Joint account, 2nd account holder has died, is the cash part of the estate?

Noctu

Hello,

I could really do with some very straightforward advice please - it would be much appreciated.

Main points are:

- My dad and his mum had 2 x joint accounts together (1 building society account, 1 current account)
- These were primarily joint accounts of convenience, so that my Dad could service the accounts
- My dad has full access to both accounts (jointly and severally I think the term is)
- My dad's mum has recently died
- Both the bank and the building society have simply taken his mum's name off the accounts, so they are both solely in my dad's name now, and still fully operational/accessible by my dad
- Each account has a (low) 5 figure sum in it.

Contextual points:
- We are about to enter the probate process
- Dad's mum owned a house as well as the two accounts above, and the house will be sold
- The house value plus the value of these two accounts falls under the amount for inheritance tax
- Dad's mum's will is very simple, splitting her entire estate (with no mention of any specifics such as house or anything else) amongst her 3 children 
- Dad is executor of the will along with a named solicitor. None of his siblings are executors

My question is: 

*** Does the money in these two accounts form part of the estate that my dad needs to split between the 3 siblings? ***

My dad's mum wanted my dad to have this money, as my dad was the only one to bother looking after her for many years. However this was never formalised into her will etc.

Thank you very much for any advice.

[Deleted User]

No. The money goes to the survivor of the joint account.

Keep_pedalling

Deleted_User said:

No. The money goes to the survivor of the joint account.

Not if the accounts were simple set up for convenience and all of the money belonged to the deceased. 

thegreenone

I had a similar set up with my late Mum.  Halifax said the money was mine but the Solicitors probate form specifically asked "Who paid money into the account and for whose benefit were withdrawals made?". They didn't ask for bank statements but I'm fairly certain it was included.

The money was earmarked for Funeral Expenses (by Mum) which I used it for and continued paying the bills until her flat was cleared, sold and the estate wound up.  It took almost a year from her death and there wasn't a lot left.

Grumpy_chap

If these are simply straightforward joint bank accounts, then I understand the legal position is exactly this:

Deleted_User said:

The money goes to the survivor of the joint account.

If, however, it sounds as though the accounts should have been set up as trust accounts or as sole accounts in the mother's name and operated under PoA as the correct process.  In that case, the morally correct thing to do is to treat the balances of the accounts as part of the estate for all purposes - IHT calculations, probate and the distribution to beneficiaries.

doodling

Hi,

Noctu said:

[...]
My question is: 

*** Does the money in these two accounts form part of the estate that my dad needs to split between the 3 siblings? ***

[...]

The answer to that question depends on whether it was always intended that the money be jointly owned (effectively half gifted) or whether your Dad was simply looking after it.  Your comment about his Mum saying that she wanted him to have it suggests the former, but a lot of the other text you have written suggests the latter.

In the former case then no, the money doesn't form part of the estate for the purposes of administering the will.  It (well, 50% of it anyway) is however likely to fall within the estate for the purposes of inheritance tax.

In the latter case then it falls within the estate for both.

It would be helpful if there was some evidence of your Dad's Mum's intention, especially if other beneficiaries disagree with how the money is being handled.

BooJewels

I think this is an area where morals and legals maybe differ.

My late father set up a joint account each with my sister and I (about 4 years ago now) and put the same amount of money in each one.  Neither of us added to it from our own funds, but we did add to it from his funds - for example, when we sold one of his cars, half went into each account - he was still alive then. The original plan was that this would pay bills etc. if for some reason we had difficulties with the LPA he'd set up, or there were delays getting access to his money etc.

So whilst upon his death, each of those accounts reverted to the two of us, neither of us considered it our money - we're both executors and the only beneficiaries.  To date, the money is still there untouched and the accounts show about 3 transactions each since opening.  We declared both sums on the Probate forms and until the estate is finalised in a few weeks (house just selling), neither of us consider it our funds.  So, whilst legally it actually probably is, morally, it certainly isn't.  Yet.

Noctu

Thanks all. We are going to meet with a solicitor as it doesn't appear very clear, and I'll update.

TripleH

I'd play it safe and use the accounts only to settle bills of the estate in the interim.

Unless it was recorded somewhere (other than just verbally in front of you), the assumption you need to make is that your father's siblings could get upset about not having their 'fair' share of the estate.

getmore4less

Even when an account is fully intended to be joint,  if it is funded solely by the diseased  then....

For distribution
it passes by survivorship.

For IHT   
50% at the time it was set up is a gift, that needs accounting for in the gift section, at DOD 50% of the current balance is part of the taxable estate.

it can get more complicated depending on the amount and timing of any use of the money

HMRC cover this in various places here is one
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15000
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15060
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15042
https://www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm15043

AS this estate is under the nil rate band available a lot of this drops out to no tax due.
Leaving the issue of the potential dispute over distribution.

pollypenny

I agree that the money does belong to the estate.  My father simply made me a signatory on his accounts. Much easier all round.