked Royal Bank of Scotland (RBS) to release £103,000 lying in a Power of Attorney (POA) account that he managed on behalf of his uncle.
However the RBS branch in Winchester said he could not have access to the money as all accounts were “frozen” at the time of an individual’s death and would remain so until probate was granted.
Mr Webb replied that he was in an impossible situation. He would be unable to obtain probate until he had paid the first tranche of death duties, but could not obtain the money to make the payment because the funds had been frozen by RBS until probate had been granted.
After a month-long battle Mr Webb’s solicitor finally persuaded RBS that it could release funds from the POA account to pay taxes under the same proviso that allows money to be taken out of a deceased person’s estate to pay undertaker’s bills.
An RBS spokeswoman says: “The money should have been released sooner and we apologise to Mr Webb. The information he was given at branch level was wrong. We have, in fact, brought in a new system to tackle the problem he has highlighted.”
She says that last year the Law Society, Inland Revenue and major banks all agreed to operate a new method of allowing funds to be unfrozen from an estate to pay tax while ensuring that it went specifically to the Revenue and nowhere else.
A D20 form was produced in March 2003, which allows executors such as Mr Webb to pay inheritance tax demands by completing the form, after which the bank makes the payment directly to the Revenue.
The RBS says: “It appears that, in Mr Webb’s case, we failed to follow the new procedure. This only came to light after the matter had been brought to our attention at a higher level.
“We can only apologise to Mr Webb for his experience. We do have new guidelines and procedures in place.”