IHT & Gift to a Joint Bank Account.
Posted: April 4th, 2024, 7:32 pm
Joint bank accounts between spouses can be tricky and there are several points arising in law and in HMRC concessions regarding each joint tenant legally owning 100% of the balance. Less is discoverable about treatment of other joint bank accounts except for obvious beneficial interests such as when the joint tenancy is to enable, say, a child to assist a parent in management of the account. I have seen mentions of 'In re Figgis' but haven't found the source.
So... Donor (D) transfers funds to a long-standing bank account which is jointly-owned by Spouse (S) and Another (A) - but not D so no benefit is reserved and it looks like a straightforward 'transfer of value' with not even the slightest hint that a loan is intended. The same value is soon withdrawn by A from that S&A joint account (which is otherwise funded and operated by both parties). In the absence of any documentation there could be differing interpretations of this for IHT purposes.
1. D has made an inter-spouse lifetime transfer to S of the full amount which went directly from D's other resources into the S&A account (rather than into a pre-existing D&S joint account) and whatever happened subsequently is no concern of D's.
2. If simply following the money and 'seeing through' anything between source and final destination: D has made a PET to A of the full sum. This interpetation would require knowledge of outward transactions on S&A account but D and D's executor may not have access to that knowledge.
3. D has made an inter-spouse lifetime transfer to S for half the value and a PET to A of the other half - but D's executor would have no knowledge of whether beneficial interests in this account were actually 50:50 or something else.
If D predeceases S then how should D's executor treat the transfer - 100% exempt transfer to S or 100% PET to A (though knowledge of A withdrawing total may not exist) or 50:50 (though knowledge of actual beneficial interests may not exist)?
If, on the other hand, D's executor had access to contemporaneous documentation recording D's intent, would that take precedence over any treatment that HMRC might deem to be the 'correct' interpretation of legislation? I haven't been able to find anything specific to this situation in the manual and am not clear on what general principles HMRC may apply.
Just as an aside, similar questions arise for S's executor if S predeceases D. Was the account used merely as a conduit from D to A with S having no involvement so making no gift personally or has S made PET to A of full amount that entered the S&A joint account or is 50% of that sum to be treated as from D to A such that only 50% was ever attributable to S and therefore the PET from S to A is just that 50%? I'm not looking to address this situation directly as the executor of S would have a different state of knowledge regarding the S&A account and I expect much else would generally follow-on from consideration of the primary scenario.
Pointers to relevant sources and/or direct knowledge of custom & practice would be appreciated.
Cheers!
So... Donor (D) transfers funds to a long-standing bank account which is jointly-owned by Spouse (S) and Another (A) - but not D so no benefit is reserved and it looks like a straightforward 'transfer of value' with not even the slightest hint that a loan is intended. The same value is soon withdrawn by A from that S&A joint account (which is otherwise funded and operated by both parties). In the absence of any documentation there could be differing interpretations of this for IHT purposes.
1. D has made an inter-spouse lifetime transfer to S of the full amount which went directly from D's other resources into the S&A account (rather than into a pre-existing D&S joint account) and whatever happened subsequently is no concern of D's.
2. If simply following the money and 'seeing through' anything between source and final destination: D has made a PET to A of the full sum. This interpetation would require knowledge of outward transactions on S&A account but D and D's executor may not have access to that knowledge.
3. D has made an inter-spouse lifetime transfer to S for half the value and a PET to A of the other half - but D's executor would have no knowledge of whether beneficial interests in this account were actually 50:50 or something else.
If D predeceases S then how should D's executor treat the transfer - 100% exempt transfer to S or 100% PET to A (though knowledge of A withdrawing total may not exist) or 50:50 (though knowledge of actual beneficial interests may not exist)?
If, on the other hand, D's executor had access to contemporaneous documentation recording D's intent, would that take precedence over any treatment that HMRC might deem to be the 'correct' interpretation of legislation? I haven't been able to find anything specific to this situation in the manual and am not clear on what general principles HMRC may apply.
Just as an aside, similar questions arise for S's executor if S predeceases D. Was the account used merely as a conduit from D to A with S having no involvement so making no gift personally or has S made PET to A of full amount that entered the S&A joint account or is 50% of that sum to be treated as from D to A such that only 50% was ever attributable to S and therefore the PET from S to A is just that 50%? I'm not looking to address this situation directly as the executor of S would have a different state of knowledge regarding the S&A account and I expect much else would generally follow-on from consideration of the primary scenario.
Pointers to relevant sources and/or direct knowledge of custom & practice would be appreciated.
Cheers!