Bank deposits are among the most common assets subject to inheritance. Account holders in Ukraine often issue a so-called "bank instruction in the event of death" when opening a deposit, expecting this to automatically transfer the funds to a designated heir. But is that assumption legally sound?
What Is a Bank Instruction Concerning a Deposit?
This is a unilateral declaration by the depositor, completed at a bank branch, designating a specific individual to receive the deposit in the event of the depositor’s death.
However, such an instruction is not a formal will and does not substitute the legal acceptance of inheritance. Therefore, it is not subject to the formal requirements applicable to wills (e.g., notarization or equivalent). Instead, it is executed in simple written form, dated, certified by an authorized bank employee, and retained with the deposit agreement documentation.
It is important to note that a notarized will takes legal precedence over a bank instruction. Consequently, if a will was executed after the bank instruction and:
- covers the depositor’s entire estate or
- specifically names a different individual as beneficiary of the deposit,
then the bank instruction is deemed revoked.
No Automatic Transfer: Understanding the Legal Reality
While a depositor’s instruction held by a bank carries legal weight, it does not constitute a legal basis for claiming funds. It merely identifies a potential heir whose rights are only recognized upon proper inheritance procedures being followed.
Thus, even if no will exists, and the deposit agreement (or separate instruction) names an individual to receive the funds, this does not create an automatic entitlement. The designated person must still formally accept the inheritance and follow the statutory process for acquiring rights to the deposit. This principle was most recently affirmed by the Supreme Court of Ukraine.
Steps for Heirs Designated in a Bank Instruction:
- Submit an application to a notary for acceptance of the inheritance within six months from the date of the depositor’s death. This may be done at any notary office located in the area of the deceased’s last residence. The notary will then initiate the inheritance case.
- Obtain a Certificate of Inheritance from the notary, which legally confirms the heir’s right to the bank deposit.
- Present the Сertificate to the bank, along with the heir’s ID and the deceased’s death certificate, to access the funds.
What Happens If the Designated Individual Fails to Accept the Inheritance?
At present – nothing. A bank instruction does not override the legal requirement to formally accept an inheritance. If the individual named in the instruction fails to file an application to accept the inheritance in time, they lose their right to the deposit, which may then be transferred to other heirs – either under a will or by statutory succession.
This is a critical point often misunderstood: many believe that being named in a bank instruction is sufficient for receiving the funds further. In practice, this misconception has led to deposits being inherited by more distant relatives who completed the proper legal steps.
Key Takeaways
If you are a bank depositor intending to issue a bank instruction in favor of a specific individual, you should inform such person of the legal obligation to formally accept the inheritance. If you are a potential heir, verify whether such an instruction exists with the bank and do not delay in filing your inheritance claim with a notary.
Understanding the interplay between bank instruction and Ukraine’s inheritance law is crucial. This serves as a timely reminder for businesses, banks, private clients and legal advisers: formalities matter, and oversight in inheritance matters can sometimes cost thousands – if not millions – of dollars.
