Joint bank accounts - a reminder

Sorry if it came across that way, Nonnie, only trying to help. It was because you mentioned the money being "apportioned" for IHT, which might have led people to think it was a tax payable by individual beneficiaries on their own income. In most cases the IHT is paid out first and then the individuals get their share, tax-paid - they don't get separate tax bills. Whether the tax is actually deducted from each individual's share depends on how the will is set out - it can state that certain bequests are to be "tax free" which means the tax due on those will be paid by the rest of the estate.

You probably know all this, but I wouldn't like other people to be misled by our conversation.

Bit patronising granyticktock as I think I have made it quite clear I understand how banking works and have experience of one person on our account dying. I know the money belongs to all on the account and I also understand IHT is only on the assets of the individual therefore only on their proportion of the account.

Ah, I see, Monica. Yes that sounds very sensible if you both want some privacy, and there's no reason the banks would object to it. As far as the banks are concerned they are joint accounts, and how you choose to use them is your own business.

*grannyticktock. It means that DH has neither cheque book nor debit card on the joint account I treat as my private account and vice versa. Yes, everything in it is notionally joint, but neither of us trespasses on the others preserves. When I receive the statement for DH's notional private account I shred it without looking at it and he does likewise, or rather gives it to me in the unopened envelope. We are both hold our 'personal' accounts with different banks.

It means in an emergency, we each have access to the money in the account and dates back to DH's travelling days pre internet and mobile phone when I would have to pay his credit card bills in his absence or transfer money to other accounts. For decades now that hasn't been necessary, but it is a useful backstop.

Nonnie, yes all the money in a joint account belongs to all the account holders, but IHT is levied on the total sum of the estate, regardless of how many people are beneficiaries. The tax isn't payable by the individuals, it's payable by the executors before the payout to beneficiaries.

Monica, I don't really understand what you're saying. A joint account has two (or more, apparently) account holders; the account is in both their names and they have equal rights and access to the funds. A private account operated by one person isn't a "joint account", it's something different, surely?

All our accounts are joint but two of them are personal to one person. The only person with a card to operate the account is the person whose private account it is. We have been doing this for roughly 40 years with four different banks and none of them has ever seen any problem with the system.

It's not always up to the bank either in a death or illness so they cannot promise that they definitely won't freeze the account. All they can guarantee you is that they don't automatically/routinely freeze them.

They can also freeze joint accounts if someone has a diagnosis of Dementia!

Sometimes. It isn't automatic but it does sometimes happen. More often when it is an adult child or other non spouce rather than a spouce/partner.

Resident partners tend to be okay in the case of dementia. Safeguarding will sometimes get alerted if it is a non partner who does not have power of attorney but is a joint account holder.

It is my understanding that the money in a joint account belongs to all the account holders so would only be apportioned for IHT.

We had five of us on the account before DS died and it has only ever been queried by people other than the bank. Also have 4 on a credit card but they only take one, main card holder, for authority.

. But as I've said, third-party access, even if it includes a debit card etc, is not the same as being a joint account holder.

This is correct too. A second card holder is not a joint account holder. That type of account freezes and goes through probate.

OK, all clear now. I didn't know it was possible to have as many as four account holders for one account, so I assumed the sons wouldn't actually be named on the account, but I stand corrected. The only possible issue when the estate is being administered would be if IHT applies; while spouses can pass everything to each other without any tax being payable, the funds in a joint account with a non-spouse would need to declared for probate valuation and for IHT, if applicable.

ok but who apart from you grannyticktock is talking about third party access, both I and Nonnie are talking about joint accounts

grannyticktock you are mistaken our sons have been on our account for many years and the account is set up so that any one of us can operate as equals. One of the benefits is that they have immediate access to our accounts, just as they do now. Some people find this difficult to understand but we operate on trust.

For those who think an account may be frozen when one party dies that is not the case with our bank. DS died last year and all that happened was that they sent new cheque books with his name removed.

They can also freeze joint accounts if someone has a diagnosis of Dementia!

Your bank will be able to let you know whether it's their policy to freeze a joint account when one holder dies - mine assured me that they didn't. I had checked this out when my husband was terminally ill, just to make sure I wouldn't be left without access to the account. But as I've said, third-party access, even if it includes a debit card etc, is not the same as being a joint account holder.

Obviously my Son has his own account, I don't have or need access to his as he is unlikely to pop off before me.

Sometimes joint accounts are frozen initially after the death of one account holder. Make sure you have enough in separate accounts to get by

My son is also a joint account holder with me on my accounts for the same reason as Nonnie when I die the account and contents is his to do as he pleases. He also has power of attorney but the two are separate, the accounts wont be frozen. I'm aware if he wasn't a joint account holder the account would be frozen until probate which is why he is a joint account holder.

Nonnie, if your sons are actually joint account holders, this would mean they are immediately entitled to what's in the account if you died; but I don't think it's possible to have multiple account holders. What is possible is for your sons to have third-party acccess that gives them power to manage the account during your lifetime, but once the account holder dies, the account is frozen and third parties can no longer access it - it isn't really any help when it comes to administering the estate. Only after probate is granted can the executor(s) start to deal with the money.

It is a cost cutting exercise. Santander said as much. If you're not using it they won't send another. I appreciate that and because I use mine (Barclays) I do automatically get a new one and same for DH with and Santander he automatically gets a new one it's the dormant ones they want to cut out. Other banks could be different but may follow suit in future

Our bank automatically sends us 2 new cards when our old ones expire, DH never has used his cards. How odd that your Bank doesn’t.

Overthill, the cards only arrived this month so I am sure they must be.

Nonie it might be an idea for them to check they are still valid

We have our sons on our bank account too, it will make it a lot easier for them to deal with our estate. They don't use their cards at all but the bank still sends them new ones when theirs are out of date. Our bank must be different to yours.