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How banks charge dead people fees

Related Story: CBA customer dead for a decade but still charged fees, commission hears

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The banking royal commission has heard the Commonwealth Bank has been charging dead clients' fees for planning advice.

At least five CBA planners admitted to knowingly doing this.

So how was it possible? Why would someone have a bank account after they had died?

Well, estates are usually wound up within a year, said succession expert from the University of New South Wales, Professor Prue Vines.

"It's called the 'executor's year' — that's the usual time you would expect administration to be completed by," she said.

Any money and assets would then be transferred to the beneficiaries, and accounts with the banks closed down, therefore further fees could not be taken out.

But the commission heard the estate of one client was charged for 10 years after his death.

The client's estate was being managed by the Public Trustees, a state-government-funded service that provides low-cost wills in exchange for a fee for administering deceased estates.

Professor Vines said it was largely used by low-income clients.

So how could an estate take 10 years to wind up?

There are two possible explanations:

1. It's an overly complicated estate with disputes
2. A testamentary trust has been set up, which distributes assets over a long period

Why weren't the fees picked up?

Professor Vines said obviously the banks are in the wrong here, however the ongoing fees — in some cases at $65 a month — should have been picked up by the manager of the estate.

"They should have known they were being charged a fee for a dead person. It does seem very odd," she said.

A warning for executors: scrutinise the documents

It is a lesson for both executors and beneficiaries of an inheritance to keep an eye on the accounts.

"Most beneficiaries probably wouldn't query the charges. They probably don't even read the accounts," Professor Vines said.

"Being executor is an onerous task — so much bigger than people realise and people get overwhelmed."

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