Joint accounts – good or bad?
Sophie Fenn, Assistant Solicitor in the Private Client Team at the Wilkes Partnership raises some of the unintended problems caused by joint accounts.
Many people set up joint accounts as a convenient way of managing their finances. Cohabiting or married couples sometimes use joint accounts for household expenses and shared purchases. Elderly parents often add a child to their account, either so the account is held jointly or so the child has third party mandate, to help when they are less physically mobile or mentally able. Sadly this can make joint accounts easy pickings for financial abuse.
British Bankers’ Association guidance is that an account be frozen if one of the parties lacks mental capacity and this applies to both joint and sole accounts. This can create difficulties for the other party and the management of their own financial affairs. A Power of Attorney or Court of Protection Deputy Order is then required to access the account. Couples who only have joint accounts often delay preparing Powers of Attorney as they make the assumption that there will always be one of them who can access the account.
On death, the starting position is that a joint account will pass to the surviving owner by survivorship, outside of any will or rules of intestacy. Sometimes, particularly when an adult child has been added to the account for convenience, that is not what was intended creating difficulties in administering the estate.
To discuss this further please contact Sophie Fenn on 0121 733 8000.