How much can a bank release without probate? The thresholds, the £5,000 rule and what happens above them

There is no legal threshold. Each bank and building society sets its own limit for paying out a sole-name account on sight of the death certificate and a signed indemnity, and those limits run from about £5,000 to £50,000 depending on the bank. The £5,000 figure people quote comes from a 1965 Act that lets certain bodies pay out small sums without a grant, and it is also the point below which the court charges no probate application fee.

Why there is no single bank probate threshold

When someone dies, the money in their sole-name accounts belongs to their estate. A grant of probate, or letters of administration where there is no will, is the court's document proving who has the right to collect it. A bank that pays out without seeing a grant is taking a commercial risk: if it pays the wrong person, it may have to pay again. So each bank decides for itself how much risk it will carry, and that decision is what people call its threshold. It is a policy, not a law, and it can change without notice.

That is why two families with estates of the same size get different answers. One bank pays out £30,000 on a death certificate and a form. Another asks for a grant at £15,000.

Where the £5,000 figure comes from

The Administration of Estates (Small Payments) Act 1965 lets certain bodies pay out sums owed to a person who has died without asking for a grant. It covers things like National Savings, building society and friendly society accounts, and some pension payments. The limit was raised to £5,000 in 1984 and has not moved since. Ordinary bank accounts are not covered by the Act at all. Banks release money on their own terms, which is why their limits sit well above £5,000.

The same £5,000 marks the line for the court fee. The probate application fee is £526 where the estate is worth more than £5,000, and nothing where it is £5,000 or less. Extra copies of the grant cost £2 each with the application and £16 each afterwards, so order one for each bank at the start.

So the £5,000 rule governs which bodies may pay small sums under the 1965 Act, and whether you pay the court fee. It does not govern what a parent's bank will do with an £8,000 balance.

What banks actually do

Once a bank is told of a death it freezes the sole-name accounts, though most will still pay the funeral bill direct to the funeral director. It then adds up everything the person held with it and compares the total with its own limit. Below the limit, it usually asks for:

• The death certificate, either the original or a certified copy.
• The will, if there is one, so it can see who the executors are. Where there is no will, some banks apply a lower limit.
• Proof of identity and address for the person making the claim.
• A closure form and a signed indemnity, sometimes called a small estates declaration, in which you promise to repay the bank if someone else turns out to be entitled.

Above the limit, the bank asks for the grant and nothing else will do.

Limits differ because appetite for risk differs. A large high street bank may set £50,000, a smaller building society £15,000 or £5,000. The figures move, so ask each bank's bereavement team for its current limit rather than trusting a list on the internet.

It is common for one bank to pay and another to refuse. You apply for the grant because of the bank that refused, and the application covers the whole estate, including money already handed over, because the estate is valued at the date of death.

A bank can always insist on a grant. Its limit is a ceiling on what it will consider, not a promise. A dispute in the family, an unclear will or a claimant who is not the named executor can lead it to ask for a grant at any figure.

Joint accounts: the survivor keeps the account

A joint account works differently. When one holder dies the account passes to the survivor automatically, by survivorship. The bank removes the deceased's name once it sees the death certificate and the survivor carries on using the account. No grant is needed, whatever the balance.

Two points catch people out. First, the deceased's share of the balance still counts as part of their estate for inheritance tax. HMRC usually treats the share as half, unless the money clearly came from one person. Between spouses and civil partners the spouse exemption covers it, but the figure still goes on the forms.

Second, a joint account opened for convenience, say a parent's account with an adult child added to help with the bills, may in law still belong to the parent's estate. The bank will hand it to the child, but the child may hold it for the estate rather than for themselves. That depends on what the parent intended. There is more in the guide to closing a bank account after a death.

When probate is always needed

Some assets need a grant whatever the total, because whoever holds them will not act without one:

• A house, flat or land in the deceased's sole name. The Land Registry will not transfer it or register a sale without the grant, however little the house is worth and even if it is the only asset.
• A share of a property owned as tenants in common. The deceased's share passes under the will or the intestacy rules, and the buyer's solicitor will want the grant.
• Shares and investments. Most registrars and investment providers insist on a grant, some for holdings of a few hundred pounds.
• Life policies not written in trust. The payout belongs to the estate, so the insurer needs the grant. A policy in trust pays the trustees direct and needs none.
• Any bank or building society account over that bank's own limit.

A small estate with a house in it still needs probate. Aaron sees this often: a few thousand pounds in the bank and a modest terraced house. The bank pays out on an indemnity, but the house cannot be sold until the grant arrives. The wider question of whether you need probate at all has its own guide.

The trap in "no probate needed"

No probate needed is not the same as no duties. Whoever takes the money is administering an estate and carries the same responsibilities as an executor with a grant:

• Debts come before beneficiaries. The funeral, bills, credit cards, care fees, overpaid benefits and any tax owed to HMRC are settled from the estate first.
• Inheritance tax, where it is due, must be worked out and paid by the end of the sixth month after the death, whether or not anyone applies for a grant.
• The two-month notice. An executor who places a notice in The Gazette and waits two months before paying anyone out is protected from unknown creditors under the Trustee Act 1925. Someone who pays out the week the bank releases the money is not.
• Personal liability. If you hand the money round the family and a creditor or a missed beneficiary turns up later, you can be personally liable up to the amount that passed through your hands. The indemnity you signed also lets the bank come back to you.

The money looks small, so people treat the job as small. The law does not.

A short example

A mother dies leaving £18,000 at Bank A, £3,000 at Bank B and no house. Her daughter is the executor. The estate is £21,000 in total.

Bank A's limit is £25,000. It pays out within a few weeks on the death certificate, the will, the daughter's ID and a signed indemnity. Bank B's limit is lower and it asks for a grant. Because the estate is over £5,000, the application fee is £526 plus £2 for each extra copy. The grant covers the whole £21,000 estate, not just the £3,000 at Bank B.

The daughter pays the funeral and the last bills from the Bank A money, places the two-month notice, and waits for the grant before Bank B releases its £3,000. Only then does she share out what is left. That order protects her.

What to do next

Check the facts first. List every account, its balance at the date of death and whether it was sole or joint. Ask each bank for its current limit. Do not sign an indemnity until you know the estate can pay its debts.

If one bank wants a grant and the rest of the estate is simple, Aaron can obtain the grant on its own for a fixed fee agreed in writing before any work starts, and you deal with the banks yourself. If there is a house, a mix of sole and joint assets, or debts you are unsure about, he can take on the whole administration instead. He is a solicitor regulated by the SRA and a full member of STEP.

A free 15-minute call is enough to say which of those applies. If you would rather work it out first, the Plan Finder asks a few questions and points you to the right page. Whichever route, the fee is fixed and agreed in writing before any work starts.

This page is general information about the law of England and Wales. The right answer depends on your facts, and a bank's limit today may not be its limit next month.