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How should a banker deal with Executors and Administrators ?

Executive and administration are persons who are appointed to conduct the affairs of a person after his death. The executor is appointed by the testator (person making a will) to execute his will after his death, whereas an administrator is appointed by a court for the execution of a will if the executor is not named in the will.

If the testator had executed a will and appointed persons to look after his affairs after his death, the appointees are known as executors. But if there is no such mention in the will or if the person dies interstate (Eg. Without leaving any will) the court may appoint a person to administer the estate of the deceased. They are known as administrators.

In the case of executors, their powers and duties are mentioned in the will. The only thing is that the will should be probated, that is, certified by competent court as a bona fide document.

In the case of administrators. They are appointed by courts, their powers, duties and responsibilities will be defined by the letters of administration issued by courts.

On the death of a customer, his account it automatically frozen and the banker should not allow further operations. The executor can be allowed to operate the same on production of probate obtained from the court. In the case of an administrator the banker should insist upon the letters of administration issued by the court of competent jurisdiction. In either case the account of the deceased must be closed and a new account should be opened indicating the trust character of the account of the deceased, that is, as executors or administrators of the estate of the deceased.

When the appointees are more than one person they shall have a joint interest in the estates of the deceased. The banker may allow operation of the account by one or more upon the authority in writing by all the executors or administrations. But this authority is revocable and in case of revocation all the executors and administrators should operate the accounts jointly.

Precautionary Measures

The banker should take the following precaution while dealing with executors and administers :

  1. On the death of a customer, the banker must stop payments from his account. The executor should be permitted to operate the account of the deceased after he has obtained the probate from the court. The administrator is authorized to do so after securing the letter of administration. The banker should examine these documents before the appointed person in permitted to operate the account.
  2. When two or more persons are appointed as executors or administrators, they shall have joint interest in the estate of the deceased and this interest is not capable of division. Then they should open a joint account with the bank. In such cases, the bank should obtain clear instructions regarding the operation of the account. One or more executors may draw cheques on the account but a letter of authority signed by all the them stating the name/names of the persons who will operate the account is taken by the banker.
  3. The banker should be very cautious in conducting the account of executors administrators so as to prevent them from misappropriating the funds of the deceased.
  4. The banker cannot exercise his right of set-off against the credit balance in the executor’s personal account in respect of a debtor balance in the account of the deceased.
  5. The banker should not permit transfer of funds from the estate account to the personal account of the executor.
  6. On the death, insolvency, insanity or resignation of any of the executors or administrators the bank can honour the cheques issued by him and can continue to operate the account, unless otherwise provided in the will.
  7. The executor administrator may pledge the property of the testator to obtain an overdraft from the banker. The executor may do so only if he is permitted by the will. Hence the banker should examine the will before granting any loan to the executor or the administration and they must jointly sign the loan document.

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