Joint bank accounts are very common – sometimes people hold bank accounts into which both people’s money goes (for household expenses etc), whereas some people have been added to an account to assist a relative out when they are finding banking a little more difficult themselves. Both are valid uses of a joint account – but what happens to a joint account when a joint account holder dies, and who is entitled to the money?
When someone dies, their assets are separated into 3 categories. The 2 most obvious categories are “jointly owned” and “owned by themselves”. The third category is more obscure and is related to trusts – if you think you have something in this third category, you may need to consult a solicitor about how to divide up your estate on death and how to calculate your Inheritance Tax bill.
If you own something jointly, it will likely pass by survivorship. This means that it will not go through your Will and will instead pass automatically to the person that you own it with, regardless of the value of the asset. The exception to this is where you own a property with someone else, but as “Tenants in Common”, rather than “Joint Tenants”, as this is classed as owning by yourself. A solicitor can tell you how you own your home if you’re unsure.
If the joint bank account that you own holds only your money, and it has only ever been used for your funds, it is treated as only belonging to you. This is most common where someone has been added to another’s bank account to help them manage their money. Whilst the bank will give the funds to the joint owner on a joint account holder’s death, they must pay the funds back to your estate. This can cause problems if this wasn’t what was understood, or if the person does not want to give the funds back, and can lead to expensive litigation to recover the funds.
If the money was genuinely joint monies, it belongs to the other account holder and does not need to be paid back.
It’s always advisable to plan your estate to ensure the people who you want to get your money, get it. Speak to one of our specialist estate solicitors today.
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