Introduction

The Bank-Customer relationship is one that is governed and regulated by law, be it contractual or statutory. The relationship, like every other relationship, confers rights on the parties and at the same time, imposes obligations. At the onboarding stage of the bank-customer relationship, certain pieces of information are collected from the customer as part of the account opening processes. Among others, these are requirements by the regulatory bodies for KYC (Know Your Customer) purposes.

Aside from the personal details of the customer collected by the bank, one other detail that is usually collected is information about the next of kin. The Bank-Customer relationship is a continuous relationship in which the bank and customer have an open line of communication, and so the bank usually contacts the customer and vice versa.

Due to the possibility of the bank not being able to establish direct contact with the customer, there arises the need to have contact of another person (usually a close relative) who can be contacted in the event that the bank is unable to reach the customer.

In recent times, there has been some circulation in the media about the concept of Next-of-Kin and Payable on Death, with the impression being created that the next-of-kin has an automatic right of inheritance of the deceased customer’s funds under Ghana law. It is suggested that a customer can nominate a beneficiary with a payable-on-death form to enable such a nominee to automatically receive funds in the customer’s account upon his or her death.

The authors believe that this controversy has led the Bank of Ghana to issue a notice with no. BG/GOV/SEC/2024/22 seeking to clarify the position. In this short piece, an attempt shall be made to dispel the notion that the Next-of-Kin is the person who is automatically entitled to the benefit of the funds in the deceased customer’s account and contribute to the education on how to access the account of a deceased customer of a bank or financial institution.

It will also be argued that the concept of Payable on Death is not known to and recognized by Ghana law as one entitled to the funds in the account or access to same. It shall conclude by saying that, upon the death of a customer of a bank or financial institution, the only document that a bank is required to respond to by way of mandate of a deceased customer is either Letters of Administration or Probate as the case may be. It is essential that this is done to clear the misconception.

One key incident of the relationship between a bank and a customer is that of a debtor-creditor relationship, where the customer in depositing his or her money with the bank becomes a creditor to the bank with the bank being a debtor. The customer can demand his or her money at any time and the bank is under obligation to make the funds available once the customer is in funds and the necessary conditions have been fulfilled.

Upon the death of the customer, although the relationship is terminated by operation of law, the obligation owed by the bank to the deceased customer and by extension his or her estate is not extinguished by the death in the view of the authors. Upon the demise of the customer, it is not anyone who can have access to the funds in the account. It is a gross misconception of the law, to say that the Next-of-Kin qua Next-of-Kin is automatically entitled to the funds in the deceased customer’s account or even access to same.

Who is a Next-of-Kin?

In Ghana, there seems to be no specific statutory definition of Next-of-Kin known to the authors. Next-of-kin generally refers to the closest living relative of an account holder who could be contacted in the event of the account holder being unreachable. That person is usually chosen by the account holder, and it could be his or her spouse, child, parent or even a friend. The Black’s Law Dictionary, 9th Edition defines Next-of-Kin as “the Person or persons most closely related to a decedent by blood or affinity”.

Mozley & Whiteley’s Law Dictionary, 12th Edition, the Next-of-Kin is, “an expression generally used for the persons who, by reason of kindred were on the death of a person intestate before 1926, entitled to his personal estate….” “Those who are, lineally or collaterally, related in the nearest degree to a given person.” He or she is one to be contacted if the customer is not reachable.

He or she is not automatically entitled to inherit the property of the deceased customer unless such a person falls in the category of persons entitled or designated beneficiaries under the estate.

Payable on Death (POD) Form

Payable on Death (POD) form is a document used in banking transactions. The document is used to designate beneficiaries to receive the funds standing to the credit of a customer upon the customer’s demise. The POD in jurisdictions where it is applicable, allows the account holder in his or her lifetime to specify who will inherit their assets without going through the Probate or Letters of Administration process.

It has been argued that the arduous administrative processes to obtain the Probate or Letters of Administration before one can access the funds in a deceased customer’s account make one consider the Next-of-kin or Payable-on-death concept as the most convenient way, but that is subject to their acceptability by the laws of Ghana.

This may be especially useful where the deceased customer has a very small estate or in instances where the only property is the funds in the bank account which may not even be much. But as would be argued by the authors, that is not the current position of the law, hence upon the death of a customer, the Probate or Letters of Administration would have to be obtained before being granted access.

Property of a deceased

Upon the death of a person, his or her property must be dealt with in accordance with law. A person’s property which forms part of the estate upon his or her death includes his or her money or investments with a bank or financial institution. The person may either die testate (made a Will) or intestate (without a Will).

If the person made a Will, then it means that he or she appointed Executors who will apply for the Probate and if he does not make a Will, certain categories of persons known to law must apply to the Court for Letters of Administration and be appointed as Administrators of the estate.

If the person made a Will, he or she can devise or give to anyone his or her property provided that the property belongs to the person making the Will. On the other hand, if the person dies without making a Will (intestate), the property will be shared in accordance with the Intestate Succession Law (P.N.D.C.L 111).

Once the customer dies, the only document the bank will respond to is the legally recognised document of a Probate or Letters of Administration issued by the Court. Upon the demise of a customer, his or her relative(s) may notify the bank of the demise of the relative whereupon the bank is obliged by that notification to place a PND (Post No Debit) on the account.

This means that the account ought to be restricted once the bank receives notice of death with the requisite evidence from relatives, the bank ought not allow debits to be made on the accounts. Some banks will allow only credit into the accounts, while others will create a suspense account and credit same with all funds that come in favour of the customer until the personal representatives are so appointed.

How then can the funds of deceased customer be accessed

The law is that no one can deal with the property of a deceased person unless the person is duly authorized under the Will of the deceased customer, or the person has been appointed as an Administrator by a Court. It is an offence of intermeddling to deal with such property without lawful authority. The only means by which a deceased’s account details or funds can be accessed is when there is the appropriate legal document or authorisation, which could be either a Probate or Letters of Administration.

Letters of Administration (LA)

When a person dies without making a Will, he or she is said to have died intestate. Due to the absence of a Will, the deceased in this case would not have appointed the beneficiaries of his estate. In such cases, the applicable law is the Intestate Succession Law PNDCL 111. Under that law, there are four categories of persons who may make an application to the Court to be appointed as Administrators to manage or wind up the estate. These persons in order of priority are, the surviving spouse (widow or widower), surviving child, surviving parents and customary successor.

The law is that any or all of these four persons can put an application before the court supported by an affidavit deposing to the facts in support of the application. The application and affidavit would usually depose to the facts like the name and address of the application, the relationship between the applicant and the deceased, the name of the deceased, date and place of death, his or her fixed place of abode, the nature and value of the property he or she died possessed of, the evidence of death (death certificate, Medical Certificate of Cause of Death or in some instance burial permits).

The affidavit is deposed to by any or all the four categories of persons and filed together with the statutory forms.

The application is then filed, and a date is given by the registrar of the Court for the applicants to appear before the court for the hearing. Upon hearing by the Court, if satisfied that all the processes are in order, the Court will grant the application subject to posting for 21 days or any number of days the court may deem fit. The notice to be posted is titled, Notice of Next-of-Kin.

This is posted for a number of days at designated places and the purpose is for persons who may have an interest in the estate who may have been entitled to but sidelined in the application process to raise a caveat and state their interest in the estate. If no caveat is raised, the process moves to the next stage where there is the payment of the estate tax, which currently stands at 3% of the value of the estate.

This is payable to the state through the court, and it is a condition precedent to the issue of the Letters of Administration. Upon the payment and before the letters of administration are issued, the Administrators must sign a bond with sureties who undertake that the estate will be administered in accordance with law.

Grant of Probate

Where a customer died having made a Will, the appropriate document required for accessing the account is a probate. Once a Will has been made, it presupposes that the deceased customer (testator) has appointed an Executor. An Executor is the person who the testator has appointed or nominated in his Will to administer the estate upon his demise. It is the Executors who in this case would have to make an application to the court for the grant of probate.

The process is virtually the same as the application for letters of administration, except that in the case of probate, the persons to make the application are nominated by the testator in his Will and not by operation of law. It is only when the Executors are also deceased that the law permits beneficiaries or persons entitled under the estate to apply for Letters of Administration with Will Annexed.

The application for the grant of probate is also by motion with an affidavit deposed to by the Executors deposing to the facts including the demise of the testator, date and place of death, who he or she was survived by, the evidence of the death of the customer, list of properties the testator died possessed of among other relevant information.

The necessary statutory forms are attached and filed. Once the probate is granted, the necessary processes including the payment of the 3% estate tax are complied with and the Probate is issued. It is when the Probate is issued that same can be submitted to the bank for access to the funds in the deceased customer’s account.

Notice of Grant

As mentioned earlier, before the Court would grant Letters of Administration for designated persons to have access to funds in the account or any other property of a deceased customer, the court would cause a notice of the grant to be posted for a number of days. The Rules of Court governing the High Court and Circuit Court, High Court (Civil Procedure) Rules 2004 C.I 47 provides for this in Order 66 Rule 10 as follows:

“(1) The Court shall not allow any grant of letters of administration to issue unless after the grant, notice of it is given for a period of not less than twenty-one days, or such other period as the Court may order in the following manner (a) in the Court where the application for grant was made: (b) in any public place within the jurisdiction of the Court where it is likely that the notice will be seen by those who may have an interest in the estate; (c) at the last known place of abode of the deceased in respect of whose estate the grant has been made.

(2) Where the grant is in respect of the estate of a person who died intestate, notice must be given whenever practicable to all persons entitled to a share of the estate of the deceased under the Intestate Succession Law, 1985 (P.N.D.C.L 111); the Court may, however, dispense with such notice to beneficiaries if it considers it expedient to do so.

(3) The Court shall not allow any grant of probate or letters of administration to issue unless all inquiries which it sees fit to make have been answered to its satisfaction.

(4) The Court shall afford as great a facility as possible for obtaining probate or letters of administration as is consistent with due regard to the prevention of error and fraud. (5) Notice under this rule shall be as in Form 23 specified in the Schedule.” This notice to be posted is captioned “Notice of Next-of-Kin.”

It is only when the above two documents have been procured that the bank can grant access to the account.

Next-of-Kin and its utility in Banking

The Next-of-Kin information is one of the information a financial institution is required by law to take from the customer at the onboarding stage. This means that in the account opening process, the customer must nominate a next-of-kin, who is usually the person to be contacted by the bank when the customer is not reachable. That is the utility of a next-of-kin qua next-of-kin.

In recent times, the Bank of Ghana has issued a directive titled, “Unclaimed Balances and Dormant Account Directive, February 2021” pursuant to section 92 of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930).

The directive deals with how the banks or financial institutions are supposed to treat unclaimed balances and dormant accounts. Unclaimed balances under the law, happen in instances where a current or savings account has not been operated for a period of two years or a time deposit has not been operated for a period of two years after maturity.

The subject of treatment of unclaimed balances and dormant accounts was treated by the first author in an earlier paper https://thebftonline.com/2024/05/28/treatment-of-dormant-accounts-and-unclaimed-bank-balances-a-look-at-act-930-and-other-relevant-directives/.

The Bank of Ghana Directive on Unclaimed Balances and Dormant Accounts provides that when a customer has unclaimed balances and such customers are not reachable, the funds in their accounts must be placed in a dormant account register. The bank is under obligation to communicate or take steps to contact an account number holder by physical visitation, phone call or SMS, email, or any other agreed form of communication.

The Directive provides that, “A regulated financial institution shall contact the “Next-of-Kin” or other designated person of the Dormant Account Holder where efforts to locate the Dormant Account Holder prove futile.” It is therefore useful that the bank or financial institution has the details of the next-of-kin so that he or she can be contacted in the event that the customer is unreachable.

Banks’ Duty of Confidentiality to Customers

The Bank or any financial institution owes several duties to its customers. One of such duties is the duty of confidentiality. The bank has information on its customers, which information it has mainly because of the Bank-Customer relationship and for purely that sole purpose. It is therefore not supposed to be divulged to other unauthorized third parties. These include information on bank balances, account number details, access to funds, details of transactions etc and these obligations are present whether in the lifetime of the customer or after the customer’s demise.

In the absence of the Probate and Letters of Administration in relation to the deceased, it is the view of the authors that, the Bank or Financial Institution has no business granting access even to the account details or information to any other person, regardless of the relationship of the person seeking same and the deceased customer. The Bank owes a confidential obligation towards the customer, whether dead or alive. At common law, the courts have indicated that the bank has no business divulging customer information to third parties without the consent of the said customers.

In the case of Tournier v National Provincial and Union Bank of England [1924] 1 KB 461, it was held that the bank's duty of confidentiality does not apply in four instances where the bank was compelled by (1) law, (2) duty to the public, (3) interest of the bank and (4) with the consent of the customer. The Statutory regime of Ghana under the Banks and Specialised Deposit-Taking Institutions Act 2016 (Act 930) mirrors this position regarding the exceptions in Section 146 of Act 930. Relative to this subject, the law provides in section 146

(4) that, “The duty of confidentiality imposed under this section shall not apply where (c) the customer has died, testate or intestate, and the information is required by the appointed personal representative of the deceased or the testamentary executor solely in connection with the succession to the estate; (d) the express consent of the customer has been obtained.”

It is therefore an error if the bank decides to grant access to either account details/information or funds in the account without these permissible exceptions known to law. Any bank that does such exposes itself to serious potential risk should the lawfully appointed personal representatives of the deceased customers decide to take them on.

It is therefore beyond doubt that the bank’s duty of disclosure of information or access to funds is strictly circumscribed by law and the bank cannot act on its own outside the law, no matter how well-intentioned it may be. Whatever step the bank may take relative to the account of a deceased person must be grounded in and supported by law, falling which the bank places itself in a position of high risk.

Conclusion

In conclusion, it is worth to note that the concept of Payable on Death (POD) is unknown to Ghana law. That document does not and cannot grant access to the account or funds of a deceased customer, the bank if properly advised legally does not respond to such documents by way of access to the accounts or funds therein.

The only documents the banks will respond to and grant access to the account or funds therein are either Probate or Letters of Administration. These are documents which must be applied for before the courts by the designated persons either by the testator in his Will or by persons designated by law.