In Estatesearch’s third ‘Product in Focus’ article, we look at the Financial Asset Search and why this should be conducted on every case when carrying out estate administration.
Investigating a deceased’s finances is a large part of an estate administrator’s job during the process of estate administration and this is one of their primary and most urgent jobs. But did you know that there is reported to be up to £1.2 billion of unclaimed assets in UK bank accounts, a figure which is increasing annually?
Added to this staggering figure, data from a 2016 FSA report found that a snapshot look at ‘gone away’ pension accounts has resulted in £200 billion of unclaimed pension money while over £3 billion lies in National Saving and Investments, as yet repatriated to its rightful owners.
How is there such an enormous amount of money hidden within financial institutions and why does unclaimed money not always surface during estate administration?
Finances can become missed and unclaimed for many reasons, but the main causes tend to be unreported changes of address, ceases of activity on an account and inadequate record keeping.
According to research by the Bureau of Labour Statistics in 2019, an individual has an average of eleven jobs during their lifetime. If they are contributing to a pension fund in each of those jobs, pensions from earlier employment can be extremely easy to overlook, particularly in this era of digital communication when accounts are often managed online and there is little, or no documentation being sent. In a report in the Financial Times Adviser in 2017, research conducted by Aegon, revealed that one in five people with multiple pensions has lost track of at least one of them, representing at least 21% of those questioned in their survey, an extremely concerning 6.6 million people.
Coupled with this, research on British moving habits has shown that we move home up to nine times in our lifetime and each time a person moves, financial institutions expect to be updated with a new address for communication purposes. In amongst the chaos and stress of moving, it can be easy to forget to inform each institution of your relocation. Failing to do so however, can result in numerous lost financial assets.
A third area of risk is demonstrated by the number of accounts where a person elects not to withdraw, deposit, or use a specific account. This results in them being categorised as inactive. HSBC states that “an inactive or dormant account is one that hasn’t been used in at least 6 months. Inevitably, since these accounts are not being checked regularly, they pose a significant risk of being involved in a fraudulent transaction.”
What are the implications for Personal Representatives if they do not locate all of the Estate’s assets?
Executors, or Personal Representatives, are responsible for an estate ‘in perpetuity’ and have a responsibility to find the beneficiaries of an estate and to confirm that those beneficiaries are receiving what is owed to them. Executors must locate all the assets in an estate so that they do not disadvantage the beneficiaries and must be able to demonstrate that they have conducted a thorough search of all financial institutions where assets may have been held by the deceased. The implications of not doing so include but are not limited to; HMRC fines for understated Inheritance Tax, lack of financial viability for estate administration professionals to re-open files if the value of the missed assets is small, and additional costs to Executors incurred from having to rework and submit estate paperwork.
The solution – Financial Asset Search
Estatesearch are now the largest provider of financial asset searches in the UK and have been pioneering new data and technology to help private client practitioners identify assets easily and effectively, via our award-winning platform. Our financial asset search is an integral part of our Financial Profile Service which gives Executors, Beneficiaries, Deputies and Attorneys peace of mind through a comprehensive search which mitigates the risks and costs of missing assets.
It is vital to conduct a financial asset search on every estate being administered, as the vast amount of money unclaimed in UK financial institutions demonstrates that families of the deceased or the Executors do now where all the assets are or about the existence of some of them.
How Estatesearch can help
Our Financial Profile Service includes our Financial Asset Search, which helps to identify the assets in the estate quickly, whilst mitigating risk. We actively notify and search a comprehensive list of banks, building societies, investment managers, share registrars, pension providers and insurers of the deceased and notify the private client practitioner when a financial institution reports a ‘match.’ Responses and updates can be seen in real-time in our portal and include copies of any relevant correspondence, reference numbers and contact details.
Our Financial Asset Search offers an unrivalled level of transparent due diligence, a clear audit trail of all reasonable steps taken to locate the assets of the estate, and a fast and efficient search with a fully detailed, final report delivered on day thirty.
Click here for the rest of our ‘Product in Focus Series’
This article was submitted to be published by Estatesearch as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.