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The role of bank statements in estate administration: tips for charities and executors

Picture of Jodie Newton

By Jodie Newton

31 Oct 2024 | 1 minute read

When a charity is a beneficiary or a personal representative of an estate, they are likely to have very little knowledge about that individual's estate and spending habits. Bank statements can therefore provide a helpful insight to ensure the estate is administered correctly.  

Banks only need to keep account statements for six years but quite often some hold them slightly longer. That means that the Personal Representative of an estate can request statements for this period to review the activity on the deceased's bank account.

Most people are habitual in their spending habits – generally income goes into their account from employment or pensions, then utility bills, food and any subscriptions go out. A review of the statements can help to identify any unusual activity and the Personal Representative can then weigh up if it is worth making further enquiries to see if there are any other avenues that require exploring.

Key considerations

Reviewing bank statements for the last seven years of someone’s life can indicate if any lifetime gifts or loans were given, which of course need to be considered for inheritance tax purposes. Bank transfers, which generally document the name of the benefactor, and cheques are listed on the statements. It’s thorough to request copies of cheques for any unusual transactions or large amounts to see if they were bills paid, gifts given or otherwise.

Any unusual payments should be considered in light of any Lasting Power of Attorney or Deputyship order that was in place whilst the deceased was alive as it may be that the Attorney/Deputy had authority to give lifetime gifts or maintain a third party on behalf of the deceased.

Statements showing lifetime gifts can also act as an indicator of whether there is likely to be any party that was not provided for under the terms of the Will and who may consider action under the Inheritance (Provision for Family and Dependants) Act 1975 in the estate.

If a strange flurry of activity occurs on an account that is outside the deceased’s usual spending patterns, it is important to consider if there was any third party access to the account or if the account was fraudulently accessed.  The most appropriate next steps can then be considered.

Premium bonds and shareholdings usually pay prizes and dividends directly into a bank account. It’s worth considering the amount of any unknown payments into an account and any reference number used to see if it relates to either of these. For example, premium bonds usually pay in nominations of £25 and a dividend from a shareholding may use the registrar or holding name as the reference.

A review of the existing standing orders can also help to rule out any third party that may be holding original documents for the estate such as a Will or property Deeds as sometimes there is a charge for storage fees, and these would be listed on the account.

Top tips

  1. Check the national insurance number of the deceased against any pension/HMRC transactions which list the national insurance number to ensure that the account was only used by the deceased.
  1. If there is a sort code and account number on any unusual payments out of the account, first check the sort code to see what bank it belongs to and make enquiries with that financial institution to see if the deceased had any assets with them.
  1. Tread with caution when it comes to any potential crypto assets as these can be hard to distinguish from fraudulent activity. Ensure to check the spellings and note if there are any typographical errors in the name of the cryptocurrency.
  1. If the deceased was self-employed or completed tax returns, keep bank statements for as far back as you can as these can provide a wealth of information about what income the deceased had.
  1. Some savings accounts can be set up to pay interest to another account. If you come across a payment (usually with a long number as a reference) it's worth investigating if this relates to an account elsewhere.

Get in touch

Please contact our Charity Probate team if you would like any further information about reviewing bank statements in an estate and what red flags to look out for.

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