£1 billion left locked in bank accounts by deceased without wills

Almost £1 billion will be left abandoned in bank accounts this year alone by people who die without a will.

According to the rules of intestacy that dictate the distribution of assets when someone dies without a will in place, the banks must freeze their accounts until a beneficiary is decided.

However, banks are allowed to release cash if it amounts to less than a certain amount - which is determined at the banks' discretion.

Solicitor firm Simpson Millar says the amount banks are willing to release is going up quite quickly - from an average of £5,000 in 2014 to between £20,000 and £30,000 in 2015, depending on the guidelines of each individual bank.

Read more: how changes to the rules of intestacy could affect you

SHORT-CHANGED

If the sum involved is more than the bank's own limit, those sorting out the deceased's estate will have to apply for a letter of administration from the government.

Simpson Millar filed a Freedom of Information request to Her Majesty's Courts and Tribunals Service, and found that by 31 August 2015, 26,943 letters of administration had been granted - meaning there were likely many cases where the deceased left at least £20,000 in a single bank account.

This implies that, if the trend continues for the rest of the year, £800 million at the very least will have been trapped in the bank accounts of people who died intestate.

Assuming many people will have substantially more than that, the true figure could easily surpass £1 billion, and Simpson Millar believes it could be quite a bit higher.

Research published earlier this year found that most adults in the UK lack wills, including three-quarters of people in their 30s.

Sian Thompson, head of wills and probate at Simpson Millar, warns that having this amount of cash sitting unclaimed can be a source of serious family disputes.

'A widespread lack of formal legal arrangements and a rise in successful court challenges have already led to an upsurge in disputes over inheritances,' she says.

'The intestacy rules dictate whom the money should go to in the absence of a will. But banks releasing large sums of money without a grant of representation is making it easier for one relative to short-change another.

'£20,000 is a lot of money for most people, and trying to agree how to divide it can all too easily be the cause of an unnecessary family rift.'

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