Published on: 8th January 2024

Joint Bank Accounts vs Property and Financial Affairs LPA

For children with elderly parents, a joint bank account may seem like the perfect way to assist their relative in managing their financial affairs – paying bills, buying food shopping and helping with internet banking. What well-meaning children and their parents do not realise, however, is that their solution could actually be creating problems further down the line.

In cases where an elderly relative loses mental capacity or passes away, there can be complications that arise over who owns the funds in the account and whether the child, and joint owner, can carry on managing the money.

The first major issue is that when a co-owner of a bank account passes away, the funds automatically go to the surviving co-owner. So, if the deceased’s Will dictates that their funds should be shared equally between their four children, but only one is a co-owner of the bank account, that one child could potentially receive what their parent wanted to be the inheritance of all four. Some banks have also been known to freeze accounts when learning that one of the co-owner’s has lost mental capacity or died. This would make paying for things even harder during a time that is already very stressful.

Another downside to having a joint account is that the child’s personal and professional lives can end up impacting the funds in the bank account. For example, if the child’s marriage has deteriorated and divorce is on the horizon, a portion of the funds are at risk of being included in any divorce settlement to the child’s spouse. The same principle could apply with bankruptcy – the elderly relatives money would be seen as partly owned by the bankrupt individual and so could be used to pay off debts.

So, what many see as a helpful way to manage their elderly relatives finances can actually end up causing an abundance of hassle. However, there is another option that is more in line as a ‘perfect solution’ and that is a Property and Financial Affairs Lasting Power of Attorney. This document gives trusted loved ones the ability to not only access bank accounts and pay bills, but to speak with service providers like ourselves, utilities companies and government bodies.

If you would like to speak with one of our Consultants to discuss any of the issues raised in this article or any other Estate Planning topic please telephone 01732 868190 or click here.

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If you wish to give instructions or require general information about our Wills, Lasting Powers of Attorney, or Trusts then we will carry out a telephone or Zoom appointment.

However, if you wish to give instructions to one of our Consultants and you feel that you can only do this at a Face to Face meeting then we are offering, at our Consultant’s discretion, a limited number of Face to Face appointments in most of the areas we normally cover. To see the areas we normally cover please click here.

To arrange an appointment please telephone 01732 868190 or click here.

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