What is Probate?

Apparently "what is probate?" is one of the top ten "what is..." searches on Google in the UK. My assistant is writing a sensible article on the subject at the moment, explaining the problem for someone bereaved who might need to obtain probate. But I thought I'd devote a blog post to explaining the problem from a different angle. Because I think it's easier to understand what a grant of probate is, and why one is needed, if you look at things from the point of view of a bank.

Suppose that I own a bank. And that you have a million pounds deposited at my bank.

Now, suppose that one day, some guy walks into my bank and tells me that you have died, and that he is your executor, and I pay him the million pounds. Then the next day, you walk into my bank and ask where your million pounds is. I tell you that I paid it to a guy yesterday, because he told me you had died. And you point out that you self-evidently haven't died and demand that I pay out your million pounds again - which, of course, I have to do.

Or, imagine the same scenario, but this time you really have died, and the guy comes to me with your death certificate and I pay him the million pounds. Then, the next day another guy walks in with a copy of your will, pointing out that he is your executor and not the first guy, and that I must pay out the million pounds again to him.

Or, this time a guy comes into my bank with your death certificate and a will showing that he is your executor. So I pay the million pounds to him. Then the next day, another guy comes in and says he is your executor. When I protest that I've already paid the first guy, the second guy produces another will, dated later than the first will, revoking all previous wills and appointing the second guy as executor. So I have to pay out the million pounds again.

But suppose the first guy comes to me with a grant of probate. This time I can pay the first guy with confidence. Because the grant of probate is, in effect, an order of the court authorising me to pay estate money to the person named in it. And if it turns out that there is another guy out there with some kind of claim against your estate, he has to take it up with the person named on the probate. And not with me.

So that is why probates are necessary, really. It's not so much that they protect the executor or the estate. It's that they protect anyone who has to pay money to the estate: like the deceased's banker or stockbroker or the buyer of the house.

A FOOTNOTE: As you might imagine, doing what I do for a living, I could come up with an unlimited number of these one-guy then-another-guy scenarios. A lot of them would involve the first "guy" being, or claiming to be, your widow(er). And you may be thinking that if the first guy in each scenario is some kind of fraudster then my bank might be able to recover the million pounds from him. But he isn't necessarily a fraudster (in the real world, problems more often happen where there are genuine competing claims against an estate). Besides, if he really is a fraudster he might have disappeared off the face of the earth, as fraudsters often do.

AND A POSTSCRIPT: Nina Sampson's article, metioned above, appeared in London Business Matters, April 2012, Page 32.