Cheque being debited from bank after death

Hello. I would be grateful for assistance on this probate question, on a matter I have inherited.

Please see the following timeline:
31.08.18 - Date of death
12.09.18 - Bank confirms with lay executor that they have received the bereavement notification form from her.
24.09.18 - The deceased’s cleaner attempts to cash in cheque in her favour for £5k and cheque was rejected by bank.
27.09.18 - The deceased’s cleaner attempts to cash in cheque in her favour for £5k and cheque was accepted by bank.
03.10.18 - My firm lodges death certificate with bank.

The bank claims they had authority to pay out the cheque because although the bereavement notification form was lodged before being presented with the cheque, the death certificate was not. However, they clearly rejected the first attempt for a specific reason.

Is the bank right to have accepted the cheque?

Thanks in advance.

Was the cheque apparently in accordance with the mandate and generally in order? Was it signed by the proper signatory with a signature the bank could have been expected to recognise? A bank does not have a role as a foolproof guarantor against fraud or undue influence practised upon its contractual customer.

I do not have direct experience of what a bank does about absolutely legitimate cheques presented after notification of the death of a sole signatory customer or, if it is to freeze the account, what latitude if any is to be accorded to it to feed the information received into its system. I do have direct experience of something similar.

I was my Uncle’s attorney but did not inform the bank out of deference and avoidance of distress to him. I paid all his bills and took possession of his cheque book. Once a month I would present him an itemised list. He would draw a cheque for me. This went on for a few years. Then on one extraordinary day he went missing and returned eventually dressed as for his office in the City in days gone by. I later learned that he had visited his bank and cancelled my latest 4 cheques as unknown items. My fault. I then had to deal with the bank formally so he could survive, regardless of any consequent anguish.

Unless the cleaner was entitled to the 5K, although the PRs must pursue cost-effective remedies, there is not always comprehensive legal redress against human venality.

Jack Harper

I believe Bills of Exchange Act 1882 s75(1) and (2) are relevant.

Under section 75(2) the bank’s authority to pay cheques is immediately terminated once it has notice of the customer’s death. Effectively on death the bank has no authority to continue to act on the deceased’s behalf.

I’m not sure whether a bereavement notification form would legally constitute acceptable notice (unlike a death certificate) but it would seem the bank has been put on notice as to the death and my understanding is that banks often provide for such a notification by way of one of their forms and on receipt typically cease to process payments under cheques issued pre death.

Under the BEA there is no de minimis amount up to which a cheque may be paid post death.

Prima facie, it does seem from the legal perspective that payment should not have been made.

Malcolm Finney

My understanding is that the bereavement notification form was agreed between the British Bankers Association, The Law Society and STEP (amongst others) to be an acceptable form by which to notify a bank of a client’s death, without the need to produce a death certificate.

However, I believe the BBA could not “require” banks to adopt the process, but that it was a “voluntary” arrangement. I understand that all the mainstream banks signed up to the arrangement, but not some of the “lesser” banks and perhaps some of the newer banks.

If the bank holds its position, I suggest an enquiry be made of the BBA to see if the bank in question signed up to the “voluntary code” and, if so, whoever is dealing with the matter at the bank should be reminded of this. If that is not sufficient, then I suggest the bank be asked for a final response letter, so that the matter may be referred to the Ombudsman. That could result in it landing on the desk of someone who can deal with the matter appropriately. Just a pain if one has to go that far.

Paul Saunders FCIB TEP

Independent Trust Consultant

Providing support and advice to fellow professionals

Presumably the cleaner was not entitled to £5k but rather was trying to defraud the deceased, in which case the police might be interested? This is theft. Alternatively, if they were entitled to this money but had simply sat on the cheque, validly issued prior to death, until after the death before attempting to present it, then I am failing to see the problem.

1 Like

Thanks everyone for your assistance - I don’t believe the cheque was a case of fraud but I will check this in the first instance.