Joint Bank Accounts and Probate

Do you need probate for joint bank accounts?

In the majority of cases, you will not need a grant of probate for a joint bank account. The account will pass over to the surviving owner/owners and the deceased’s name will be removed from the account.

Being an Account Signatory is not the same as being a joint tenant on a bank account. Being an account signatory allows authorised access to another person’s account but they are not an owner of the account. If the account is in a sole name, with an account signatory, and the account is over the banks threshold for probate, you will need to provide a grant of probate.

Does money in a joint account automatically pass to the surviving account holder?

Money in a joint account does automatically pass to the surviving account holder. When someone has joint bank accounts the funds within the account are generally considered shared and mutually divisible between the holders of the account. When someone dies the remaining account holder, or executor, may submit the death certificate to the bank and take over ownership of the account and all the funds contained within. The funds will be transferred wholly to that individual’s name. The reason for this being that, at any point prior to the death, either party may have used all of the funds within the account at any given time. However, this also means that the account holder is responsible for any and all taxes upon the account in the future.

Are joint accounts part of the estate?

Assets held in a joint account, in some cases, maybe considered part of the deceased’s estate for tax purposes but they do not fall under the deceased’s Will. The testator cannot dictate how jointly owned assets are distributed upon their death because they do not solely own those assets and does not have the right to pass on another person’s share. The surviving owner will automatically receive the joint assets.

For example, if the deceased was in a relationship and held joint accounts with their partner but also accounts in their sole name, the assets in sole name accounts are included in the deceased’s estate and will be distributed according to their Will or the laws of intestacy. The joint assets will pass directly to the surviving partner, regardless of the WIll or laws of intestacy.

Where there is a joint account in name but not in purpose, where only one person is contributing funds into the account, depending on the individual circumstance, it would (if challenged) most likely be considered that the assets within the account are the sole assets of the sole contributor. For example a joint account between a person and their LPA. It is quite common for a joint account to be used in order for the LPA to more conveniently assist the account holder with their finances. However, the LPA is not actually contributing funds into the account themselves therefore this money should be consider as part of the deceased’s estate.

Are joint bank accounts subject to inheritance tax?

When the individuals on joint bank accounts were married or in a civil partnership, the state has little interest in this transfer of assets during probate, and the accounts are usually exempt from Inheritance Tax. However, where there are unmarried individuals sharing an account or a family member has been placed on the account of an ageing relative, greater scrutiny is applied.

The general rule is that the deceased will have owed 50% of the tax, and the survivor may be expected to pay that to the estate by using the funds within the account. This is where the executor must work with the parties involved to assess who owns what and who is responsible for the tax.

How do you remove the deceased’s name from a joint bank account?

Each institution will have its own process for handling a deceased’s clients assets, you should approach the bank to find out what their individual process is. However, in order to have the deceased’s name removed from the account, you will need to provide the bank or building society with the death certificate.

An executor’s job can be extremely taxing with so many things to take into consideration, which is why it is always recommended that they consult with solicitors, valuation experts, and anyone else who can provide expertise. Probate cannot end until everything is accounted for, which is why it is exceedingly important to understand these matters down to the details so that the judge may close the probate and everyone receive their just portion.

If you are the Executor of an estate and would like professional help, speak to a member of our team on 08007318722 or send us an inquiry via our website.

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