Are ‘Wills’ the next banking scandal?

23rd July 2018

The newspapers reckon that Wills drawn up by banks will be the next big banking scandal.

In the 80’s and 90’s many of the large banks used to make a monthly charge for account facilities which sometimes used to include a free or very cheap will-writing service. These types of accounts were particularly popular 10-20 years ago.

The Money Mail has recently revealed that around 1.5 million people have been sold cheap or free will-writing services by banks.

So what is the problem?

The issue the newspapers have identified is that when the banks drew up these Wills they often appointed themselves as Executors and  the costs of acting as Executors and the legal fees involved were buried in long terms and conditions.

If the bank is the Executor of a Will it means that means the bank and its solicitors, rather than a son or daughter or another family member or trusted friend, will be responsible for wrapping up the deceased estate and dealing with everything from property sales to inheritance tax.

In return for this service, it is not uncommon for a bank to charge an administration fee and a percentage of the total monetary value of the estate (plus VAT).  If a close relative had been appointed as an Executor they could perform this service for free.

Money Mail has publicised some case examples here: http://www.dailymail.co.uk/money/news/article-5964599/Why-cheap-bank-cost-family-30-000.html

What should you do if you made a Will with your bank?

If you have made a Will with a bank you should think about reviewing the terms and conditions, charges and appointment of Executors now.

You may be happy with the arrangements and charges but if you are not you could write to the bank to ask them to stand down as Executors, and/or change their charges in relation to your Will. Banks often charge an administration fee to do this and in England can refuse to do so.

You may find that it is cheaper and quicker to just draw up your Will again naming Executors of your choice. Your new Will just needs to include a standard clause revoking previous Wills so the one held by the bank has no validity.

Who to use to draw up a new Will.

If you opt to use a professional will-writing service, (rather than choosing a solicitor to draw up your new Will) choose the firm carefully; will-writing is an unregulated business and there are rogue firms out there. We have come across clients who have made their Will through a will-writing service, where the cost of making a Will has been charged excessively in comparison to the costs we would charge for drawing up a Will.

We are also aware of families who have sought advice from us as they have found that when the Will was drawn up the family house has been put into a Trust making it impossible (because of the terms of the Trust) to sell the property when their relative dies. This is because some will-writers do not understand the implications and also because they add an additional cost on to the making of the Will for including this type of Trust.

Often unregulated will-writers go out of business quite quickly and then it is difficult to make a complaint about them or pursue any claims for negligence.

When a person who draws up a Will dies and relatives find that their Will has been drawn up incorrectly it is often very difficult to sort out the issues. Specialist legal advice is often required with additional legal fees and this can be expensive.

Solicitors are regulated by the Solicitors Regulation Authority (SRA). The SRA demands that solicitors inform their clients properly about costs and terms and conditions at the outset of instructions being received from a client.

Most solicitors who draw up Wills will advise their clients to appoint a son or daughter, close relative or friend to act as an Executor(s) as these are the people the client knew during life and they trust to carry out their wishes properly.

Solicitors can and often do act as Executors, but this is usually for more complex Wills, or where there are no friends or family to act as an Executor, or if the person making the Will wishes that their solicitor acts as their Executor.

The cost of a solicitor acting as an Executor and the legal charges involved will be explained clearly before the Will is finalised.

If you have any concerns about your existing Will and would like to have it reviewed or if you wish to draw up a new Will please contact us on 0191 4555361.