Sharing a joint bank account with an elderly parent to help them manage day-to-day finances is common but, after the parent’s death, can lead to disputes between siblings over who the money belongs to.
Experts at London law firm Osbornes Law warn that money left in a joint account will automatically transfer to the surviving account holder on death and will not be included in their estate.
Given it is not unusual for the older generation to keep thousands of pounds in current accounts, this can mean the siblings of the account holding child are left with less inheritance, in some cases leading to family feuds or even legal action.
Katie de Swarte, a solicitor specialising in will disputes at Osbornes Law, says, “We see a lot of cases where a parent has added one of their grown-up children as an account holder to help them with their banking, write cheques and pay bills. They did this without realising that the often-significant sums of money in their current account will pass to that child in the event of their death, rather than being divided equally between their children as outlined in their will or under the rules of intestacy.
“Whilst some siblings will willingly share the money with their brothers and sisters in the interests of fairness, there are those that feel they are entitled to it due to the extra caring responsibilities they had for the parent, or claim they were also using the account for their own purposes.”
If someone wishes to challenge the rule of survivorship that sees the bank automatically transfer the account to the joint holder, they will need to show evidence this was not the deceased’s intention when they added the joint account holder.
Ideally, the parent would have written down their intention that the child was being added simply for practical reasons. This is rare, however, and more often than not where a dispute arises, past transactions will need to be scrutinised to see how the account was used by the parent and child, for example, to see who placed the original funds in the account.
Katie explains: “Many people don’t realise that you can challenge the survivorship rule. In some cases, it may even be necessary to freeze the account while a dispute is ongoing to prevent the surviving account holder from withdrawing the cash. It is therefore important to notify the bank if there are concerns as to the way in which the account was held, when the first holder dies.
“You will need to provide evidence that the account wasn’t being used by the surviving account holder personally, other than to help their parent out. That means looking at the transactions, which are likely to show only the parent regularly crediting and debiting the account or that all the transactions were for the parent’s benefit. This becomes harder if the account is not often used or credited, particularly as it is only possible to go back through seven years’ worth of statements if historical statements have not been retained.
“If successful, the closing balance of the account will fall to the deceased’s estate. However, it is important to remember that even if the account can be proven not to be a true joint account, it must also be proved that the deceased’s intention was that the joint holder would not benefit from the funds in the account.”
If it becomes clear that the joint holder child did in fact credit funds to the account that were solely for their benefit and not the parents, dependant on why they credited these funds and the overall circumstances, it is likely that they would be entitled to their own money and the balance, subject to the intention, would go to the parents’ estate.
For those considering making a son or daughter a joint account holder, it is recommended that you make them a signatory to the account to enable them to undertake transactions, rather than a full joint account holder. If you do, ensure there is a paper trail setting out your intentions for the account so that there is no confusion in the future. Ideally, a Declaration of Trust would be signed to confirm the true ownership.
