Rip-off Will Writing Scandal by Banks
A report in the Daily Mail on 15th June takes issue with banks who are set to potentially cash in on 1.5 minion families wealth as their loved ones were sold ‘rip-off’ Wills.
The Wills were sold in the 1990’s and early 2000’s, many at £75 and some even offered for free. The key issues identified are:
- The small print gave the banks the right to appoint themselves as executor
- This meant they could grab up to 2.5 per cent from an estate in legal fees
- An estimated 1.5M wills have been written by banks over the past 20 years
It is thought that high street banks can expect a combined £9 billion windfall from Will Writing services.
‘Families are in for a huge shock when their loved one dies and they face having to hand a bank eye- watering amounts from their inheritance,’ said James Daley of the consumer website Fairer Finance. ‘These small percentages may seem reasonable at the time but they can add up to tens of thousands of pounds on a customer’s death.’
Customers would typically be visited at home by bank staff or lawyers who would record their wishes. Families can request a bank stands down from being Executor, usually for a fee of around £250. However the bank does not need to comply.
Banks are still offering will writing services. Natwest and sister bank RBS charge 2.5 per cent, plus a £1,500 charge up to a maximum total fee of £15,000. Lloyds charges 2.5 percent on the first £1 million of wealth.
In 2010 an investigation by consumer group Which? found that before Barclays sold its will writing business, it had been charging £80 upfront for a will but would ask for 4.5 per cent of the first £100,000 of an estate, followed by 3.5 per cent of the next £400,000. In 2011, Barclays, HSBC, Lloyds and RBS agreed to review their will-writing practices after the Office of Fair Trading found customers were appointing executors without properly understanding the options and the cost. Customers would have to pay 1.5 per cent for the remainder, plus £400 for each beneficiary.
Redwood Financial View
These banks have not in our opinion acted in the best interests of their Clients. These families have been encouraged to appoint the bank as an Executor – an official legal role with responsibility for everything from disposing of property to paying bills and taxes. By contrast, Redwood Financial charge a fixed fee for the Will creation and always recommend our Clients appoint family members/beneficiaries of the Will to act as Executors. We always recommend against appointing processionals in this capacity and only use them when specific advice is needed.
Our next FREE Public Seminar on Wills, Trusts & Estate Planning is 26th June at the Botley Park Hotel, Botley and will cover the topic of Wills and appointing the right people as executors. Book online at: Book Me A Place!: call us on 01489877 547 or Email info@redwoodfinancial.co.uk.
Read the full Daily Mail Article here: DailyMail.co.uk
