Offsetting and death

[ErikaPNP]

When a person dies, debts must be paid in a strict order of priority from the estate. The funeral expenses always have the first call on the estate before any debts of the deceased must be paid, if there are any funds left in the estate. Personal loans and credit card debts are only to be paid once all of the priority debts (such as secured loan or mortgage) have been settled, if there are monies left.

 

I have two questions:

 

1. If the bank have used offsetting to take some money in the deceased's bank account to pay a small unsecured personal loan, are they bound by law to return the funds which they took from the account to the executor if it can be demonstrated that there is not enough money in the total estate to pay the funeral expenses?

 

2. And - Should they have used offsetting at all (immediately on being informed of the death) without engaging with the executor?

[gizmo111]

When a person dies, debts must be paid in a strict order of priority from the estate. The funeral expenses always have the first call on the estate before any debts of the deceased must be paid, if there are any funds left in the estate. Personal loans and credit card debts are only to be paid once all of the priority debts (such as secured loan or mortgage) have been settled, if there are monies left.

 

I have two questions:

 

1. If the bank have used offsetting to take some money in the deceased's bank account to pay a small unsecured personal loan, are they bound by law to return the funds which they took from the account to the executor if it can be demonstrated that there is not enough money in the total estate to pay the funeral expenses?

 

Yes - they cannot take funds from an estate without probate or letters or administration and the estate being settled properly. The account should have been frozen and any balance paid to the estate.

 

2. And - Should they have used offsetting at all (immediately on being informed of the death) without engaging with the executor?

 

No as above

[ErikaPNP]

That's exactly as I thought - thanks. Do yuo have a link to the relevant legislation so that I can pass this on?

 

Thanks.

[gizmo111]

Lots of info here Dealing with a deceased person's money and property : Directgov - Government, citizens and rights

[dx100uk]

that is VERY out of order.

 

there are strict guideline [already pointed to about this]

 

i would also seek compensation and costs, let your solicitors deal with that, thats wht they are paid for.

 

this happened to a work collegues wifes after the death of her father.

 

she got £1000 back for each case of this happening when a certain four footed bank grabbed over £25k on 2 cards and 2 loans back in 2003.

 

dx

[harrassed senior]

OMG - is nothing sacred!! This will be driving people in droves to keep their cash under the mattress again.

[ErikaPNP]

The lady applied for a funeral payment from the social fund for her son's funeral. It was refused due to the estate held in the deceased's account combined with a small insurance policy. But the bank have taken the majority of funds in his account to offset a loan. The DWP are absolutely correct in their decision, a look at the funeral bill and the insurance policy is enough to satisfy me of that, and told her an appeal against this is fruitless because aside from the estate in the bank, the sum of insurance is enough to cancel out entitlement to the funeral payment. So I can't help her there.

 

I told her to query the bank taking the money because the order of priority is clear in that the estate must meet the funeral expenses first. She told me she has gone to the bank and spoken to them on the phone, and that they have told her that they have acted within the law because they can use offsetting in this circumstance, I don't agree. I need to write a letter for her to the bank (rather than her talking to them on the phone or face to face), to get everything in writing, which they are less likely to deny.

 

Can't find the actual legislation on it - I've found plenty of websites which talk about order of priority, but no legislation. I've searched Oopsi and can't bloomin well find it. It's driving me to distraction. The funeral directors have been very patient but it's only a matter of time before the account is sent to debt collection.

[harrassed senior]

Well tried to find some form of information, but ended up going round in circles.

 

I think from what I have read and personal experience when my daughter died was that when you inform the Bank of the deceased person, the account is IMMEDIATELY frozen, cannot find actual 'law' but pretty much a fact.

 

A request can be made to this bank to release enough funds to pay for the first priority debt which is Funeral Expenses then the balance MUST remain frozen until Grant of Probate or Letters of Administration are issued unless this leaves a balance of £5000 or less which again MUST be paid to the Estate Representative in order that prioritized debts are cleared first. Credit Card Debts come way down the list.

 

Sure you know that already, but it has just been reconfirmed over and over again during my search.

[ErikaPNP]

Thanks very much for trying. You appear to be getting the same results that I am. I'll write up a letter for her asking the bank to confirm their position in writing - which I doubt very much that they will do, seeing as they are doing something they shouldn't be!