Acrimonious will situation

[hiriskpaul]

Here is an interesting conundrum. I am curious as to how it can be resolved.

A relative, call her A, died a couple of months ago. She was married to B and her will says B is to inherit everything provided he outlives her by 21 days, or whatever. A is found to have a joint account with C, although C refuses to confirm she is the joint holder and the bank refuses to reveal who the joint holder is, or the account balance. My understanding is the default position is C would be considered joint tenant with A and so would be entitled to A's half of the account, even if this is not in the will. However, if this half does not pass to her husband B, then surely it must use up part of A's nil rate band, or if greater than the nil rate band, inheritance tax will be due? Even if the amount in the account fell within the nil rate band, surely the amount needs to be established as it will reduce the amount of nil rate band that can be utilised when B dies?

Have I read this situation correctly? If so, can the bank or C be compelled to confirm who the holder is and the account balance at A's date of death?

[didds]

In a parallel universe C has now removed all the money form the account and closed it - "didnt know A was dead, but A told me that was Ok to do when I last spoke to A".

??


didds

[swill453]

Isn't it just normal practice for the bank to supply information to A's executor on demand?

I agree C probably can't be compelled to do anything, and may already have removed the money from the account.

Scott.

[Avantegarde]

Let's assume that C's claim to now own A's half of the joint account is legitimate. The OP's problem seems (partly) to be this: does A's half of the account still form part of A's estate for inheritance tax purposes, even though those assets are no longer available to help pay an IHT bill? My answer: Dunno.

[gryffron]

Hi,

However, if this half does not pass to her husband B, then surely it must use up part of A's nil rate band, or if greater than the nil rate band, inheritance tax will be due?

Yes.
Useful info here: https://www.thegazette.co.uk/wills-and- ... ent/103479

But...
It looks like it is even more difficult than you think. There is no concept of "halves" in a joint account.
(from my link):Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account.
Good luck working that one out!

However, I really can't see why there should be any acrimony here?
C is absolutely entitled to money in a joint account. The will is irrelevant. The law is very clear on this point, as explained in the link above.
Maybe C doesn't know this and is worried they will be chased for the money?
So I would suggest a polite letter to C, stating quite clearly that the executors understand it is C's right to take the money, and asking for their co-operation.

Also send death certificate and will to bank, asking them to remove A from the joint account, and provide statement to the executor. This is also to C's advantage as they gain sole control of the account - not that they probably care if they have cleared the cash out. Though, I'm not entirely sure if the bank have a duty here, as the joint account is NOT part of the estate managed by the executors. So there's no reason the bank should co-operate with the executors. Even though they need the information for HMRC

All of which information still dismally fails to answer your question. Indeed probably made it even harder.

Gryff

[didds]

It looks like it is even more difficult than you think. There is no concept of "halves" in a joint account.
(from my link):Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account.
Good luck working that one out!

all i can add is that in somethig like 20+ years of self assessment all I ever did wrt bank account interest in outr shared accuunts was split it down the middle between mrs didds and me, and declare my half on my SA. HMRC seemed happy enough with that - albeit admittedly the amounts were pretty small .

didds

[Watis]

It looks like it is even more difficult than you think. There is no concept of "halves" in a joint account.
(from my link):Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account.
Good luck working that one out!

all i can add is that in somethig like 20+ years of self assessment all I ever did wrt bank account interest in outr shared accuunts was split it down the middle between mrs didds and me, and declare my half on my SA. HMRC seemed happy enough with that - albeit admittedly the amounts were pretty small .

didds

didds is correct wrt self assessment returns. I phoned HMRC to ask the exactly this question many years ago and was instructed to split the interest on joint accounts 50:50.

But the OP's post relates to executorship and probate, where the rules may well be different . . .

Watis

[PinkDalek]

But the OP's post relates to executorship and probate, where the rules may well be different . . .

Yes they are and the link provided by gryffron goes some way to explaining the position re survivorship etc, plus comments on Inheritance Tax.

The extract provided Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account. was under the heading Are there inheritance tax implications when a joint bank account holder dies?.

The relevant IHT404 form is here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/517451/IHT404.pdf

It includes:

Jointly owned assets where all the money was provided by the deceased

Sometimes assets may be owned jointly with another person, but one person provided all the money, either in an account or to buy an asset. For example, an elderly person who has difficulty getting out, may add the name of a relative to an account for convenience so the relative may draw out money on the elderly person’s behalf.

If the person who provided all the money dies, then their share of this account will be the whole. But if the other joint owner has withdrawn money for their own use, those withdrawals may be gifts and you may need to include them on form IHT403, ‘Gifts and other transfers of value’.

It follows that if someone died with their name on a joint account but they did not provide any of the funds, no part of the account need be included in the estate unless the other joint owner intended to make a gift to the deceased.

Then read on, particularly page 6 re Survivorship assets, and see also pages 23 and 24 here:

Guide to completing your Inheritance Tax account
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/864520/Guide_to_completing_your_Inheritance_Tax_account__IHT400_notes__-_English.pdf

[didds]

didds is correct wrt self assessment returns. I phoned HMRC to ask the exactly this question many years ago and was instructed to split the interest on joint accounts 50:50.

But the OP's post relates to executorship and probate, where the rules may well be different . . .

Watis

and that is fair enough of course. but short of asking HMRC its as good as we possibly know. Good point though

[PinkDalek]

Off-Topic to the OP and may be better in a separate thread but re:

... but short of asking HMRC its as good as we possibly know.

There are alternatives to asking HMRC - see and enjoy https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim2420 for their views.

Extract only (my underlining and best to read the entirety):

Interest: taxation of interest: joint accounts

Where interest arises on an account held in the joint names of spouses or civil partners, each will normally be taxable on half of the interest, under ITA07/S836. Where, however, their beneficial entitlement to interest (or any other income from a jointly owned asset) is not actually 50:50, they may elect to be taxed on their actual entitlement. ...

Where a savings account or other source of interest is owned jointly by persons who are not spouses or civil partners, they will be taxed on the interest to which they are actually entitled. ...

[Lootman]

It looks like it is even more difficult than you think. There is no concept of "halves" in a joint account.
(from my link):Rather than simply assuming each account holder is entitled to an equal share of the funds, HMRC usually treats account holders as owning a share of the funds which is proportionate to their contributions to the account.
Good luck working that one out!

all i can add is that in somethig like 20+ years of self assessment all I ever did wrt bank account interest in outr shared accuunts was split it down the middle between mrs didds and me, and declare my half on my SA. HMRC seemed happy enough with that - albeit admittedly the amounts were pretty small .

didds is correct wrt self assessment returns. I phoned HMRC to ask the exactly this question many years ago and was instructed to split the interest on joint accounts 50:50.

50/50 is certainly the default assumption for how to attribute interest. But then it doesn't seem to apply to rents. For many years my wife and I jointly owned a rental property. All the rent was paid to her and she declared 100% of that rent for tax purposes. I declared nothing. HMRC actually investigated the rent distribution at one point, and concluded that the way we had treated it was acceptable.

A joint account is by definition 50/50 unless there are three or more account holders, and even then the shares are deemed to be equal. As others have noted HMRC may take account of who contributed the funds to that account for probate purposes. But there will be many cases where it is impossible to determine who contributed those funds. That is particularly the case if the account was in existence for a long time and money was constantly flowing in and out. I certainly don't see how an executor is supposed to determine that. So again in practice I imagine that HMRC will usually accept 50/50.

Joint accounts can be an effective way to ensure that distribution of your assets does not require probate, regardless of whether IHT is due or not. Such amounts remain liable for IHT unless the other account holder is a spouse.

[hiriskpaul]

All very interesting stuff. Thanks to everyone for their contributions. I had forgotten about the assessed according to contribution to the account rules, which of course complicates things even more.

There is no problem and argument with joint holder C inheriting the entire account. The difficulty is with C not cooperating with the executor as to the nature of the account, how much of it belonged to the deceased and what gifts were made and when. Hopefully careful and calm discussions between C an the executor D (son of A&B) will resolve this. But if not and C continues not to cooperate, can anything be done legally? Can/will the HMRC get involved?

My father always said that there is nothing better than a death to stir up family strife. Absolutely spot on here and it is not as though the estate, or that of B when he dies, will be over the nil rate bands for IHT.

[swill453]

But if not and C continues not to cooperate, can anything be done legally?

Has the executor written to the bank, with a copy of the will and death certificate?

Scott.

[hiriskpaul]

But if not and C continues not to cooperate, can anything be done legally?

Has the executor written to the bank, with a copy of the will and death certificate?

Scott.

Yes. A's name has been removed from the account, but the bank will not reveal anything about the joint holder or the amount in the account at the date of death. He is fairly confident though that he knows the identity of the joint holder. Just that person is being ridiculously awkward.

I have had similar problems with joint accounts in the past. Some banks will reveal the joint holder, some will after going through a guessing game (is it X? No. Is it Y? No. Is it Z? Yes). Some will not reveal anything without the permission of the other holder. Tricky if the other holder is dead. Someone in a branch allowed me to surreptitiously read her screen which allowed me to resolve that one!

[gryffron]

the bank will not reveal anything about the joint holder or the amount in the account at the date of death.

I have to say that viewed from the perspective of the bank, I'm not surprised. Surely their "duty" is the privacy of their client - C. They have no obligation to the executors.

Except the executors need to know. Which, if C continues to refuse to cooperate, leaves the executors with a legal duty to report to HMRC, but no powers to obtain the information.

Can one simply pass the buck to HMRC? Can you submit an incomplete return with estimates like you can with SA?
"We know of the existence of this joint account. We have no authority to access information about it."
HMRC certainly do have the powers to obtain the information, although they have so few staff these days I seriously doubt they would be bothered. Unless they suspected A was worth millions.

Gryff

[dealtn]

...the bank refuses to reveal who the joint holder is...

Is the account in question a current account? The cheque book will often reveal the names of both holders, or similarly a statement, which may also cover non current accounts.

[Lootman]

the executors need to know. Which, if C continues to refuse to cooperate, leaves the executors with a legal duty to report to HMRC, but no powers to obtain the information.

Yes, the role of Executor carries personal financial liability but no real power to compel. Which is probably the number one reason why people decline to act in that role. In practice you are reliant both on third parties co-operating with you AND on them being honest with you. If they lie it is probable that you will have no way of knowing - this might happen if a gift recipient "forgets" about a gift they received from the deceased, for instance.

I would be tempted to renounce the Executorship if a key party is playing games.

[richfool]

Here is an interesting conundrum. I am curious as to how it can be resolved.

A relative, call her A, died a couple of months ago. She was married to B and her will says B is to inherit everything provided he outlives her by 21 days, or whatever. A is found to have a joint account with C, although C refuses to confirm she is the joint holder and the bank refuses to reveal who the joint holder is, or the account balance. My understanding is the default position is C would be considered joint tenant with A and so would be entitled to A's half of the account, even if this is not in the will. However, if this half does not pass to her husband B, then surely it must use up part of A's nil rate band, or if greater than the nil rate band, inheritance tax will be due? Even if the amount in the account fell within the nil rate band, surely the amount needs to be established as it will reduce the amount of nil rate band that can be utilised when B dies?

Have I read this situation correctly? If so, can the bank or C be compelled to confirm who the holder is and the account balance at A's date of death?

Sorry, I've only just seen this thread.

If A has a joint account with C, and A then dies, the whole balance in the account automatically becomes C's, (irrespective of any wills). The bank or whatever organisation should only require sight of a copy of A's death certificate to amend the title of the account into C's sole name. I used to work for a bank and confirm that is so.

So for the purpose of probate or any distributions by the Executor, the balance of that joint account should not be taken into account and should be totally ignored. The funds are now C's.

[hiriskpaul]

Here is an interesting conundrum. I am curious as to how it can be resolved.

A relative, call her A, died a couple of months ago. She was married to B and her will says B is to inherit everything provided he outlives her by 21 days, or whatever. A is found to have a joint account with C, although C refuses to confirm she is the joint holder and the bank refuses to reveal who the joint holder is, or the account balance. My understanding is the default position is C would be considered joint tenant with A and so would be entitled to A's half of the account, even if this is not in the will. However, if this half does not pass to her husband B, then surely it must use up part of A's nil rate band, or if greater than the nil rate band, inheritance tax will be due? Even if the amount in the account fell within the nil rate band, surely the amount needs to be established as it will reduce the amount of nil rate band that can be utilised when B dies?

Have I read this situation correctly? If so, can the bank or C be compelled to confirm who the holder is and the account balance at A's date of death?

Sorry, I've only just seen this thread.

If A has a joint account with C, and A then dies, the whole balance in the account automatically becomes C's, (irrespective of any wills). The bank or whatever organisation should only require sight of a copy of A's death certificate to amend the title of the account into C's sole name. I used to work for a bank and confirm that is so.

Yes sure, but that isn't the issue. The problem is that if some of the money in the account belonged to A, then this must be reported and taken into consideration for IHT. If C will not cooperate, what should an executor do?

[hiriskpaul]

...the bank refuses to reveal who the joint holder is...

Is the account in question a current account? The cheque book will often reveal the names of both holders, or similarly a statement, which may also cover non current accounts.

Good point. I had assumed that statements and/or cheque books have not been found. I will point this out though.