(a) A personal representative of a deceased customer is an individual or individuals legally authorized to manage and administer the estate of the deceased person. This includes collecting assets, paying debts, and distributing the remaining estate according to the law or the deceased’s will. In practice, personal representatives are either:

• Executors, appointed under a valid will (testate succession), who derive authority from the will but must obtain probate to confirm it.
• Administrators, appointed by the court in cases of intestate succession (no will) or where a will exists but no executor is appointed or able to act.

In Ghana, this is governed by the Administration of Estates Act, 1961 (Act 63), and the Intestate Succession Law, 1985 (PNDCL 111), which prioritize family members like spouses and children as administrators. Banks must verify the personal representative’s authority before releasing funds to avoid liability, as seen in cases like the banking sector cleanup where improper estate handling led to disputes (e.g., similar issues in liquidated banks’ asset distributions post-2017-2019 cleanup by BoG).

(b) When a customer dies testate (with a will) and has appointed an executor, the executor must obtain a Grant of Probate from the court. This legal document validates the will and confirms the executor’s authority to administer the estate, including dealing with bank accounts. Under Ghanaian law (Administration of Estates Act, 1961), probate is essential for the executor to legally transfer or access assets like bank balances. In banking practice, institutions like GCB Bank or Ecobank Ghana require sighted probate before unfreezing accounts, ensuring compliance with BoG’s risk management directives to prevent unauthorized payouts.

(c) If the deceased testator failed to appoint an executor in the will, the relevant persons (typically beneficiaries or next of kin) must obtain Letters of Administration with Will Annexed from the court. This document appoints an administrator to handle the estate in line with the will’s provisions. Per the Administration of Estates Act, 1961 (Act 63), this is issued when no executor is named or available. Banks in Ghana, adhering to BoG’s Corporate Governance Directive 2018, insist on this document to mitigate operational risks, as failure to do so could expose them to claims, similar to disputes in historical bank collapses like UT Bank where estate mismanagement contributed to losses.

(d) In the scenario, Mary Mintah died intestate (without a will), and her sister presented a “next of kin” letter to withdraw the entire balance from the account. The bank allowed this, but later, Jacob Mends (her son) and three siblings presented Letters of Administration, demanding payment of the balance to them as the rightful administrators.

The bank’s position is precarious and likely liable for the wrongful payment to the sister. Key reasons and legal principles include:

• Freezing of Account on Death: Upon notification of a customer’s death, the banker-customer relationship terminates under operation of law (as per common law principles in cases like Joachimson v Swiss Bank Corporation [1921] and Ghanaian banking practice under Act 930). The bank must freeze the account and not allow withdrawals until proper authority is presented. Paying out based on a mere “next of kin” letter violates this, as next of kin designation (often from account opening forms) is only for notification or emergency purposes, not for estate administration.

• Requirement for Proper Legal Authority: In intestate cases, only Letters of Administration grant legal authority to administer the estate. Under PNDCL 111 (Intestate Succession Law, 1985), the estate devolves to the spouse, children, and other relatives in specified proportions, and administrators (usually family members) are appointed by the court. A next of kin letter has no legal standing for disbursing funds; it’s not equivalent to probate or letters of administration. The bank should have insisted on court-issued documents before payout, as per BoG guidelines on account management and risk (e.g., Operational Risk Management under Basel II adaptations in Ghana).

• Bank’s Liability for Wrongful Payment: By paying to the sister without due authority, the bank may be guilty of conversion or breach of duty. In Ghanaian practice, banks like Stanbic Bank Ghana have faced similar disputes, and courts (referencing cases like Commissioner of Taxation v English Scottish and Australian Bank [1920]) hold banks liable if they pay without proper verification. The bank could be required to repay the amount to the rightful administrators (Jacob and siblings), leading to double payment and potential losses. This exposes the bank to claims for negligence, interest, and costs.

• Mitigating Factors and Actions: If the bank can prove the sister was a legitimate beneficiary under PNDCL 111 (e.g., if she is the sole surviving relative, but the scenario suggests otherwise with children present), it might argue good faith. However, the presence of children (primary beneficiaries under intestate law) invalidates this. The bank should now:

  • Verify the Letters of Administration for authenticity (e.g., court seal, gazette publication).
  • Freeze any remaining assets or related accounts.
  • Seek legal advice to negotiate or contest, possibly recovering from the sister if fraud is involved.
  • Report internally as an operational risk incident per BoG’s directives, to prevent recurrence.

In real-world examples, during the 2017-2019 banking cleanup, improper handling of deceased accounts in banks like Capital Bank led to BoG interventions and liquidator disputes, underscoring the need for strict compliance. The bank should train staff on estate handling to avoid such liabilities, aligning with ethical banking under BoG’s Sustainable Banking Principles.