Introduction
Coping after someone dies is difficult, and managing their financial affairs can add to the stress. There are different rules for different types of savings and bank accounts, including Premium Bonds. If the person who died owned Premium Bonds there is a key decision to make about when you cash in the bonds. There are also specific rules to follow to claim the bonds and any prize money.
This article explains everything you need to know about how to cash in Premium Bonds and claim any prize money after someone dies.
What are Premium Bonds?
Premium Bonds are a type of savings product offered by the UK government through National Savings and Investments (NS&I). They are a popular way to save, and many people in the UK own Premium Bonds.
People buy Premium Bonds as an investment, but they function more like a lottery. Instead of earning interest, each £1 Bond number is entered into a monthly prize draw. Winners get tax-free prizes ranging from £25 up to £1 million. The winning bond numbers are chosen by a random number generator called ERNIE (Electronic Random Number Indicator Equipment).
You can invest between £25 and a maximum of £50,000 in Premium Bonds. The money invested can be withdrawn at any time.
When someone dies, all their money, investments, property and possessions are known as their assets. Premium Bonds are considered as assets, in the same way as money in a bank or building society account.
What happens to Premium Bonds when someone dies?
When someone dies, Premium Bonds form part of their estate along with all their other assets. The person responsible for administering the estate is usually the executor (if the person left a will) or administrator (if there is no will).
The executor or administrator will need to decide how to handle the Premium Bonds as part of the probate process.
Options for dealing with Premium Bonds
The executor or administrator has two main options for managing Premium Bonds after someone dies – cash them in as soon as possible, or keep hold of them for up to 12 months.
When you claim the Bonds, NS&I will tell you if they need probate before cashing in the bonds. This is usually the case if the person had more than £5,000 in NS&I savings. Once the bonds are cashed in the money is added to the estate of the person who died.
Claim them immediately
The first option for dealing with Premium Bonds is to cash them in as soon as possible. If you choose this option, the Premium Bonds are generally only eligible for prize draws up to and including the month they are claimed.
The benefit of this option is that if the estate is likely to be ready to be distributed in less than twelve months, it avoids delays. Also, the money might be needed to pay off debts/expenses sooner rather than later.
Hold the Premium Bonds for up to 12 months
The other option is to keep the Premium Bonds for a year. The bonds can be held by NS&I for up to 12 months following the owner's death.
During this one-year period, the bonds will continue to be entered for the monthly prize draws. The benefit of this option is that it can increase the total amount received if prizes are won during the year. However, it may delay the distribution of funds – if probate is completed before the end of the 12 month period you will still need to wait for the end of the year before cashing in the bonds. There is also no guarantee that any prizes will be won during the year.
The role of probate
Whether or not you need to go through the probate process to cash in someone’s Premium Bonds depends on how much the person who died left. NS&I, like other banks and building societies, has a limit below which they can release funds without requiring a Grant of Probate or Letters of Administration (the legal documents you receive as part of the probate process).
The threshold for NS&I holdings is £5,000. This threshold applies to the person’s total holdings across all NS&I products, not just Premium Bonds. So if someone owned Premium Bonds worth over £5,000, or a combination of Premium Bonds and other NS&I products exceeding £5,000, probate will usually be needed.
If probate is needed, the executor or administrator will need to provide NS&I with a copy of the Grant of Probate or Letters of Administration, along with other necessary documents, and a completed NS&I claim form, before NS&I will release the money held.
Claiming Premium Bonds and winnings
To claim the Premium Bonds after a death, the executor or administrator will need to contact NS&I. This can be done by completing a bereavement claim form. You can do this online, or by post.
You will need to provide certain information including:
The full name and address of the person who died, their date of birth and the date they died.
Details of the person making the claim (executor/administrator).
Proof of death, such as a copy of the death certificate.
Any known details of the Premium Bonds or other NS&I savings.
The bank account details where you want the payment to go.
If needed, a copy of the Grant of Probate or Letters of Administration.
NS&I aims to respond to claims within 11 working days once received. If more information is needed, they will write to you.
Any prize money won by the person who died before their death forms part of their estate. Prizes won after they died (if you opt to keep the Bonds in the draw for the 12-month eligibility period), will be paid to the executor, administrator, or the person inheriting the money.
If the bonds are not claimed within 12 months of the death, the invested money will be returned to NS&I and held in the Unclaimed Premium Bonds Account. It can be claimed at any time in the future.
Tracing Premium Bonds and other NS&I savings
Sometimes people aren’t sure if someone had Premium Bonds, or can’t find the original bond certificates. In these situations, NS&I offers a tracing service to help locate them or any other NS&I savings product.
Frequently Asked Questions about Premium Bonds
Do Premium Bonds pass to next of kin after someone dies?
No, Premium Bonds do not automatically pass to the next of kin or beneficiaries. They are dealt with by the executor or administrator as part of the estate of the person who died. They can either be cashed in during the probate process, or held in the draw for 12 months.
How do I notify NS&I that someone has died?
The executor, administrator, or person responsible for the estate should notify NS&I. This is typically done by completing the NS&I bereavement claim form, available on their website or by requesting a paper copy and posting it back. You will need to provide some personal details (full name, address, date of birth, date and place of death) and provide proof of death, such as a death certificate.
How can I find out if someone had Premium Bonds?
If you aren’t sure whether someone held Premium Bonds or other NS&I savings, NS&I offers a tracing service to help locate them.
How Trustestate can help
Dealing with all the savings and assets of someone who dies can be a challenging and overwhelming process. Let Trustestate take out the hassle for a fixed transparent fee. We offer a simple, streamlined service with expert support at every stage. Book a free call with one of our experts to find out more.
What we offer
Use our Probate and estate administration service and we’ll manage every stage of the process. We’ll take over all the admin, apply to the court for probate, and share out the estate.
Or if the estate is simple, and you have time, you can use our Grant of Probate only service, and we’ll apply for probate using information you provide.
Whichever service you choose, you’ll get dedicated advice every step of the way, and an online platform to keep track of everything.
