Survivorship of joint bank accounts

THE PROBLEM

Where an individual is added to a bank account in order to help out with the daily life of an elderly relative, problems can arise if family members have differing ideas as to what they are entitled to. A recent case dealt with how and when a joint account will fall into a person’s estate or automatically pass to the surviving owner.

The case involved a bank account held jointly by a mother and a daughter, who had been her carer. The mother’s Will divided her estate equally between her 3 children, but when she died, the daughter claimed the whole of the amount under the rules of ‘survivorship’.

THE LAW

A joint bank account automatically passes to the survivor, unless it had been set up for convenience only, in which case the intention is that the money still forms part of the estate. However in this case, after transferring the account into joint names, the mother had fallen out with her other daughter and the evidence was that she intended to exclude her from her Will. She died before this was carried out, but the court declared that there was a settled intention that her 2nd daughter would not get anything and that from that point onwards the bank account did not form part of her estate.

Therefore although a joint bank account which was created for convenience would not usually pass straight to the survivor, it may do so where there is clear evidence of a change of intention of both of the account holders.

WHAT THIS MEANS FOR YOU

It is not uncommon for family members to be put on the bank account of a relative in order to provide support and this arrangement is often practical and convenient. However, this case highlights the conflicts that can arise where intentions were not made clear. The best way to prevent further distress and expense from legal fees is to ensure that intentions are recorded clearly in a new or amended Will.

If you would like any further information, please contact our Wills, Trusts & Inheritance Tax Planning experts today.