Keeping Wills Safe: What We Can Learn From Lloyds Bank Blunder
The Financial Times has revealed that Lloyds Banking Group have uncovered approximately 9,000 Wills in their ‘safe custody’ service, which closed its doors to new customers in 2011. Cherie McBean in our Disputes team at Tilly Bailey & Irvine Solicitors takes up the story.
Lloyds have been trying to unravel the mess and reunite the Wills with the families since the summer.
What impact will this have on the families?
As a result of the bank’s blunder, there is a risk that substantial amounts of monies and assets have been distributed to the wrong beneficiaries. Similarly, there may be tax implications if the estate planning provisions in the Will have not been followed.
There is also the renewed risk that new claims against estates could be made. Executors of the new Will may be faced with claims regarding the validity of the Will. Fresh claims may also be made under the Inheritance (Provision for Family and Dependants) Act 1975 by individuals who feel that the new Will has not made adequate provision for their maintenance as the six-month limitation period will essentially restart.
The ‘human cost’ of this mistake should not be ignored. For families that have already finalised the distribution of the estate, this mistake could re-ignite the grieving process and re-open closed wounds. Furthermore, the implications of the ‘new’ Will could create or reignite family disputes.
What should families do if they are affected?
A Lloyd’s Banking group spokesperson said:
“We are investigating each case individually and where appropriate making contact with representative of these estates. We are deeply sorry for the distress and inconvenience this has caused and will ensure that those affected are fully compensated.”
In a majority of the cases identified, the discovery of the Will has not had any detrimental impact on the families – the Will had either been overridden by a newer will, copies had been stored in other locations or had been dealt with through the probate process and followed the testator’s final wishes.
However, there is an unknown number of families that are now faced with the fact that the estate has been distributed incorrectly. In these cases, the executors named in the Will should make an application for the original Grant of Representation to be revoked so that a new grant may be taken out in their name. If the estate has not yet been distributed, the new executors will be required to distribute the estate in accordance with the new will.
For estates that have already been (wrongly) distributed, the process is more complex and the executors and beneficiaries should seek legal advice.
Options available to beneficiaries
In the first instance, the beneficiaries of the ‘old’ Will and the beneficiaries under the ‘new’ Will should attempt to negotiate and agree a settlement.
However, if an agreement cannot be reached amicably and the parties involved wish to commence legal action, the following claims may be available:
1) Action against the executors - The new beneficiaries could consider an action against the executors of the incorrect Will. However, if the executors had no knowledge of the Will that had been stored by Lloyds and had otherwise administered the estate correctly, it is unlikely that a claim against the executor will succeed. Equally, any institutions that have relied on the original Grant of Representation when making payments to the original executors will protected in the same way.
2) Action against Will storage organisation - The new beneficiaries may also consider taking action against the organisation that stored the ‘new’ Will. There may be a possible claim for negligence in the withholding or non-discovery of the Will as with Lloyds.
3) Action against the beneficiaries - A personal claim against the beneficiary who received assets under the ‘old’ Will can be made if there is no other way to recover the assets. However, there is a limitation period for making this type of claim. If more than 12 years have passed between the wrong will being followed and the discovery of the new Will, this type of claim is not possible. The ‘safe custody’ storage facility was closed in 2011 and many of the lost Wills are likely to pre-date the closure. Therefore, there is a possibility that many of the families affected will be face a race against the clock to avoid the limitation period.
Furthermore, claim against the asset itself which was wrongly distributed can be made. However, these types of claim will be defeated if the beneficiary has already spent the money.
Compensation from Lloyds
A Lloyds Banking group spokesperson has already confirmed that the affected families will be compensated and Lloyds will cover the affected families' legal costs for rectifying the error. Additionally, as a gesture to the original incorrect beneficiaries, Lloyds will not seek to recover the assets that have been wrongly distributed or costs.
Alternatively, complaints can be lodged by the affected families with the Financial Ombudsman Service.
What steps should affected families take?
Our contentious probate solicitors and legal advisors would be happy to assist any individuals or families affected by assessing whether there are any claims or remedies available to any beneficiaries or executors affected by a newly discovered Will.
Keeping a Will safe
STEP's Technical Counsel, Emily Deane TEP, said, “This is a disappointing and concerning story which raises an important issue. We would advise people against storing a will in a bank safety deposit box because it may not be accessible to the executor until they get probate and this cannot be granted without a will. If someone has an existing will stored in this way, we would recommend moving it elsewhere to ensure it is accessible and its whereabouts is known to their executor(s) in the event of your death.”
With this in mind, testators may wish to consider leaving the original Will with their solicitor or drafter who prepared the document, and to notify the executors and family where the original is.
Tilly Bailey & Irvine provide clients with a copy of their signed Will. Our Wills Team are happy to help discuss both making and storing a will to avoid these issues.
Our Private Client Team has been recognised as one of the leading private client departments in the region, and are able to prepare a Will and Lasting Power of Attorney for you that reflects your personal wishes and requirements.
In addition to these services, we also offer related expert estate planning, tax and trust advice.