Probate and fixed term accounts

[AubergineParm]

Does anyone have experience of what happens with fixed term cash bank accounts and ISAs if a person dies?

I ask because my DM’s house has been sold and I need to invest the proceeds into cash accounts (she would not be happy with shares!) using my power of attorney. Whilst she isn’t terminally ill or anything she is very elderly and frail and now in residential care so I’m conscious things can change fast at that age.

Some fixed rate products look attractive but then I thought what if she dies say 1 year into a 3 year cash product? Do we get to take the cash out or is it stuck until the 3 years? I tried looking at the conditions of one but it wasn’t clear so was hoping someone had practical experience they could share please?

In my experience of the fixed term products I have had, it is always possible to get the money if you need it, but you will lose interest doing so, sometimes a lot of interest. On death, I believe the account would be frozen and the money would go into their estate - exactly how easy the bank makes that would depend on how much it is and the individual bank. Most of them make it reasonably easy because of the terrible PR outcome if they mistreat a bereaved family.

I've gone for instant access savings accounts for my DM's money because i believe overall this is in her best interests. She would be horrified if her money wasnt earning at least some interest. But we had the horrible experience of needing to move her to a new nursing home before we had sold her flat - and the one we liked refused to look at her unless she had 3 years' fees in the bank. Which we didn't have. So once we sold the flat, I just found an instant access savings account attached to her current account and her money is in there.

If she has a spouse, most accounts can just be transferred to the surviving person. IIRC the only thing we had to sell were Premium Bonds, but you get 12 months to do that.

If she's on her own, have you tried contacting the financial institutions and asking their Probate or bereavement department? They should know.

Remember that the FSCS only covers £85,000 per institution, so you may need to split the money across different organisations.

You will be able to leave them in the account until the term ends.

Thanks for the responses. DM is widowed so no spouse.

If/when she dies realistically am going to have to be lead executor so I would need to round up the remaining cash to send to the will beneficiaries (of which I am one but there a a number of others) so I don’t think leaving it in say another 2 years would be feasible.

I would need to split the money to keep under FSCS limits, absolutely. I did look at NS&I bonds but they seem to need a debit card to set up which I don’t have.

It is a quality problem I know, it is just yet another time suck out of my busy life.

@AubergineParm Being a PoA isn't easy is it? I'm trying to get things straightened out and simplified too. Having already executed a number of Wills, I'm doing it with one eye on that task too. I know it sounds grim, but that's the awful reality of where we are isn't it?

There are some pretty good instant access accounts, such as Marcus which I think has something like 4.3% interest which is better than a lot of the fixed rate and ISA accounts.

With a relatives accounts everything was kept running until probate. After probate most accounts needed to be closed, but I was allowed to keep ISAs open until 2 years from Probate.

I take it your Mum no longer has a debit card or has definitely lost capacity?

When someone dies the fixed term is usually ended. Speak to the probate department when it happens. Ford Money have good fixed term and instant access accounts.

Is there any possibility you’ll need to access the money for care costs for her? How is her care being paid?

We are very lucky here in that there is actually very good pensions providing a decent income here. Along with interest income from the house and other savings that will cover all or almost all the costs of care. As costs inevitably rise we might need to dip into the capital more but there is no realistic danger of running out. Hence locking some cash up for a few years could work well if gets better rates.

Thinking about it there is still a debit card but only used for occasional trips out to a cafe or shops for snacks etc with my more local sibling.

Updating in case use to others later. Research didn’t get very far on this - terms and conditions I looked at didn’t seem to really cover but generally what I found suggested in practice you can access. But I concluded you couldn’t always rely on this.

I’ve therefore put some in easy access with decent rates and most in fixed term products from various providers with maturities across 6-18 months. Of course making sure we have more than enough cash to cover ongoing care bills and for costs post death. any delay would be in distributing any final cash to my sibling and I as beneficiaries but given time to get probate etc it wouldn’t really be that much for that long.

I asked ChatGPT - here's its answer:-

Fixed-Term Cash Accounts or ISAs When Someone Dies?

✅ 1.
The account is usually closed early without penalty

Most banks and building societies allow early closure of fixed-term accounts (including ISAs) on death, even if the term hasn’t ended.

• Interest is typically paid up to the date of death.
• The executor or attorney (if the person is still alive) notifies the bank, who will freeze the account.
• Funds are then moved to the estate and distributed according to the will or intestacy laws.

✅ So you won’t lose the money or be stuck for 3 years — but you won’t get the full interest for the whole term either.

📄 What the Bank Needs:

When your DM dies, you (as attorney until then, and possibly executor afterwards) would typically need to provide:

• Original death certificate
• Your power of attorney or grant of probate (depending on role)
• ID
• Bank’s bereavement team may have a form to fill in

⚠️ Watch Out For:

• Some smaller banks or lesser-known savings providers may have stricter or slower processes, so always check the Terms & Conditions under “Death of account holder” or “Early closure due to death”.
• ISA rules: ISAs lose their tax-free status on death but there is usually a grace period (usually until the estate is settled or after 3 years max).

🧠 Practical Tips for You:

• If peace of mind is the goal, consider 1-year fixed accounts or easy-access savings for some of the funds.
• You can also spread the risk across a few fixed terms (e.g., part 1-year, part 2-year).
• Ask the provider directly: Email or call their bereavement or savings team to clarify what happens on death.

Thanks. Yes I used Grok before I did this and got similar answers. I could have gone calling around various banks to try and get a steer (although practice may change) but honestly I’m spread so thin I’ve taken a view and risk mitigated by limiting and staging time of deposits.