Friday 26 May 2017

Your Questions: How long before I can take out the money my late husband left to me in his account?

While the probate process is ongoing, the bank will not usually allow any access to the funds Photo: PA
While the probate process is ongoing, the bank will not usually allow any access to the funds Photo: PA

Jim Hegarty

My husband passed away suddenly earlier this month. He left a will, in which he left everything to me - including €60,000 in his savings account.

However, when I tried to access the money in this account so that I could cover funeral and day-to-day living expenses, the bank would not release the money to me - saying that it could not do so until probate is taken out. I had to take a loan out from a friend to meet these costs. How long will it take for the probate to go through and have you any advice on how I could get by financially in the interim? I was completely dependent on my husband financially.

Una, Ballyferriter, Co Kerry

When money in an account is over a certain amount, the bank always requires a Grant of Probate to be taken out. That process takes about four months from when the solicitor lodges the documents in the Probate Office - or about six months if you make the application to the Probate Office without using a solicitor.  

I always recommend using a solicitor in such cases as the process is tricky. Using a solicitor who does a lot of work in this area means that Probate Office queries will be kept to a minimum and that the process will go through as quickly as possible. Before papers can be lodged in the Probate Office, the solicitor will need to gather certain information regarding your husband's estate, and this usually takes between one and two months, after which papers can be lodged.  

Once the Grant of Probate issues, it is sent to the bank along with a withdrawal form signed by the executor - and after that, the bank will release the monies in the account.

While the probate process is ongoing, the bank will not usually allow any access to the funds. However, in some cases, it will release the monies to pay the funeral expenses, so you should ask your bank if it is possible to take money out of the account to cover these expenses. You will need to show the bank the invoice for the expenses.

There will be costs attached to extracting the Grant of Probate and the bank often opens up an executor's account which runs on an overdraft to fund these costs. This overdraft typically runs until probate issues and the monies in the actual account can be accessed. It is unlikely the bank will release any monies to fund day-to-day expenses, but as you were totally financially dependent on your husband, it would be worthwhile meeting the bank, and it may also grant you an overdraft facility on another account until you can access the funds to pay it off. Remember, however, the interest charged on overdrafts can be high.

I am a widow in my early eighties. I live alone. Although I have made my will, I am concerned that I may be unable to manage my financial affairs as I become increasingly old and frail. Is it a good idea to appoint an Enduring Power of Attorney?

Anne, Rathfarnham, Dublin 14

If you are concerned about not being able to manage your personal and financial affairs as you get older, it is very wise to sign an Enduring Power of Attorney (EPA) now.

An EPA is a legal document in which you appoint one or more persons called attorneys to manage your affairs and make decisions for you if you are ever deemed medically unfit to make such decisions in the future. To sign the EPA now, your doctor must certify that you are mentally capable of understanding the effect of signing the document. Once that is the case and you have signed the EPA, it remains in your solicitor's office until a time in the future when it may be needed. If it is needed, your doctor will again need to certify that you are no longer capable of managing your affairs, in which case the EPA is registered with the Courts Office and your attorneys become responsible for making all decisions on your life. These attorneys will have the power to access your bank accounts, and possibly even sell property, if financing is needed for your medical care and accommodation facilities. Clearly it is of the utmost importance that you pick attorneys that you fully trust, as their role is a very responsible one.  

In the absence of an EPA and if you were to become mentally incapable of managing your affairs, there would be no option but to make you a ward of court. In such a case, the Wards of Court office would be responsible for making all decisions for you. This is much more restrictive than an EPA, as you can draft the EPA to allow wide-sweeping powers to your attorneys. Also, with the EPA, you get to determine what your attorneys will be able to make decisions on, but if you were to be made a ward of court, there is no record of what your wishes are.

Finally, it is important to note that frequently EPAs are signed and never needed.

I understand there has been a change in the rules around defined benefit (DB) schemes which gives people like myself, who are in such schemes, more options when it comes to their pension. Can you explain exactly how the rules have been changed? I am worried about the financial health of my company's DB scheme, and would like to transfer my benefits in that scheme elsewhere if I could.

Robert, Dundalk, Co Louth

There has been a change in the rules since July 22, 2016, when the Finance Minister, Michael Noonan, announced that he was extending the Approved Retirement options to all buy-out-bond holders with immediate effect. Historically, individuals who transferred their defined benefit (DB) fund to a buy-out-bond were forced to buy annuities (which are historically low and unattractive). The new legislation removes that compulsion and provides such individuals with investment control over their post-retirement assets. This affects deferred members in DB pension schemes (typically individuals who have left a previous employer but have left their pension benefits behind untouched), and former members of DB schemes who have already switched into buy-out-bonds.

The recent announcement may also form part of an exit strategy for existing members of DB schemes. You should address the following questions when deciding what to do with your DB retirement funds. One: What is the likelihood of the DB scheme being in place when you reach normal retirement age? Two: Are the DB trustees currently paying increases in pension payments? Three: Does the scheme currently meet the Minimum Funding Standard (a rule which states that DB schemes must have sufficient assets in place to secure pensioner liabilities and other members' accrued benefits in the event of scheme wind-up) and if not, what reduction factor currently applies to transfers? Four: Have preserved pensions been reduced due to negative CPI (inflation) revaluation? Five: What percentage of funds may be taken as tax-free cash? Six: Are Additional Voluntary Contributions (AVCs - pension top-ups) included in the transfer value - or in addition to it? Seven: Are trustees allowing early retirement benefit drawdown before normal retirement age? Eight: When does it suit you to access cash/benefits? Nine: Now that there is no need to purchase an annuity, is a 25pc cash and Approved Retirement Fund (ARF) strategy more suitable? Ten: What is your plan for your retirement funds?

Email your questions to lmcbride@independent.ie or write to 'Your Questions, The Sunday Independent Business Section, 27-32 Talbot Street, Dublin 1'.

While we will endeavour to place your questions with the most appropriate expert to answer your query, this column is a reader service and is not intended to replace professional advice.

Sunday Indo Business

Promoted articles

Also in Business