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A joint bank account enables two people access to the monies in the account and setting up a joint bank account between an elderly person and one of their adult children is sometimes suggested as a convenient and cheaper alternative to creating a power of attorney.
The advantages are that the adult child can look after an elderly person's financial affairs while they are in hospital or a care home or find it difficult to access their bank. It also means the account is not frozen if one of account holders dies.
However, there are disadvantages:-
  • Differing views on how the money in the account should be treated. The older person may regard it as their money and to be used to meet their needs only. The younger person may see it as joint money that they can use if they find themselves faced with an unforeseeable bill;
  • One account holder may not act in the best interests of the other;
  • There are no restrictions in place to protect the interests of one account holder so one account holder could withdraw a substantial amount without asking and there would be no means of replacing that withdrawal;
  • If one account holder dies, the HMRC will generally treat the account as a gift with reservation and all the monies in the account will be counted towards the estate and may attract inheritance tax;
  • On the death of one account holder, the monies in the account will transfer to the sole name of the surviving account holder which will create difficulties if a Will has left some of the money in the account to other beneficiaries;
  • Any activity is limited to the joint bank account only.
With a Lasting Power of Attorney, however, those disadvantages do not occur. Under a Property and Affairs Lasting Power of Attorney, you can appoint someone else to look after your finances even while you still have capacity. This means your Attorney can pay bills or collect benefits for you if you are housebound.
The advantages of a Lasting Power of Attorney are:-
  • All of your financial arrangements can be looked after for you, not just one account as with a joint bank account holder;
  • The attorney must act in your best interests and follow a code of practice;
  • The attorney must make decisions as if they were you;
  • The attorney cannot personally benefit or make a profit from being an attorney;
  • The attorney has duties of good faith and confidentiality;
  • The attorney must keep your monies separate from their own;
  •  The attorney must keep accurate accounts;
  • A Lasting Power of Attorney has to be registered with the Office of the Public Guardian before it can be used;
  • Named people, selected when you draw up a Lasting Power of Attorney, have to be notified before the LPA can be registered. The named people can object to the registration to safeguard your interests in certain circumstances;
  • A Lasting Power of Attorney can put restrictions in place to protect your interests. You can also appoint more than one attorney and they can either be instructed to make decisions jointly which means they both have to agree or independently so only one has to make a decision.
Lawson-West can help you draw up a Lasting Power of Attorney which reflects your wishes and protects your interests. Please call 01858 445480 to make an appointment now or complete one of the on-line inquiry forms. You can make an appointment at any of our branches in Market Harborough, Wigston or on the Meridian Business Park. We can also arrange a home or hospital visit if you are unable to attend any of our offices due to your ill health, for a small additional fee.