Joint bank accounts can cause serious problems for personal representatives after the death of one of the account-holders. Fiona Lawrence and Julia Hardy explain

The first problem often faced by a personal representative (PR) in dealing with a jointly held bank account is a fundamental one: establishing what is the extent, if any, of the deceased’s interest. The situation is not helped where there is a lack of written communication between the joint account-holders as to how the account should pass on the death of one of them.

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Ironically, it is common for elderly parents to add their children as a joint account-holder in a bid for practical convenience – so that their child can help pay the bills and access cash for them if necessary. In such cases, what should happen when the parent dies is not usually uppermost in anybody’s mind. Will the child account-holder inherit by survivorship? How should the account be valued for inheritance tax (IHT) purposes?

Equally, spouses and civil partners commonly hold joint accounts to pay the household bills, but what is their true intention as to what should happen to the funds on the death of one of them?

In this article, we examine the practical and legal problems that frequently arise for PRs when dealing with joint bank accounts.

Who owns what?

The courts have established the starting point for assessing the ownership of jointly held funds, which is for a presumption of a resulting trust in favour of the provider of the funds. The case of Re Northall (deceased) [2010] EWHC 1448 (Ch) provides a good illustration of this.

Mrs Northall was in her late seventies when she sold her council house, and received net sale proceeds of around £55,000. Mrs Northall had never received a sum of this size, and did not have a bank account, so an account was opened in the joint names of Mrs Northall and one of her six sons, Christopher, and the £55,000 was paid in.

After just one month, two things happened. First, on Christopher’s instructions, payments of approximately half the total balance had been paid out of the account, mostly to Christopher or for his benefit, and second, Mrs Northall had died. On the day after her death, Christopher arranged for almost all of the balance to be paid into another joint account which he held with his wife.

In defending these payments, Christopher sought to rely on the small print shown on the bank’s mandate form when he and his mother opened the account. This stated that if either party died, the funds would be paid to the other. Christopher argued that this was Mrs Northall’s intention, that the withdrawals made during her lifetime were done on her instructions, and that she intended that any balance left when she died should go to Christopher.

The beneficiaries of Mrs Northall’s estate – four of her other five sons – argued that Christopher’s actions constituted a breach of trust, as he in fact only held the account balance on trust for his mother, and after her death, for her estate.

Mr Justice Richards held that, while the presumption of a resulting trust in favour of Mrs Northall could be rebutted – either if there were evidence that the provider intended to transfer the beneficial interest, or by the presumption of advancement (see below) – there was, in this case, insufficient evidence to demonstrate that Mrs Northall intended to gift the money to Christopher, so failing to rebut the presumption of resulting trust, and futher, that there was nothing to suggest that the circumstances gave rise to a presumption of advancement. In other words, there was no clear proof that Mrs Northall intended to gift the money in the account to Christopher.

This case demonstrates the importance of assessing the parties’ intentions when opening an account, even where a bank mandate provides that the account should pass by survivorship. The court focused on the intentions of Mrs Northall, who was elderly and in ailing physical health, albeit mentally sound. She was clearly unfamiliar with running bank accounts, so it is perhaps not surprising that the court considered that she had opened the account for reasons of convenience, and that the presumption of a resulting trust in her favour should be upheld.

The importance of intention

A different result was achieved in the case of Aroso v Coutts [2002] 1 All ER (Comm) 241, where the surviving account-holder successfully rebutted the presumption of a resulting trust. However, the same approach was taken by the court in assessing the parties’ intentions, to establish the true position.

The deceased had transferred substantial amounts into an account held in his name and that of his nephew. The evidence suggested that the uncle detested certain members of his family and that he wanted the monies to go to his nephew on his death, despite this being to the detriment of the deceased’s own son. Unsurprisingly, the son challenged the nephew’s sole beneficial ownership of the funds. Importantly, too, the bank was shown to have clearly pointed out to the deceased the effect of the survivorship provisions in the bank mandate.

The court found that there was clear and unchallenged evidence of the deceased’s intentions, and that he wanted his nephew to benefit. Accordingly, the nephew received the balance of the account by survivorship.

Special treatment for spouses and children?

Spouses and children have long enjoyed special treatment in cases where bank accounts are held jointly by a husband and wife or by a parent and child, and the sole contributor is (respectively) the husband or the parent.

The presumption of advancement provides that, on the death of the husband or parent, a presumption arises that they intended the wife or child to inherit the account by survivorship. Although this has been widely acknowledged as being a relatively weak presumption, which can easily be rebutted by evidence of a contrary intention (as seen above in the case Re Northall), it nonetheless provides spouses, civil partners and children with a degree of special treatment in the first instance.

However, it is important to note that the presumption of advancement will be abolished when section 199 of the Equality Act 2010 comes into force. At the time of writing, it has not yet been announced when this will be. However, once in force, the effect will be to put everyone back on the same footing – that is, that beneficial entitlement will be largely assessed by examining the intentions of the parties.

There are cases where the true intention of the joint account-holders is not necessarily clear-cut. In such cases, HMRC will review the facts, and look at a number of wide-ranging factors for clues as to where the true ownership is likely to lie

What if intentions are unclear or variable?

PRs may face more problems where joint accounts have been held for a long time, or where the parties may have changed their minds or intentions over the course of time.

In Drakeford v Cotton and Stain [2012] EWHC 1414 (Ch), Mrs Cotton held two joint bank accounts with her husband, who died on 7 February 2008. A week after his death, on 14 February 2008, Mrs Cotton transferred both accounts into her name and her daughter’s, Mrs Stain. This was primarily for convenience, so that Mrs Stain could help her to make withdrawals and run the account. All the money in the accounts came from Mrs Cotton, only she made withdrawals, and she kept the passbook.

In June 2008, Mrs Cotton had an argument with her other daughter, Mrs Drakeford, following which, Mrs Cotton decided that she did not want Mrs Drakeford to inherit her estate. She later asked her son, Mr Cotton, to arrange a meeting with a solicitor, so that she could change her existing will, which left her estate in three equal shares to her two daughters and her son.

However, Mrs Cotton died on 7 August 2008, before she could execute a new will.

By the end of the trial, it was agreed that, between 7 February 2008 and mid-June 2008, the money in the accounts was beneficially owned by Mrs Cotton alone. It was agreed that the fact that the accounts were in joint names from 14 February 2008 did not result in both joint account-holders having a beneficial interest in the money in the accounts, because it was clear that this was carried out for convenience.

The evidence centred upon statements made by Mrs Cotton in the middle of June 2008, which suggested that she had had a serious falling-out with Mrs Drakeford following a telephone call on 16 June 2008, as a result of which, Mrs Cotton was determined that Mrs Drakeford should not inherit anything on her death. Mrs Cotton then made statements to Mrs Stain to the effect that she wanted Mrs Stain to have the funds remaining in the bank accounts on her death.

Mr Justice Morgan outlined the four possible results as to the new situation which arose when the statements were made in mid-June 2008, as being that:

  1. Mrs Stain became the sole beneficial owner of the money in the accounts; or
  2. Mrs Cotton and Mrs Stain became joint beneficial owners of the money in the accounts; or
  3. Mrs Cotton retained a beneficial interest in the money in the accounts, but Mrs Stain acquired at that point a beneficial interest in the money, and so when Mrs Cotton died, Mrs Stain became the sole beneficial owner of the money; or
  4. The statements expressed Mrs Cotton’s wish that Mrs Drakeford should not inherit the money on her death, that she wished to revise her earlier will, and in her intended new will, would provide for Mrs Stain to inherit all of the money in the accounts.

Mr Justice Morgan found in favour of Mrs Stain, in line with the third possible scenario, stating that: ‘From the middle of June 2008, both Mrs Cotton and Mrs Stain had a beneficial interest of some sort (not necessarily a joint or an identical beneficial interest) in the money in the accounts and that on the death of Mrs Cotton her beneficial interest ended (and did not fall into her estate) and so that Mrs Stain’s beneficial interest was enlarged (by survivorship or something akin to survivorship) into sole beneficial ownership.’

In other words, although the court found that the bank accounts were initially put into joint names for the purposes of convenience, the evidence showed that Mrs Cotton subsequently formed a settled intention that the accounts should pass to Mrs Stain by survivorship, and were not to be inherited by Mrs Drakeford. Furthermore, Mrs Cotton had expressed that settled intention, by stating to Mrs Stain and others that the money in the accounts would go to Mrs Stain. The beneficial interest therefore vested when the relevant arrangement was made (in June 2008), and it was not a case of a testamentary disposition being made on the death of Mrs Cotton.

Is IHT payable on a joint bank account?

HM Revenue & Customs (HMRC) guidance on joint assets states that if the deceased provided all of the money in a bank account, and the account is held in joint names just for convenience, the deceased’s estate includes all of the money that was in the account on the date the person died.

Sillars v IRC [2004] STC (SCD) 180 states that where the provider of the funds is free to draw on the whole of the account, the whole account (and not just a share of it) will be included in the deceased’s estate, pursuant to section 5(2) of the Inheritance Tax Act 1984 (IHTA 1984) (see below). Equally, HMRC will treat the whole account as a gift with reservation of benefit if the deceased continues to enjoy a benefit from the account, which will render the total balance in the account liable to IHT charges.

Contrast this with the situation which applies if it is truly a joint account and held as joint tenants, and the account passes by survivorship; in this case, the beneficiary is primarily liable to pay any IHT, unless the deceased’s will provides otherwise.

These are the principles, but in practice there are many cases where the true intention of the joint account-holders is not necessarily clear-cut or evident. In such cases, HMRC will review the facts, and look at a number of wide-ranging factors for clues as to where the true ownership is likely to lie.

In the case of Matthews (Executor of Mary Matthews deceased) v HMRC [2012] UK FTT 658 (TC), for example, the deceased, Mary Matthews, had opened a joint account with her son, John, almost eight years before her death. Both Mary and John were able to make withdrawals, although neither party did, and the account accrued interest, which both Mary and John declared as income on their individual tax returns. Both reported this income as to 50 per cent entitlement each.

Acting as the executor in Mary’s estate, John completed the IHT400 account, stating that the account was intended to pass to him by survivorship, outside Mary’s will, but he failed to mention the funds in the account as a gift made during Mary’s lifetime. John also referred to just half the balance of the account on the IHT return.

HMRC argued in response that, further to section 5(2) of the IHTA 1984, as Mary remained free to draw on the whole of the account, all the funds should be included in the estate’s value at her death, or as an alternative, as Mary had retained a reservation of benefit to the whole account, the whole sum was liable to IHT.

While it may have seemed a harsh result for John, the tribunal agreed that section 5(2) of the IHTA 1984 applied, and that IHT was payable on the whole account balance.

The banks’ approach

Our experience is that there is little uniformity across the banking sector in the way that joint accounts are dealt with following the death of one account-holder. Generally speaking, banks do not automatically stop funds being withdrawn from a joint account, and will usually transfer the remaining balance in the account to the surviving account-holder, without question, on production of a death certificate.

There is an obvious upside to this for clients who want to provide their spouse with swift access to funds following their death. However, if the PR is concerned that the estate’s beneficial entitlement is in jeopardy, the first step they should take is to contact the bank or institution to notify them of the death of one of the account-holders and to request that the account be frozen until such time as the distributions can be authorised and/or agreed.

In practice, the bank or financial institution may deny this request unless the surviving account-holder is willing to agree, as, from the bank’s perspective, the survivor is still entitled to access the funds. Therefore, it is vital that PRs raise any concerns with the surviving account-holder as soon as possible, and seek their agreement, where possible, for the account to be frozen or closed, and the balance paid to the PR, pending resolution of the respective beneficial entitlements.

For effective IHT planning, PRs may wish to separate joint accounts, so that it is clear that the funds derived from one spouse. In these cases, it is possible to retrospectively sever the account by deed of variation.

For joint accounts held by a parent and child, difficulties often arise where a child has effectively been running an account as their parent’s attorney, whether formally declared or otherwise, and following the parent’s death, the child tries to claim that the proceeds should pass to them absolutely. In these cases, the child is effectively holding the account as bare trustee for the parent, but this relies on the honesty of the child in declaring this, following their parent’s death.

The way around this problem is to open an account as ‘attorney of X’, so that it is clear to whom the funds belong, and that there is a fiduciary relationship in place. However, practitioners will know that banks are often unfamiliar with powers of attorney and how they operate, which often causes more practical difficulties.

In cases where the necessary measures cannot be obtained to freeze or close an account while the beneficial entitlements are established or where there is concern about the balance being dissipated unreasonably, an application to court for a freezing injunction and/or declaration of beneficial interest may be the PR’s last resort, where the amount of the funds merits it.


It is clear that joint accounts can cause real headaches for PRs for a number of legal and practical reasons.

On the other hand, joint accounts also provide a very convenient and practical way for couples, families and friends alike to manage their finances and share their resources, and for this reason, joint bank accounts are no doubt here to stay.

For PRs, to be forewarned is to be forearmed against the issues which joint accounts frequently raise. The practical advice to give to clients should be to record and communicate clear intentions as to how their joint accounts are to be devolved following the death of one of the account-holders; to be aware of changes which may occur if accounts are open for a long time; and to record and communicate any changes assiduously.