Lost on the internet: why online banking has put our inheritance at risk

Lawyers are warning our money could be lost forever because of family secrecy and outdated laws.

Lesley Davis is a modern-day treasure hunter.

That’s not her job title, of course: on paper, she’s a partner at law firm Shakespeare Martineau in Birmingham.

Davis is a specialist in wills and succession and is tasked with hunting down the property of the dead, to pass onto their descendants and relatives.

A couple of years ago, she encountered an unusual case.

When searching for the assets of a recently deceased man, Davis was tipped off by the deceased’s friends that he had an online gambling account he hadn’t disclosed to his wife.

There was money in the account, but, Davis explains, the man’s relatives ran into a serious problem.

“When you tick the terms and conditions on any of these sites – I’m convinced most of us don’t read them properly – it means if you have a balance and you don’t claim it within a certain period of time, they take it back.”

As the account hadn’t been mentioned in the will, and there were no physical documents to show it existed, Davis wasn’t made aware of it until several months had passed.

By that point, the time limit had passed and the gambling company legally reclaimed the money, she recalls.  

“That was worth tens of thousands of pounds.”

You can find our full guide to passing on wealth here

£850 million collecting dust

Few of us have online gambling accounts, but almost all of us have bank accounts.

There’s £850 million lying unclaimed in lost bank accounts, the Money Advice Service estimates, so much so that the Government took out £330 million last year to spend on good causes.

The amount of unclaimed money about to spiral is in part due to missing ‘digital legacies’ that Davis says makes it harder for lawyers like her to find out what recently deceased people owned.

“I qualified in this area in 1991, when everything you put down on pen and paper was it: you’d write a will and everything in your will was all the assets in the estate.”

In the past, a dusty box in the attic could reveal a treasure trove of cash, bank account statements and share certificates.

Today, it’s possible to do all your banking and investing online and have almost no physical documents to show for it. That’s before you start to consider cryptocurrency wallets, gambling accounts and music collections.

The chances of relatives or lawyers bumping into these assets are close to nought, Davis warns.

“If you die and you didn’t physically identify an asset, how do you know your loved one will receive it?”

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Damned if you do

Many of us use online banking because it’s convenient: you simply log on to your computer.

You could give your lawyer your password, but although they’re bound by confidentiality, you could still be breaking your bank’s rules.

“It’s a nightmare”, says Davis. “As lawyers we’ve got to be very careful because we’ve got GDPR to think about; we can’t keep data on individuals beyond a certain length of time.

“They [the clients] shouldn’t be giving their passwords or PIN to anyone, but if they don’t, how do you pass on those assets, after they die, to the person who should have them?”

The 1990 Computer Misuse Act makes it illegal to access someone else’s digital information – even after death - unless you’ve been given permission in advance.

The problem, explains Davis, is that “it’s very difficult to get authority or consent from someone who’s dead. It has to be an understanding that’s given in advance. The problem of giving consent in advance is whether it has a shelf life.”

A future falling out or divorce could make you bitterly regret giving someone your bank details.

Davis also warns that a lack of paper records could put the executors of wills at serious risk as they will be liable for any debts not paid, even if they aren’t aware those debts existed.

“Executors are left in a terrible position and fewer and fewer people will be willing to act as executors. It’s a thankless task.”

Read our guide on how to be an executor here

Death Notification Service

In response to our increasingly paperless lives, last year a group of banks launched the Death Notification Service.

Like the Government’s Tell Us Once service, which notifies different departments such as HMRC and local councils of a death, the Death Notification Service saves you calling around various banks.

Instead, you enter their name, date of birth and death, address and Death Certificate number on the website and the banks will contact you within 10 days to confirm if the deceased had an account with them.

The service should not, however, be considered a cure-all.

“We constantly see things that haven’t been put on the Death Notification Service”, warns Davis.

Only a handful of firms are signed up to the service, most of which are high street banks and only one investment firm, Scottish Widows.

For other institutions, the executor will need to contact them directly.

Just having the Death Certificate isn’t enough; it’s seen as too easy to get, so you’ll need evidence that you’re the appointed executor of the will.

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Going back to basics

“The law is very much playing catch-up”, Davis admits.

Laws around inheritance are being looked at, she says, but will likely require major court cases involving hidden wealth or debts to move legislation forward.

In the meantime, she and her clients are going ‘back to basics’.

That means printing off documents relating to all your assets and putting them in a locked drawer in your study, together with passwords that your family could work out, such as a birthday.

If you change accounts or passwords, you’ll need to add sticky notes and regularly provide written permission to trusted people to access your accounts in the event of your death.

Unfortunately, the situation could get harder before it gets easier.

Faced with rampant fraud, financial firms encourage customers to change passwords regularly and sometimes ask they are backed up by security questions, fingerprints or even voice recognition software.

To make matters worse, your life savings could soon be hidden within your phone.

App-only bank Monzo has 1.78 million customers with recent figures showing thousands more switching, whilst Atom Bank and Tandem Bank are attracting long-term savers.

Monzo is not currently a member of the Death Notification Service. Smaller app-based banks or investment platforms, which are often just start-ups with a couple of employees, could be difficult to track down or deal with.

That’s why, until notification services cover all financial companies, it’s vital you keep paper records of your own digital legacy, Davis advises.

“You might have wanted to pass it onto your children to pay for university or to buy a house; that’s money you’ve worked hard to collect.

“If it’s not identified it just sits there.”

Putting your affairs in order: wills, power of attorney and paperwork explained

How to protect your digital legacy

We talked to Lesley Davis from Shakespeare Martineau and Sarah Coles from investment platform Hargreaves Lansdown on the best ways to protect your digital legacy.

Make a will

55% of us don’t even have a will, let alone information about where to find our assets.

If you’re over 55 it’s possible to get a will draw up for free by a solicitor, in return for charitable donations.

As Davis explains, you should take care with the wording: leaving a beneficiary your Barclays account won’t work if you later switched to Santander.

Hargreaves Lansdown’s Coles suggests you should also draw up an assets register and keep this in hardcopy with your will.

Set an annual calendar reminder

You can check if any passwords have changed or new accounts have been set up and update your hard copy records accordingly.

Consolidate accounts

According to Coles, consolidating accounts can “not just to make life simpler after your death, but make things easier for yourself now.”

It’s also an opportunity to ditch uncompetitive accounts and you can involve your family in the process.

Joint account

If you have a joint bank account, your partner will be able to pay bills and access money straight away, says Davis.

There can be serious downsides to joint accounts so you should think carefully before setting one up.

Power of Attorney

You could give someone Power of Attorney so they can access your online accounts before you die.

However, banks are unlikely to work with them until you have already lost capacity, warns Davis.

“They fight against it, understandably: they don’t want people rocking up with other people’s passwords.”

Useful websites

Death Notification Service – free service to inform member banks of a death and identify an individual’s accounts.

MyLostAccount – free service to find money with bank accounts, building societies and NS&I.

National Will Register – paid-for service that can search for wills.

Pension Tracing Service – a Government service to find unclaimed pensions.

Tell Us Once – a Government service to contact departments including HMRC, Department for Work and Pensions, DVLA and the local council.