Banks tend to offer their customers a lot of perks and extras in order to attract and retain their business. One such perk is the option of a free or cheap Will prepared by the bank to ensure that the deceased’s wishes are respected when it comes to property distribution. These Wills were very popular in the 1990s and 2000s and many thought they appeared to be a great option at the time. However, upwards of 1.5 million families in the UK are now discovering that bank drafted Wills are not as good a deal as they may once have seemed to be.
What’s the issue?
There are two key questions being raised by banks drafting Wills. The first is whether it’s appropriate for a bank to be drafting a Will on behalf of a customer. Although an uncomplicated estate may not require in-depth legal advice, this one-off document is so important that it should be prepared by an independent third party with the customer’s interests at heart. The second issue – and possibly the most troubling – is that many who took advantage of these free or cheap Wills are now discovering that there was an issue with the small print.
Banks as executors
Although the wording varies, many of these free or cheap Wills give the banks that drafted them either the opportunity, or the right, to act as executor of the Will when the time comes. This is often in return for a fairly substantial financial reward – NatWest, for example, charged one customer a £1,500 administration fee plus 2% of the overall estate plus VAT. For an estate worth £250,000 that could be a total of £6,500 (before VAT) that is paid from the estate to the bank as executor, meaning that the “free” will was actually quite an expensive choice. Other banks have been found to charge even more – Barclays, for example, has historically charged 4.5% on the first £100,000, 3.5% of the next £400,000, and 1.5% on the remainder. Barclays also charges £400 for each beneficiary in the Will.
Why is a solicitor more appropriate?
When solicitors are approached about administering a Will in the future they have to discuss with the person making the Will whether it’s in their best interests to use the solicitor. They will also provide an estimate of the likely cost involved, something that banks clearly don’t achieve by burying the fees in the small print. For those looking to ensure costs are predictable and that the process is properly managed, a solicitor is clearly a better choice.
What can you do if you have a bank drafted Will?
If you see this kind of small print in a Will drafted by a bank for you then you can simply draft a new Will that appoints different executors, such as a solicitor. For those who are beneficiaries of a Will where the bank is required to be appointed as executor, it may be possible to ask the bank to step down. If they refuse to do so then court action may be the only possible next step.
A Will is a crucial document for anyone keen to ensure their legacy is administered in the right way – bank drafted Wills may seem cheap at the time but can often prove to be costly in the long run.