When someone who owns Premium Bonds passes away, their Bonds don’t simply disappear. There is a process to ensure that the Bonds can be passed on to the appropriate person or people. In this article, we’ll explain what Premium Bonds are, what happens to them when the owner dies, and the steps that need to be taken to ensure they are transferred properly.
What are Premium Bonds?
Premium Bonds are a type of savings account offered by National Savings and Investments (NS&I) in the UK. Here are some key features of Premium Bonds:
– Minimum investment is £25. Maximum limit is £50,000.
– Instead of earning interest, each £1 Bond is entered into a monthly prize draw.
– Prizes range from £25 to £1 million. The odds of winning are 24,500 to 1.
– The Bonds don’t expire and can be cashed in at any time.
– The interest earned is tax-free.
Millions of people in the UK own Premium Bonds. They are seen as a safe, low-risk savings option. Even if you don’t win any prizes, you don’t lose your original investment.
What happens to Premium Bonds when someone dies?
When a Premium Bonds holder passes away, the Bonds don’t automatically become invalid or get cancelled. They still remain eligible to be entered into the prize draws until the proper steps are taken to transfer ownership or cash them in.
Here is a brief overview of what happens:
– The deceased person’s Premium Bonds remain in draw for prizes until formally notified of their death. Any wins during this time still stand.
– The Bonds need to go through probate so that ownership can be legally transferred to beneficiaries.
– NS&I must be formally notified of the person’s death, usually through a copy of the death certificate.
– The deceased’s Premium Bonds account will be frozen at this point until probate is granted.
– Once probate concludes, the Bonds can be transferred to beneficiaries or cashed in by the deceased’s personal representatives.
The key is that although someone may have passed away, their Premium Bonds still exist for a period of time until formal processes conclude. The Bonds don’t simply vanish or get cancelled immediately.
Notifying NS&I of a Death
The first step in dealing with a deceased person’s Premium Bonds is to formally notify NS&I of their death. This is crucial to begin the process of transferring the Bonds to beneficiaries.
How to Notify NS&I
To notify NS&I of a Premium Bond holder’s death, you need to send them a copy of the death certificate. This should be the original death certificate issued by the registry office. Photocopies or scans cannot be accepted.
The death certificate should be sent to:
NS&I
Glasgow
G58 1SB
Make sure to include the deceased’s Premium Bonds holder’s number in the letter. This helps NS&I identify the correct account.
You should notify NS&I as soon as possible after the person’s death. Do not cash in any Bonds or try to transfer ownership before officially notifying them.
Who Can Notify NS&I
The following people can notify NS&I of a Premium Bonds holder’s death:
– Next of kin
– Solicitor
– Executor
– Personal representative
If you are handling the estate of the deceased, make sure you have the legal authority to act on their behalf before contacting NS&I.
What Happens After NS&I is Notified
Once NS&I receives the death certificate, here is what happens:
– The person’s Premium Bonds account is frozen. No withdrawals or transfers can occur yet.
– Any prizes won from draws after the date of death still get paid into the account.
– NS&I writes to the executor/personal representative with further instructions.
– The Bonds remain eligible for prizes until ownership is formally transferred.
– After probate, the Bonds can start to be cashed in or transferred to beneficiaries.
So in summary, notifying NS&I begins the process of transferring the Bonds, but there are still further steps before they can be claimed. The account is frozen but they can still win draws in the meantime.
Delaying Notification
Legally, NS&I must be notified within 3 months of the date of death. However, in practice, the notification is often delayed further:
– It can take several months for probate to be granted after a death.
– Some executors delay notifying NS&I so the Bonds can continue to earn prizes during this interim period.
– NS&I does allow a delay of up to a year before notifying them if there are valid reasons.
– Delaying substantially beyond a year could cause legal issues down the line.
The optimal time to notify NS&I is once probate has been granted. But an executor should use their judgement on the appropriate delay for a specific estate.
Transferring Premium Bonds After a Death
Once NS&I has been formally notified of the death, the next step is transferring the deceased’s Premium Bonds to beneficiaries or cashing them in. This can’t happen until probate concludes.
The Probate Process
Probate is the legal process for handling a deceased person’s estate. It involves:
– Identifying all assets and liabilities in the estate. Premium Bonds are included as an asset.
– Paying any taxes, debts or fees that are owed.
– Distributing remaining assets to beneficiaries under the law or the will’s instructions.
– Closing the estate when everything is distributed.
Only once probate is granted can Premium Bonds begin to be transferred or cashed in. This also formally confirms the executor’s or personal representative’s legal authority to manage the Bonds.
Probate can take several months in a straightforward estate. It may take over a year if the estate is large or complex.
Transferring Bonds to Beneficiaries
If Premium Bonds are being transferred to people named as beneficiaries in the deceased’s will, the process is:
1. The executor sends NS&I a copy of the will and death certificate (if not already done).
2. NS&I updates its records to show the Bonds passing to the new owners.
3. The inheriting beneficiaries are sent new Bond certificates in their own names.
4. The deceased holder’s Bonds are cancelled and removed from draws.
Beneficiaries do not need to have an existing Premium Bonds account to inherit them. NS&I will open a new account in their name if required.
Joint accounts with a surviving Bond holder just require updating the details to remove the deceased. The surviving holder retains the Bonds.
Cashing In Bonds
Instead of transferring Bonds to beneficiaries, the deceased’s personal representatives may choose to cash them in. Reasons could include:
– Using the money immediately to pay estate debts or taxes.
– The Bonds form part of the residual estate for distant relatives who don’t want to manage them.
– Complex family disputes make distributing the Bonds impractical.
To cash in Premium Bonds, the executor or personal representative should contact NS&I and provide copies of the grant of probate and death certificate. The money can then be withdrawn from the deceased’s account.
After cashing in, the Bonds are cancelled and removed from future prize draws.
Maximum Limits When Transferring Premium Bonds
There are maximum limits on how many Premium Bonds a single person can hold. The current limit is £50,000 worth of Bonds per person.
This means that inheriting large volumes of Premium Bonds from a deceased estate could breach the £50,000 threshold for beneficiaries.
Here are the key points on maximum limits that apply on death:
Exceeding Limits as a Beneficiary
– Beneficiaries can inherit Bonds up to the maximum even if this exceeds £50,000.
– But any Bonds already held by a beneficiary still count towards their limit.
– If a beneficiary already holds £50,000 worth of Bonds, they can’t inherit any further Bonds through probate. These excess Bonds would need to be cashed in.
Joint Ownership Flexibility
– A common workaround is for spouses to jointly hold some of their Bonds. Their combined limit is £100,000.
– So on the first death, the survivor can inherit all the deceased’s Bonds without breaching any limits.
Allowance for Children
– The £50,000 limit applies to each child beneficiary separately.
– So children inheriting can receive substantial volumes without encountering any limits.
– But the Bonds must be held solely in each child’s name rather than jointly.
Overall, inheriting large volumes of Premium Bonds is possible in most situations by distributing them carefully between beneficiaries. But executing this properly comes down to the specific circumstances and planning of the estate.
Example Transfer Scenarios
Here are some examples to illustrate how Premium Bond transfers work with the maximum limits:
Example 1
– Mr Smith solely owns £50,000 of Premium Bonds when he passes away.
– In his will he leaves the Bonds to his wife Mrs Smith.
– Mrs Smith already has £30,000 of Bonds herself.
– She can inherit her husband’s full £50,000 without breaching the limit due to probate rules. Her new total is £80,000.
Example 2
– Mrs Jones solely owns £40,000 of Premium Bonds when she passes away.
– She leaves the Bonds to her two children Peter and Jane equally.
– Peter already holds £10,000 of Bonds. Jane holds none.
– Peter can inherit £15,000 of his mother’s Bonds, taking him to the £50,000 maximum.
– The remaining £25,000 passes to Jane without exceeding any limits.
Example 3
– Mr Patel jointly owns £60,000 of Bonds with his wife. They are worth £30,000 each.
– On Mr Patel’s death, Mrs Patel inherits his £30,000. This doesn’t breach her limit.
– No complications arise as joint ownership increased their combined allowance.
So in summary, transferring Premium Bonds through probate comes down to carefully matching beneficiaries to the Bond volumes available without exceeding £50,000 per person.
Find Lost Premium Bonds or Those With Unknown Owners
Sometimes Premium Bonds are lost or their owner is no longer known. This can happen if records aren’t updated properly over long periods.
If you need to trace lost Premium Bonds or identify unknown owners, NS&I provides tracing services.
Tracing Lost Bonds
To search for lost Premium Bonds registered under your own name, you can fill out an online Lost Bonds form.
You will need to enter personal details and information about events around when the Bonds went missing. NS&I may also request documentation to confirm your identity.
If NS&I can trace your missing Bonds, they will reinstate them under your account and name. This allows you to start managing them again.
Identifying Unknown Owners
For Premium Bonds registered to an owner who is now unknown, deceased, or can’t be contacted, a more detailed process applies.
You will need to provide extensive information to NS&I on:
– The identity of the Bond holder (full name, previous addresses etc.)
– Their personal representatives if deceased.
– Details of events leading to the Bonds becoming unmanageable.
NS&I must conduct detailed research into records and documents to ascertain what became of the Bonds.
If they can identify that you have legal entitlement to the Bonds as an heir or beneficiary, they can be re-registered in your name. Otherwise, the tracing process may identify information allowing the original owner to be contacted.
Overall, NS&I has procedures to reconnect people to lost or unmanageable Premium Bonds. But sufficient evidence must be provided to prove your entitlement to them.
Conclusion
Premium Bonds don’t disappear when someone passes away. A formal legal process must be followed to notify NS&I and execute transfers to beneficiaries or cashing in.
Key steps include:
– Notifying NS&I of the death through a copy of the death certificate.
– Waiting for probate to conclude before transferring ownership of the Bonds.
– Checking maximum limits when inheriting large volumes of Premium Bonds.
– Using NS&I tracing services to locate lost or unidentified Bonds.
Following the correct procedures ensures Premium Bonds can be claimed by those legally entitled to them. The deceased’s savings don’t disappear but correctly pass on to their heirs and beneficiaries. With good record keeping and execution, Premium Bonds can continue benefiting your family for generations.
