Law Relating to Distribution of Funds to Beneficiaries

Under general banking law, the property (e.g. monies) in a deceased account holder’s bank account passes to his legal representatives, by operation of law, on the death of a client of a bank licensed and registered in The Bahamas. The property is then distributed to the appropriate or named beneficiary, in accordance with the provisions of the deceased account holder’s will or the rules of intestacy, depending upon whether the deceased account holder died, having made a valid, inter vivos will or died intestate (without a will).

However, if the account is a joint account, the balance in the account becomes the property of the surviving joint account holder in the event of the death of one of the account holders, by virtue of the surviving account holder’s right of survivorship.

Therefore, the property in the deceased account holder’s account, subject to the terms and conditions of the bank’s mandate or contract with the client, cannot be disposed in any way that the bank chooses, since the legal ownership of the property in the account is that of the personal representative(s) of the deceased account holder.

Notwithstanding the foregoing legal principle, the personal representative must produce to the bank, sufficient evidence of probate of the will or letters of administration of the estate of the deceased account holder, as required by Section 49 (1) and (2) of the Supreme Court Act, 1996 (“the Act”) of the Bahamas. Although it is the duty of the personal representative to give notice of the deceased account holder’s death as soon as possible, the bank, being organised and operated under the laws of The Bahamas, may act only upon a Grant of Probate or Letters of Administration in this jurisdiction.

Under common law, a bank who pays the monies remaining in a deceased account holder’s account to a person who has not obtained one the foregoing grants of representation, becomes, by operation of law, an executor de son tort (one who, being either an executor or administrator, who has obtained a Grant of Probate or Letters of Administration in the deceased account holder’s estate, acts in some way as if he/it was an executor or administrator). The bank will also be liable to pay such penalties and duties as would have been payable on Grant of Probate or Administration.

The probate requirements in The Bahamas must be fulfilled before such property in a deceased account holder’s bank account, situate in or related to The Bahamas, may be distributed to the personal representatives of the deceased account holder, notwithstanding the fact that the will of the deceased account holder, may have already been probated in his country of domicile and a Grant of Probate issued in his country of domicile.

The foreign will or letter of administration must be probated again in this jurisdiction and a new Grant of Probate issued to the personal representative of the deceased account holder for the property in his account situated in or related to The Bahamas. The Grant of Probate or Administration, whatever the case may be, must be resealed in The Bahamas.

Under the Probate Rules of the Act, in order to reseal the foreign grant in The Bahamas, the following documents are required: (a). Petition for Resealing the Grant; (b). Bond for Making a Return; (c) Return; (d) Administration Bond (for resealing Letters of Administration) (e) Power of Attorney (to be issued to the person acting on behalf of the personal representative of the deceased account holder, in submitting the documents to the Probate Registry of The Bahamas); (f) Affidavit of Domicile and Assets; (g) Affidavit of the validity of the Will; (h) Three (3) certified copies of the Will; and (i) Three (3) certified copies of the Grant of Probate or Letters of Administration.

The foregoing documents are submitted to the Probate Registry of the Supreme Court of The Bahamas and the process may take from three (3) months to a year, depending upon the proper completion and submission of the documents, the nature of the assets, and the complete fulfilment of the probate requirements.

1. Upon receipt of the Grant of Resealing of Probate in The Bahamas, the bank should require the following information before release of the property in a deceased account holder’s account: (a). Certified copy of the Grant of Resealing of Probate from the authorised Attorney (under the aforementioned Power of Attorney) in The Bahamas; (b) An independent, written verification of the identification of the Executor or Administrator from a Notary Public or lawyer in his country of domicile; (c) Letter from the Executor stating that he has been advised by Bahamian legal counsel and/or the authorised attorney of the estate of the deceased account holder, that all of the relevant probate rules and procedures have been followed and completed, regarding the Resealing of the Grant of Probate in The Bahamas and that all of the relevant laws have been complied with, as preliminary steps in requesting the release of the property/monies in the deceased account holder’s account. 
   
   

The Executor should also make a formal request for the release or distribution of the property/monies in the deceased account holder’s account, indicating the specific reasons for the release or distribution of the property/monies for the account, and he should also provide the Bank with his specimen signature, duly certified by a Notary Public or lawyer in his country of domicile, or alternatively, copies of the first four or relevant pages of his passport.

Section 50 (1) (a) –(d) of the Act is also applicable to the distribution of funds to claimant(s) of the credit balances of the onshore and offshore accounts of deceased account holders, as it provides an easier, more efficient alternative to the formal requirements of the Act, under certain specified conditions.

Section 50 (1) of the Act gives the manager or assistant manager of a bank the discretion to pay “any sum standing to the credit of a deceased person to any person who upon producing satisfactory proof of death of such deceased person and upon producing such evidence as may be required by the manager or assistant manager to be entitled by law to the said sum standing to the credit of the deceased person”, without the production of probate or letters of administration.

To satisfy the requirements of Section 50 of the Act, the claimant of the credit balance of the deceased account holder must produce the following documents/information, before payment of the funds is made to them: 1. Certified copy of the death certificate of the deceased account holder, duly notarized or apostilled (as applicable to deceased account holders domiciled outside of The Bahamas requiring such legalization); 2. Certified copy of the will of the deceased account holder and/or a certified copy of an Affidavit of Law from an attorney in the country where the deceased account holder was domiciled at death, indicating the entitlement of the claimant under that country’s laws of succession. This is to establish the claimant’s legal entitlement to the credit balance of the deceased account holder; 3. Affidavit/Declaration by the claimant, duly certified by a Notary Public in The Bahamas or lawyer in his country of domicile (as prescribed by Section 8 of the Oaths Act), that the deceased person has no real estate in The Bahamas and his total personal estate does not exceed the amount standing to his credit at the bank; and 4. Actual or certified copies of Notices evidencing the fact that at least three (3) months has been given by the claimant by advertisement in three (3) issues of a daily newspaper in The Bahamas, requesting that all persons/creditors having any claims to the estate of the deceased account holder to notify the bank in writing of such claims.

The bank must then ensure that no other claims to the estate of the deceased person have been received by the bank and the bank must then forward the statutory declaration along with the evidence of advertisement for creditors of deceased account holder’s estate to the Registrar General.

It should be noted that the statutory procedure outlined in Section 50 of the Act should be used in a discretionary manner by the manager or assistant manager of the bank, in addition to and in compliance with its internal verification and due diligence policies and procedures, regarding such accounts.

Where the statutory procedure proves to be more open to scrutiny or arguably, less stringent, in its application, than the standards of the bank’s internal policies, procedures, and overall mandate, it may be advisable that the bank exercise its discretion in following the standard probate procedure in Section 49 of the Act, as a precautionary measure.

The information contained in this post is intended for your information only and does not constitute a legal opinion.  If you require specific legal advice you should contact a Bahamian estate-planning and administration attorney.  Such an attorney would be qualified to handle probate and administration of estates in The Bahamas.  You may contact a Bahamian probate and administration of estates attorney by clicking here.