Death of a bank customer

This discourse is on banker-customer relationship in the event of a death of the customer and noted that the customer’s account opening mandate and indeed any such agreement stands invalidated by reason of death of the customer.

We begin to deal with what becomes of the interest or money of the customer in the bank. Some questions (most of which came in our discussion on the banker-customer relationship five weeks ago) have arisen as a result of practical experiences of some people in this circumstance. Here are some of them.

Q. Customer’s written instructions:

My father wrote a letter to his bank when he was on sick bed to the effect that balances in his account should be transferred to me, his first son, upon his death. I have a copy of the letter with which I approached the bank some days after his death for the transfer. To my surprise, the bank declined to honour the letter even though it was acknowledged by their staff with the banks stamp on it. They said that the letter contradicted what he had in his mandate. What should I do to recover the money?

Advice:

As stated earlier, any mandate or instruction given by a customer (in this case your father) to his banker stands invalidated by his death.

As a matter of fact, the purported letter of instruction on his sick bed was ignorantly done and also negligently accepted by the bank. The bank ought to have responded to the letter with a rejection clause that such instruction is inoperable in law.

The customer could have been advised by the bank or some other persons to make a Will in which the balances on his account are specifically bequeathed to his first son.

Also, the customer could have been advised to convert his account into joint account with his first son, in which case, under the rule of survivorship (which we treated in this column some weeks back), the first son automatically assumes sole ownership of the account and may continue to draw from the account until the grant of probate.

In response to the mention of the sick bed instruction contradicting the mandate, the detail of the mandate information is necessary to decide the implication. However, we may note here that most customer mandates carry next of kin specifications, in which case, it now becomes a reference point for transactions in the account, pending the presentation of the probate. This may mean that only the person specified by the deceased customer will be allowed to effect such transactions, subject to limits.

Q. Transfer of deceased customer’s account:

I am the first wife of my husband and upon the death of my husband, his bank transferred the money in his account to the second wife’s account in the same bank. My husband left no Will upon his death but our tradition supports that his first son (who is also my son) or I should have the money. But the bank refused to listen to us. What do we do?

Advice:

As stated in the answer to the first question, the bank may be acting on the mandate specification in respect of next of kin. It may be that the husband made his second wife his next of kin. This has officially given the second wife an edge in respect of access to the bank account even though the mandate is terminated upon death.

However, a letter of administration may override this situation, if the first wife can get that in her favour.

On the other hand, many banks still make payments of money due to a deceased’s estate without seeing grant of probate of letters of administration if the amount involved is not more than N5,000. In this case, all the bank needs do is to request to see the evidence of the customer’s death, which is the death certificate deposited in the bank’s record.

If the second wife is specified as the next of kin, then she is automatically recognised as the beneficiary of the account though some banks will still require that she should be introduced by a reputable solicitor known to the bank.

However, even with these conditions met, the second wife would still be required to sign an indemnity in favour of the bank to cover the possibility of any subsequent claims (especially in this case by the first wife, her son or any other person) to the money being successfully proved.

Afterwards the balances may then be transferred with safety to Mrs. Ajeigbe’s account.

Q. Death of joint account holder/ business partner

My sister (name withheld by us) and her friend (name withheld) have a business partnership. They opened a joint current account at the Ikeja branch of …….. bank. With a balance of N850,000 in the account; when she died, we approached the bank to claim her share of the balance in the joint account. The bank said it had earlier received a request from her business partner asking for the balance to be transferred to a deposit account in her name (surviving business partner’s name) in the same bank, having notified the bank of the demise of her partner and co-signatory. The bank said it had honoured the request of our sister’s business partner and, therefore, no money for our late sister.

Advice:

The question is centered on the rule of survivorship in a joint account. The rule says that in a joint account, the survivor takes over the account and the balance. Authority, Marshall v. Crutwell (1875)

The bank’s responsibility on the outstanding N850,000 is to the surviving business partner/co-signatory to the account, and not to the estate of the late partner.

The executors/family of the late partner could sue and make claims on the surviving partner, if they so wish.