Banks and financial institutions often request a grant of probate (where there is a will) or letters of administration (where there is no will) before they will release monies held in a deceased customer’s account.

The requirement for probate or letters of administration is a form of risk management. Banks will request that they be given a copy of a grant of probate or letters of administration before they will release monies from a deceased estate account.

You may be thinking “Why isn’t a copy of the will enough for the bank?”. Reasons why the bank may not be satisfied with only a copy of the will, and insist on being given a copy of the grant of probate or letters of administration, include the possible existence of a newer will, possible identity fraud, and forgery.

Banks will often release funds without a grant of probate or letters of administration when the balance held by the bank is below a threshold amount (e.g. $15,000). In these circumstances, a bank may release funds to close family members who have signed an indemnity form protecting the bank from future legal claims. Each bank has its own risk tolerance and policies regarding waiving the requirement for probate: the bank exercises its discretion in deciding whether to waive this requirement.

Forms of accounts

Bank accounts are usually held as either:

1. Joint bank accounts

Due to the “right of survivorship”, probate is not required for the release to a surviving account holder of monies held in a joint bank account. Once a bank is notified of and is satisfied as to the death of a joint-account holder, the surviving account holder usually becomes the sole account holder, irrespective of any instructions to the contrary in the deceased account holder’s will; or

2. Solely held accounts

Each bank has a threshold amount above which they require a certified copy of probate or letters of administration. If the amount the bank holds is above the threshold amount, it usually requests a copy of the grant of probate or letters of administration as a pre-requisite to releasing monies held in one person’s name.

Authorities to access accounts

Unless and until a bank is formally informed of the death of the account holder, the deceased’s accounts remain operational and third party authority holders are able to access a deceased account holder’s funds.

A third party authority holder should notify the bank of the passing of the account holder and formally ask the bank to release monies as required. A third party authority holder might have the practical ability to access the deceased’s funds but they would not usually have a legal right to access those funds prior to a grant of probate or letters of administration. Accessing deceased estate funds without obtaining the bank’s formal approval may have legal repercussions.

Where do the funds lie?

For probate and letters of administration applications, it is important to determine the “location” of the bank account. This determines which state’s supreme court has jurisdiction to issue the grant and, consequently, which legal processes and fees will apply. A bank account’s BSB number usually shows where an account was set up and where the funds “lie” for the purposes of probate law.

Deceased estate bank accounts

Upon being advised of the passing of an account holder, a bank normally “freezes” accounts held solely in the name of the account holder. Those accounts will usually still be able to receive funds, but access to the accounts will be denied until the executor or administrator has given the bank a certified copy of the grant of probate or letters of administration. Monies will usually be released on request by the deceased’s family members to cover any funeral and legal expenses.

Deceased estate bank accounts can bank cheques made payable to the “estate of the deceased”.

Where to now?

It is important to make reasonable enquiries as to what assets the deceased owned at the date of death so that you can make an informed decision about whether you need a grant of probate or letters of administration. Contact us if you are unsure about the process. We can assist you to apply for a grant of probate or letters of administration.