Joint Account and IHT

[brugen]

A quick question on IHT.

A mother and son have a joint savings account. The mother dies. When calculating the mother's estate do we use

1 100% of the joint account
2 50% of the joint account
3 0% of the joint account (as the son has access to the totality of the account)

Does it make any difference if withdrawal from the account requires just one or both signatures?

Thanks in advance.

brugen

[PinkDalek]

A quick question on IHT.

A mother and son have a joint savings account. The mother dies. When calculating the mother's estate do we use

1 100% of the joint account
2 50% of the joint account
3 0% of the joint account (as the son has access to the totality of the account)

Does it make any difference if withdrawal from the account requires just one or both signatures?

Thanks in advance.

brugen

It depends on how the joint account was funded although access to it has some relevance.

Here's an article dated January/March 2016 which goes into some detail:

http://communities.lawsociety.org.uk/pr ... ullarticle

[brugen]

It depends on how the joint account was funded although access to it has some relevance.

Here's an article dated January/March 2016 which goes into some detail:

http://communities.lawsociety.org.uk/pr ... ullarticle

Thanks, PinkDalek for your swift response. I'll read the article and I'm meeting the son this evening so I should have more understanding of the reasoning behind the joint account.

Cheers

brugen

[Clitheroekid]

A mother and son have a joint savings account. The mother dies. When calculating the mother's estate do we use

1 100% of the joint account
2 50% of the joint account
3 0% of the joint account (as the son has access to the totality of the account)

It's impossible for anyone to give you a definitive answer, as it depends who actually owned the money in the account. Unfortunately, although it's usually safe to assume that a husband and wife owned it 50/50 this certainly doesn't apply in respect of a parent and child.

For example, it's quite common for a parent to transfer an account from their sole name into the joint names of themselves and their child simply for administrative purposes, in order to enable the child to visit the bank and obtain cash for the parent. The child has no entitlement to the money, and is really just acting as their parent's informal attorney. So when the parent dies then in the absence of any evidence to the contrary the whole of the money in the account forms part of their estate.

This would, of course, also be the case even if the parent did intend the child to inherit the money.

However, it's quite possible that the account could be jointly owned, for example if the parent and child lived together and the account was used to receive money from both of them and to pay household bills. In that event it may well be impossible to determine what share each of them owned with any accuracy, so that a best guess would have to be used when compiling the inheritance tax return.

Assuming you aren't aware of the mother's intentions regarding the account it will be necessary to ask the son about the reason the account was in joint names. For the sake of simplicity one would hope that he would accept that he had no beneficial interest in the account, but if he does claim such an interest things may become a bit awkward, particularly if there are other children who are equal beneficiaries in the Will.