Jessica Cousins, Solicitor in the Private Client team answers a readers question in Choice Magazine published on 1 February 2017.
Q. My wife and I are both in our 80s and we have our house registered as tenants in common. For many years we have also held a three-way building society account in the names of me, my wife and our son, which we have contributed to, and any one of us can sign to make withdrawals.
My question is: if my wife and I should die, either together or separately, what would have to be declared for probate? Would the funds in the account automatically belong to the survivor, or survivors, or could the funds be withdrawn before probate? Our estate will not be liable to Inheritance Tax.
A. If the building society account is held in
the joint names of you, your wife and your son, you will hold it as
joint tenants unless you have completed a declaration of trust to
the contrary. However, it would be worth checking this with the
building society;
it is likely to have been part of the paperwork you signed on
setting up the account.
Assuming the account is held as joint tenants, on the death of one of you, it will pass automatically to the two survivors. A grant of probate will not be needed for the account and the survivors can continue to use it as before.
Having this form of joint account is a good way of ensuring a
surviving spouse or other joint owner can have immediate access to
funds. You say that you have all contributed to the building
society account and that your and your wife's estate will
not
be subject to Inheritance Tax (IHT). However, in the case of an
estate where IHT is an issue, care should be exercised with the
valuation of joint accounts if contributions to it have been
unequal or largely stemmed from one person.
There is a risk that on the main contributor's death, the
whole of the account will be treated as theirs for IHT purposes
(and
potentially subject to IHT at 40 per cent) even though it passes to
the surviving joint owners. If this situation were relevant,
advice should be taken on making a declaration of trust to make
clear that the account beneficially belongs to the joint owners
equally (or in whatever proportions is agreed).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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