Most people are aware of The Financial Services Compensation Scheme (FSCS) providing protection to consumers in the event that their bank went bust. The standard protection limit being £85k per person per financial institution or £170k for joint accounts.
For those who work in the thousands, with regards to savings, the normal protection is probably more than sufficient, but what happens when large sums are generated from an inheritance?
One of the protections offered by the FSCS is the temporary high balance (THB) limit, available to individuals or Executors who have a large sum of money in their account for a limited period of time, prior for example to the pay-out to beneficiaries from an inheritance.
The THB, provides protection up to £1 million for up to six months. So if the financial institution holding the beneficiary’s money were to become insolvent during this period, the FSCS would provide compensation up to £1 million for the Estate Bank Account, although it is suggested that 3 months might be the timeframe for reimbursement.
Therefore, there’s no need for executors to panic and run around opening accounts up and down the high street (for the £85k limit). If the executor received say £600,000 as part of the distribution of the estate, they will benefit from the temporary high balance limit, as long as the money is held in the account for no more than six months.