Joint bank accounts and wills (split from original thread)

[Clitheroekid]

Curiously, this HMRC page https://www.gov.uk/hmrc-internal-manual ... /ihtm12061, states

Whatever the type of Will, property held jointly (IHTM15001) and passing by survivorship (IHTM15081) cannot be subject to any Will but passes automatically to the surviving owner(s).

So presumably their jointly held property and bank accounts are not restricted by the Will. If so, can a Will be written to cover these assets? Or another joint tenants relationship entered into for these assets?

You cannot dispose of jointly owned property by Will, as the doctrine of survivorship means that the property automatically vests in the survivor, irrespective of what the Will says.

However, there's a lot of confusion about what joint ownership actually means. Legal title is not the same as what lawyers call `beneficial' ownership - the right to enjoy the subject matter.

The most obvious example is where a house is owned by two people as tenants-in-common. On death the legal title passes to the survivor by the law of survivorship. But the beneficial title passes according to the terms of the tenancy-in-common. So if they owned it on a 70:30 basis and the deceased owned the 70% that share passes to whoever inherits his estate, and not to the surviving owner.

This can cause massive confusion when it comes to bank accounts. I'm dealing with a case at present where the deceased left about £130k in a bank account that was in joint names with her son. He's saying that the cash has passed to him by survivorship, and that it therefore belongs to him. He's quite adamant that it does not form part of the estate, and he's saying he must be right as the bank have transferred the account into his sole name.

But it's not as straightforward as it seems. I've discovered that the deceased only added him to the account a couple of years ago, and so far as I can ascertain he has contributed nothing at all into the account. I suspect that he was added merely to facilitate managing the account, as the deceased was more more or less bed bound for the last couple of years of her life. So far as I'm aware there's no evidence that she meant him to inherit the cash in the account.

Consequently, I intend to argue that the cash does form part of the estate, and that although he has legal title to it he holds it as trustee for the estate.

It's quite worrying that banks, who are supposedly so keen to protect their customers, allow this sort of thing to happen without, it seems, ever considering the consequences. In practical terms, as the account is now in his sole name there's nothing to stop him withdrawing the cash and vanishing. Would / should the bank be liable in that situation? Answers on a postcard!

[hiriskpaul]

Curiously, this HMRC page https://www.gov.uk/hmrc-internal-manual ... /ihtm12061, states

Whatever the type of Will, property held jointly (IHTM15001) and passing by survivorship (IHTM15081) cannot be subject to any Will but passes automatically to the surviving owner(s).

So presumably their jointly held property and bank accounts are not restricted by the Will. If so, can a Will be written to cover these assets? Or another joint tenants relationship entered into for these assets?

You cannot dispose of jointly owned property by Will, as the doctrine of survivorship means that the property automatically vests in the survivor, irrespective of what the Will says.

However, there's a lot of confusion about what joint ownership actually means. Legal title is not the same as what lawyers call `beneficial' ownership - the right to enjoy the subject matter.

The most obvious example is where a house is owned by two people as tenants-in-common. On death the legal title passes to the survivor by the law of survivorship. But the beneficial title passes according to the terms of the tenancy-in-common. So if they owned it on a 70:30 basis and the deceased owned the 70% that share passes to whoever inherits his estate, and not to the surviving owner.

This can cause massive confusion when it comes to bank accounts. I'm dealing with a case at present where the deceased left about £130k in a bank account that was in joint names with her son. He's saying that the cash has passed to him by survivorship, and that it therefore belongs to him. He's quite adamant that it does not form part of the estate, and he's saying he must be right as the bank have transferred the account into his sole name.

But it's not as straightforward as it seems. I've discovered that the deceased only added him to the account a couple of years ago, and so far as I can ascertain he has contributed nothing at all into the account. I suspect that he was added merely to facilitate managing the account, as the deceased was more more or less bed bound for the last couple of years of her life. So far as I'm aware there's no evidence that she meant him to inherit the cash in the account.

Consequently, I intend to argue that the cash does form part of the estate, and that although he has legal title to it he holds it as trustee for the estate.

It's quite worrying that banks, who are supposedly so keen to protect their customers, allow this sort of thing to happen without, it seems, ever considering the consequences. In practical terms, as the account is now in his sole name there's nothing to stop him withdrawing the cash and vanishing. Would / should the bank be liable in that situation? Answers on a postcard!

I have joint current and savings accounts with an elderly relative who does not use the Internet, smartphones, etc. just so I can order things online and make other payments for them. I have written a statement that I keep with my belongings and my relative's saying that none of the money in the account is mine and that I have a joint account for convenience. Hopefully that should make the situation clear to relevant executors.

[chas49]

Moderator Message:
The discussion about legal/beneficial ownership of jointly held assets is very interesting and deserves its own thread.

I have copied these posts to a new topic so the issue can be discussed here if desired

Thanks

[DrFfybes]

This can cause massive confusion when it comes to bank accounts. I'm dealing with a case at present where the deceased left about £130k in a bank account that was in joint names with her son. He's saying that the cash has passed to him by survivorship, and that it therefore belongs to him. He's quite adamant that it does not form part of the estate, and he's saying he must be right as the bank have transferred the account into his sole name.

But it's not as straightforward as it seems. I've discovered that the deceased only added him to the account a couple of years ago, and so far as I can ascertain he has contributed nothing at all into the account. I suspect that he was added merely to facilitate managing the account, as the deceased was more more or less bed bound for the last couple of years of her life. So far as I'm aware there's no evidence that she meant him to inherit the cash in the account.

Consequently, I intend to argue that the cash does form part of the estate, and that although he has legal title to it he holds it as trustee for the estate.

It's quite worrying that banks, who are supposedly so keen to protect their customers, allow this sort of thing to happen without, it seems, ever considering the consequences. In practical terms, as the account is now in his sole name there's nothing to stop him withdrawing the cash and vanishing. Would / should the bank be liable in that situation? Answers on a postcard!

I have joint current and savings accounts with an elderly relative who does not use the Internet, smartphones, etc. just so I can order things online and make other payments for them. I have written a statement that I keep with my belongings and my relative's saying that none of the money in the account is mine and that I have a joint account for convenience. Hopefully that should make the situation clear to relevant executors.

Banks have a system where you can add an authorised person to operate the account without putting it in joint names - effectivelt a PoA for that account, In fact RBS do (or did) prefer to use this rather than the PoA when my mum let me access her finances.

Surely that is a more unambiguous option?

Paul

[hiriskpaul]

This can cause massive confusion when it comes to bank accounts. I'm dealing with a case at present where the deceased left about £130k in a bank account that was in joint names with her son. He's saying that the cash has passed to him by survivorship, and that it therefore belongs to him. He's quite adamant that it does not form part of the estate, and he's saying he must be right as the bank have transferred the account into his sole name.

But it's not as straightforward as it seems. I've discovered that the deceased only added him to the account a couple of years ago, and so far as I can ascertain he has contributed nothing at all into the account. I suspect that he was added merely to facilitate managing the account, as the deceased was more more or less bed bound for the last couple of years of her life. So far as I'm aware there's no evidence that she meant him to inherit the cash in the account.

Consequently, I intend to argue that the cash does form part of the estate, and that although he has legal title to it he holds it as trustee for the estate.

It's quite worrying that banks, who are supposedly so keen to protect their customers, allow this sort of thing to happen without, it seems, ever considering the consequences. In practical terms, as the account is now in his sole name there's nothing to stop him withdrawing the cash and vanishing. Would / should the bank be liable in that situation? Answers on a postcard!

I have joint current and savings accounts with an elderly relative who does not use the Internet, smartphones, etc. just so I can order things online and make other payments for them. I have written a statement that I keep with my belongings and my relative's saying that none of the money in the account is mine and that I have a joint account for convenience. Hopefully that should make the situation clear to relevant executors.

Banks have a system where you can add an authorised person to operate the account without putting it in joint names - effectivelt a PoA for that account, In fact RBS do (or did) prefer to use this rather than the PoA when my mum let me access her finances.

Surely that is a more unambiguous option?

Paul

Thanks, I will look into this as I have not heard of it before. When I asked Nationwide BS, the advice at the time was to use a joint account. Neither I nor my relative want a POA, at least not yet.

[Lootman]

Neither I nor my relative want a POA, at least not yet.

My attitude towards POAs is to get them when you don't need them; not when you do. Because if you wait until you need one, because the subject person is no longer of sound mind, then they cannot legally accede to one anyway.

So I was made attorney for my mother in 1990, but I did not use that power until 2006.

I gave my children a POA over my affairs in 2007 (right before EPAs went away and LPAs took over) and they still have not used it. But I could get hit by a bus tomorrow.

[Clitheroekid]

I gave my children a POA over my affairs in 2007 (right before EPAs went away and LPAs took over) and they still have not used it.

That's what you think!

[AF62]

It's quite worrying that banks, who are supposedly so keen to protect their customers, allow this sort of thing to happen without, it seems, ever considering the consequences. In practical terms, as the account is now in his sole name there's nothing to stop him withdrawing the cash and vanishing. Would / should the bank be liable in that situation? Answers on a postcard!

The British Bankers Association have a leaflet setting out what can be done to operate someone else's account in various circumstances (mental capacity, no mental capacity, etc.) - https://assets.publishing.service.gov.u ... e-else.pdf

The issue I can see for the banks is that if they question why a joint account is being created then they will inevitably be met with a response of 'what is it to do with you, its my money'.

And then you get to every other joint account that exists, between married couples, couples living together, etc. -is a bank supposed to get involved in the detail about how and why such accounts exist.

If if did get to a situation where the bank was liable then likely the response from the banks would simply be to withdraw offering joint accounts.

[unperplex]

Clitheroekid,
Your comments on legal/beneficial ownership are very interesting.
You say that where a house is held as tenants in common, although the legal title passes to the survivor under the doctrine of survivorship, the beneficial title remains in whatever shares the “tenants” declared.
This may well be the case theoretically (I have not researched it) but practically, with a house (assuming it is Registered Title, as most are) the distinction is somewhat academic because is it not the case that where you have a tenancy in common the Land Registry will automatically place a restriction on the Title providing that no disposition can take place by a survivor (without the cooperation of the deceased’s estate - I forget the exact wording) and therefore the signature of the deceased’s Representative (ie: Executor or Administrator, if it is an Intestacy) is required.
Presumably such signature would not be forthcoming (and the property cannot therefore be sold) unless the declared shares were honoured from the sale monies…..?

The above is according to my understanding of English law.
I am aware there are a number of Scots on the Lemon Fool.
Scots Land Law can be very different from English and I have no idea what the law is north of the border.

[Clitheroekid]

is it not the case that where you have a tenancy in common the Land Registry will automatically place a restriction on the Title providing that no disposition can take place by a survivor (without the cooperation of the deceased’s estate - I forget the exact wording) and therefore the signature of the deceased’s Representative (ie: Executor or Administrator, if it is an Intestacy) is required.
Presumably such signature would not be forthcoming (and the property cannot therefore be sold) unless the declared shares were honoured from the sale monies…..?

You’re partly correct. When property is owned as tenants-in-common the Land Registry will enter a Form A restriction on the title, which says:

No disposition by a sole proprietor of the registered estate (except a trust corporation) under which capital money arises is to be registered unless authorised by an order of the court.

However, it is not the case that on the death of one TIC the other signature on the sale transfer has to be that of the personal representative of the deceased’s estate. The surviving owner can appoint anyone they like to act as co-trustee and sign the transfer.

It’s actually a potential loophole that an unscrupulous surviving owner could easily exploit to sell the house and scarper with the proceeds!