Probate experts discuss the rising millions of unclaimed money
Countless millions of unclaimed money sitting in probate files has become an increasing concern in the industry.
The five high street banks declared that £137 million of unclaimed money laid dormant (which was monies laid dormant for 15 years plus) in 2019. This figure is growing exponentially, with banks and building societies increasing by £100 million per annum and pension pots stand at £20bn, with FCA reporting it’s increasing annually.
It is felt that there is a total unawareness of this figure and its growth and more encouragement was needed for consumers to think about what assets they have and record them.
There is concern that due to people moving around, changing jobs, working abroad, it is difficult to keep track of assets, especially pensions. There was also an argument whether due diligence and searches were not as good years ago and there was a belief that there would be a lot of money sitting in countless closed probate files, with millions and millions of money probably belonging to beneficiaries in these files.
Finances have now become more important than ever since the pandemic. So there needs to be protection for beneficiaries to be able to re-open dormant probate files as there is a duty to find assets for clients.
Today’s Wills and Probate asked probate professionals in the sector their views. We asked whether they were surprised by the figure of £137 million of unclaimed assets, why they think this figure is growing at an increased rate, what can be done to reduce this figure, and how they ensure no asset is missed in order to maximise the value of their client’s estate.
STEP member Paul Saunders TEP commented. He said:
“The value tied up in these “lost” assets is far more than many might even imagine. The Government has been in consultation to extend the Dormant Assets Scheme to a wider range of assets, such as shares, and if this comes about there will be even greater value involved. The re-purposing of these assets via the Dormant Assets Scheme, channelling them to charity to benefit the wider community, cannot not make up for the economic loss to the original owners, or their families. This will be especially so where pension savings are involved. In general, the various asset-holding bodies are not adept at tracking down “missing” clients, and GDPR is no doubt inhibiting the extent to any enquiries they might make. Consideration might be given to licensing organisations to trace those clients, including allowing them to access data to assist in such tracking. For example, where pension funds are involved, the licence could include limited access to the National Insurance database, as the client will normally have had to provide the pension provider with their National Insurance number (which is personal to the individual).”
Jade Gani, solicitor and head of wills and probate at Aston Bond further commented. She said:
“£137,000,000.00 in old unclaimed assets across 5 banks is a staggering amount, whichever way you look at it. But I think we need to examine the data a bit more: are these accounts that had smaller sums and they were not notified of the death, perhaps because everything else was dealt with on a ‘small Estate’ basis; or do these relate to larger accounts that, for some reason, were not linked to the Deceased or missed when they were notified of the death? If the former, then the banks are only guilty of inaction and poor housekeeping. If the latter, they have a great deal of explaining to do and should at least indemnify the Personal Representatives from claims against them; it would be unconscionable for Personal Representatives to be held responsible if they dutifully notified the banks, but were provide inaccurate information by them on which they reasonably relied.
“As more banks open and investments continue to diversify, we can assume these figures will continue to rise if action isn’t taken. This requires work both on the part of the banks and investment providers, but also with the individuals who take out the accounts or investments.
“There isn’t one infallible method to ensure nothing gets missed, but rather a series of actions that can help dramatically reduce the risk an asset is overlooked, such as:
a. Ensuring you take detailed notes on the Client’s assets when they come to prepare their Will;
b. Confirm those notes in writing to the Client, so they can check all is in order;
c. Encourage your Client to keep an ‘asset log’ and provide a template if required;
d. Stress the importance of your Client keeping in good contact with you and updating you when they add/diversify assets;
e. Encourage your Client to keep good records and/or discuss with their nearest and dearest what assets to expect or where to find information about them, i.e. the ‘asset log’;
f. When your Client dies, educate the Personal Representatives on their duties to beneficiaries and what might happen if they fail to collect in all the assets;
g. Let the Personal Representatives know about asset search providers who can help track down any missing assets;
h. If required, wade through the Client’s personal papers for evidence of any other assets; and
i. Always ask asset holders to search for any other records under those details and, where possible, check bank statements for anything you might have missed.
“Hopefully, if banks take action and are abiding by GDPR rules whilst also utilising advances in technology effectively, then this could help to dramatically reduce this figure in the future.”
Louise Sackey, solicitor at IDR Law added:
“I think that unfortunately this is an issue that will only increase in time with many accounts now being opened online and having no paper statements.
There are services such as My Lost Account (https://www.mylostaccount.org.uk/faqs/faq-26#faq-26) which is free but will only locate dormant accounts (those not used for 15 years) and can’t be used to trace any active accounts. There is also the Pension Tracing Service provided by HMRC that enables you to search for and locate pensions. Experian also run the Unclaimed Assets Register and offer an asset tracing service for £25 https://www.uar.co.uk/. Professional advisors should really consider using these as matter of course especially the free ones.
“Going forward it would be helpful if when people are drafting their wills, they are encouraged to think about what would happen if they were to die unexpectedly. Being a contentious probate solicitor, we often see circumstances where people are left with no access to funds or information in an already difficult time, especially if their partner dealt with the finances. Often a pension can be the only immediate source of income for the Deceased’s family, but this is more difficult if they do not have details of the Deceased’s pension. A folder or information sheet with bank account details, pensions, insurance policies could often help in the circumstances. It is also good opportunity to record passwords for email or social media which often may hold memories worth much more than money.”
Elaine Roche, Director of SFE (Solicitors for the Elderly) and Partner at Kuits Solicitors in Manchester says she’s not surprised by the amount of unclaimed assets in the UK. She said:
“People now transfer their accounts more frequently, have broader investment portfolios, and move around the country and world more. It’s easy for asset holders to lose track and executors can be distant to the deceased so things get missed. The shift to online accounts can also make things tricky as paperless accounts can be harder to trace.
“To reduce missed assets, it’s important for clients to keep an updated list for their executor and ensure banks are updated when accounts are changed or closed. It’s also helpful when clients keep a list of passwords for accounts, updated as needed and, of course, with the information stored in a secure way.
“In terms of making sure no asset is missed to maximise the value of an estate, they key is to be thorough. It’s important to cover all bases, follow up on banking history, check old accounts, conduct dormant asset searches and check any life policies and share certificates even if they look out of date. Usually you might find a few hundred pounds, but when I was a trainee we once found share certificates that turned out to be worth £250,000.”