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What happens to jointly owned assets on death?

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There is often confusion as to how jointly owned assets should be treated upon the death of one party and often people wrongly assume that the surviving owner takes all.

An example of an asset passing by survivorship is in the case of a property which is owned by the parties as joint tenants. For the person who dies, their share of the property passes to the surviving joint owner automatically on their death.  If however the property is owned as tenants in common, then the deceased’s share of the property will pass in accordance with their Will or under the rules of intestacy if they have not made a Will.  The most common way to own a property as a couple is as joint tenants, but it is important that you consider the implications of such ownership when buying a property.

Things are slightly more complicated when looking at jointly owned assets such as bank accounts and there are often problems in identifying the deceased’s interest in such accounts. The recent case of Re Northall (deceased) [2010] EWHC 1448 (Ch) demonstrates the difficulties that can occur on the death of one party when funds have been placed in a joint bank account.  In this case the mother, Mrs Northall, had purchased a council house with one of her sons.  She subsequently sold the property and received a cheque for the sale proceeds of £54,836.00.  As she did not have her own bank account, one of her other sons opened an account in the name of himself and his mother so that she could bank the cheque.  Shortly afterwards payments of £28,625.00 were made out of the account by the son.  Mrs Northall then died and the day after her death the son transferred the remaining balance in the joint account to an account he held jointly with his wife. The son claimed that his mother had authorised his withdrawals from the joint account, which were apparently made on her behalf, and that she said that he could keep any residue if she died.  This claim however did not work in his favour as in fact it demonstrated that his mother was the beneficial owner of the funds in the joint account and such funds would therefore not pass by survivorship to the son just because he was the joint account holder.

The judge held that where one person puts money into joint names there is a presumption of a resulting trust in favour of the provider of the funds. Such a presumption can be rebutted in one of two ways, firstly if the circumstances give rise to a presumption of advancement, and secondly by evidence that the provider intended to transfer the beneficial interest.  In the second instance, it would be up to the surviving son to prove this point. The case highlights the importance of the intentions of the parties at the time of opening the joint account and evidence of such intentions.  The bank forms which are completed when opening a joint account can be a key piece of evidence in showing the parties intentions.  In this case however, although there was provision for survivorship on the account opening form, if was found that this was insufficient evidence as had not been drawn to Mrs Northall’s attention at the time of opening the account.  Accordingly, the son had no evidence to show his mother’s intention for him to benefit from the funds on her death and so was ordered by the judge to account for the balance of funds in the joint account at the date of death and any withdrawals made during Mrs Northall’s lifetime, unless there was evidence that these were made on her instructions.

It is becoming increasingly common for children to open joint bank accounts with one of their parents, for example if their parent is elderly and has difficulties in dealing with their own affairs.  It is important that at the time of opening the joint account there is a clear indication of who the funds in the account belong to, the intention as to their use and the ultimate beneficiaries on death.  In a lot of cases it may be better for the parent to enter into a Lasting Power of Attorney, providing of course they have the sufficient mental capacity to do so.  This would allow them to appoint an Attorney of their choice to act on their behalf in dealing with their financial affairs.  In this case there would be no need to open a joint bank account, as the Lasting Power of Attorney will enable the Attorney to access funds in the parent’s bank account for the parent’s benefit. This will ensure that it remains clear that the funds in the account belong solely to the parent and should be used for their benefit.

If you would like more information about the passing of jointly owned assets on death or Lasting Powers of Attorney please contact the Private Client Team 
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