Minimising problems for your survivors 8 February 2012 at 1:37PM in Over 50s MoneySaving 28 replies 2.7K views

Misterfyer

A key piece of advice left out of the fact sheets about discussing 'unpleasant issues' relating to your own death or lack of capability is as follows : set up a joint bank account NOW with (probably) your main beneficiary or attorney-to-be or whoever will need rapid access to your money - for instance to settle bills, pay funeral expenses, etc., after your death. It is one of the difficulties often faced by survivors or those suddenly needing to take up Power of Attorney. They can only stare at the cash you have available, but can't legally get at it, and banks are unlikely to make it available until the estate has been settled or PoA approved. However, a joint account gives them immediate access. There maybe some issue about a joint account where one party is dead, but since your bank won't know you're dead unless someone tells them, your beneficiary can access your money to settle liabilities and argue about it later if need be. If you don't wish your beneficiary or attorney-to-be to have access to your finances before your death/incapacity you simply don't give them the details (or card/cheque book) - lock these away with your will or PoA form so that they only become available when the need occurs.

dzug1

It's left out of such fact sheets because it is (legally) extremely bad advice. Having joint accounts in such circumstances is an open invitation to accusation of fraud and is an easy way to help yourself to funds to which you are not entitled. 'Arguing about it later' could be in front of a fraud judge if things go wrong

An attorney in particular should NOT muddle their own finances with that of the donor. And an attorney who continues to exercise his powers after death is definitely breaking the law

Biggles

It's incredibly bad advice. It's one of those things that - even apart from the legal aspects - should work well in theory but which, in very many families, will sow distrust and resentment at best and fraud and theft at worst.

Don't even think of it!

chesky369

................There maybe some issue about a joint account where one party is dead, but since your bank won't know you're dead unless someone tells them, your beneficiary can access your money to settle liabilities and argue about it later if need be..............

recipe for disaster.

Misterfyer

Sorry Dzug1 and Biggles; it is NOT - 'extremely' or 'incredibly' bad advice. It is an idea worth considering. Accusations of fraud may come in any situation; but they are merely that - accusations. Accusations are not to be feared if they are baseless. Millions of people have joint bank accounts without problems. Nonsense to suggest that an arrangement that suits millions is to be avoided. Fraudsters will commit fraud with or without the existence of joint bank accounts! Those with Power of Attorney have access to your funds anyway, so having a joint bank account doesn't make fraud particularly easier or more likely, nor does it have to lead to 'muddling' up finances (as long as you can count and are not a fraudster). Scary nonsense to talk about 'fraud judges'. Exercising Power of Attorney with probity is not going to lead you in front of a 'fraud judge'. Having a joint bank account won't change that.
Exercising Power of Attorney after death is quite probably not legal. However, using funds in a joint bank account need not be the same as using Power of Attorney.
It may well be that in some circumstances, having a joint bank account is not a good idea. If you have a family rent with suspicion or doom-sayers or self proclaimed legal experts for neighbours, maybe you should avoid it ( - but in those circumstances you'll probably get the same flak for other reasons - they'll find the reasons).
However, I say again to those who are honest and don't fear baseless gossip (which will come anyway from those so inclined): opening a joint bank account with those you are prepared to trust as your attorney or you have willed as a beneficiary is a GOOD IDEA worth considering. It is no more a 'recipe for disaster' than signing over PoA. It could save them from real problems and financial difficulty in the case of an unexpected situation.
I act with Powers of Attorney in two cases (mother and mother-in-law). I had joint bank accounts with both - set up long ago in sensible anticipation. The arrangement proved invaluable. I know myself to be a significant beneficiary in both wills. When either one dies (or both) I will use funds in these joint accounts to pay for their funerals - even before their (complicated) estates are settled. I do not have thousands of pounds of my own to pay up front - why should I take out a loan when their money is staring at me? I fear nothing because I am honest. The law does not touch people who act in good faith, with honest intention and who do not steal or defraud. (Amateur legal eagles - look up the legal meaning of the word 'intention').

Errata

Banks will release funds to cover funeral expenses before Probate when they're presented with a death certificate.
Local authorities will foot the costs of a place in a care home and recover them if a deputy needs to be appointed by the Court of Protection.
What's the problem?

Misterfyer

Good points, Errata. I appreciate positive thinking. I guess no real problems with the ways you point out - except that these would involve some bureaucracy and messing around. A joint bank account simply makes it so much easier. What's the problem with that?

Errata

They would involve protection, making honesty and trust unecessary.

dzug1

So questions:

who owns these joint accounts after death?

Whose tax return does the interest go on? Who does the interest belong to?

And more importantly just why is this key piece of advice left out of the fact sheets?

Biggles

The main problem is that your assets immediately become shared 50/50 with the other party - in law, for them to do as they wish with. And, on your death, they would become 100% theirs, irrespective of any will or intestacy laws, or indeed your intentions for your estate.

And other minor annoyances, eg should the other party begin to spend the money on themselves, you have no recourse whatsoever, as you have 'given' them the money.

Misterfyer wrote: »

Millions of people have joint bank accounts without problems.

Yes, normally because it is their money, to which they need to share access.

Exercising Power of Attorney after death is quite probably not legal.

Probably? Probably? Power of Attorney is only legal for a person. Not for a corpse.

Mojisola

The money in a joint account is taken to be owned 50/50. Are you declaring the money in the two accounts you hold with mother and MIL?