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Joint account with mother as provision for probate?

(49 Posts)
YBR Fri 12-May-17 17:06:57

My Father died a couple of years ago and was completely in denial so had given very little thought to it. My mother is doing the opposite!
Today she suggested that She and I should have a joint account so that I would have access to pay the costs of funerals, probate, death taxes and so on.
It would be all her money in the account, but does anyone know whether there would be legal or tax implications associated with doing this?

Ethelswith Fri 12-May-17 17:16:00

You need to check that bank doesn't automatically close/freeze the account on the death of one holder.

When my DF was very ill, they decided to open a account solely for DM, and switched most income in to that simply so she would be able to pay for stuff whilst all the formalities were going on.

DirtyBlonde Fri 12-May-17 17:20:26

Tax implications could arise if it was an interest bearing account.

And if life went tits up for you, the amount in there would also legally be your asset and could affect a benefits claim.

YBR Fri 12-May-17 17:27:56

I know that the bank by parents had a joint account with only froze the savings accounts in Dad's sole name and not the joint accounts.

DirtyBlonde Do you know details - or where to look. If the tax-man assumes that half the interest is my income, can we tell him that's not the case?
Presumably we could revert the account to Sole name it the benefits thing came up.

TinselTwins Fri 12-May-17 18:25:56

I think some NS&I products can release money to executers before probate is complete - there are other (probably better) ways to go about this.

She could pay for her funeral etc

fairiedemon Fri 12-May-17 18:28:22

When my mum died last year, Barclays released £5k from her sole savings account to cover the funeral costs upon production of the invoice from the funeral directors.

Chasingsquirrels Fri 12-May-17 18:30:27

Barclays said they could pay the funeral bill direct if there were enough funds in DH's sole account - I just gave them the bill. Received a receipted copy from the funeral directors today to show it as paid.

VeuveVera Fri 12-May-17 18:33:17

It's a good idea
They won't freeze it if it's a joint account.
Tax implications would be minimal unless it's v large amounts.

They can release funds from a deceased account for the funeral before probate.

wtffgs Fri 12-May-17 18:36:38

I have a similar arrangement but it only covers a current account - the idea being that I can pay essential household bills without worrying in the first couple of months when I'll be otherwise busy starting probate, informing people of the death and getting the house on the market along with dealing with raw grief. A savings account isn't worth it as that will be frozen on my parent's death.

Mehfruittea Fri 12-May-17 18:41:19

You couldn't just take your name off to avoid the benefits thing. They will see it as your capital, and if your name is removed they will consider it as you disposing of your capital deliberately.

Check out the limits for capital, it only comes in to force after 12 months if you claim contributions based benefit to begin with.

GrindingForms Fri 12-May-17 18:55:08

what a lovely mother op, you are very lucky.

You can simply ask the bank what they do in the event of her death.

Another thing you can look into if she is looking so far ahead is Power of Attorneys, there are two types, one is financial ( not sure how long it lasts for) which means you can control her finances if she is stuck in hospital and a longer term one for dementia etc...which is about 400 - 500 pounds however it means you are in full control of her not the state should she become ill.

Then sometimes it depends how much is in bank account but again you would need to check ie over 50 grand many banks won't release ( except for funeral) because of probate etc.

YBR Fri 12-May-17 19:18:28

She has more costs in mind that the funeral or 5k.
Probate is quite an expensive process (complex estate I would expect as dad had investments with maybe a dozen different funds/shares). I guess there'll be income tax to pay and death taxes have to be paid before the estate has probate granted AFAIK.
She does not want me to be out of pocket owing to this process

Clearly the Joint account idea is too simplistic and we'll need to go to an accountant or solicitor for advice.

WatchingFromTheWings Fri 12-May-17 19:28:12

Has your mother considered one of those prepaid funeral arrangements? All paid for upfront leaving you with nothing to worry about. Both my parents did it (DF deceased, DM still alive). Saves alot of hassle.

The bank will close the account as soon as you notify them off the death though you'd still have access to the account up to that point.

SherlocksDeerstalker Fri 12-May-17 19:30:29

I have this arrangement with my mother. We spoke at length with the bank manager about it. It is worth getting correct advice for your particular situation and bank though.

VeuveVera Fri 12-May-17 19:32:57

Power of attorney doesn't apply after death.

I found probate application quite straightforward. You don't need exact figures.
If everything is owned jointly between you and your mum, including house,it will all become yours and is out of the estate, and wouldn't even be included for Iht calculations.
I've found shares were the most difficult thing to deal with, had to open specific executor account.
Don't automatically pay credit cards or any tax. I paid credit cards out of insurance money(didn't have to) and Hmrc waived income tax because there was no money in the estate.

kath6144 Fri 12-May-17 20:02:06

Op, why do you say Probate is quite an expensive process.

Has your mum nominated you as executor, or a solicitor? If only you, it is very straightforward, with minimal costs. I did mums last year, including shares. The actual probate form only needs an estimate of cost, so as long as you know name and type of shares (you could help your mum make a list now), then you can value via web. (Once you have probate, you can then send grant off to stockbrokers and get shares put in your name, if you are sole beneficiary. I had mums, DB wasn't interested, he had more cash)

We had no income tax to pay. Death tax (Presume you mean IHT) will have to be paid but can you estimate how much that may be - bearing in mind that your mum will have both your dads and her own allowance - and maybe she puts that into a joint account?

All other household costs should be frozen until probate is granted, eg utilities, water etc. Council tax is not due for a given time after Probate.

I paid for funeral deposit and sundries from own money, plus probate cost (200ish?), the bank gave me a cheque from her account for funeral invoice. That was all that needed paying up front.

Given that my mum had terminal cancer diagnosed a year before she died, I had already helped her sort finances, so I knew exactly what she had, where (most amalgamated into one institution) so doing the probate form was very easy, just needed house valuations, which we got after funeral. Would your mum let you help her do similar?

So the only sticking point I can see in your situation is paying IHT, if likely to be due, and paying for funeral deposit etc if you have no cash of your own. (My DB had none, doesn't work - not sure how he would have managed if I wasn't around, but presumably mum would have given him some money upfront)

kath6144 Fri 12-May-17 20:05:10

Op, why do you say Probate is quite an expensive process.

Has your mum nominated you as executor? If so, it is very straightforward, with minimal costs. I did mums last year, including shares. The actual probate form only needs an estimate of cost, so as long as you know name and no of shares (you could help your mum make a list now), then you can value via web. (Once you have probate, you can then send probate grant off to stockbrokers and get shares put in your name, if you are sole beneficiary?)

We had no income tax to pay. Death tax (Presume you mean IHT) will have to be paid but can you estimate how much that may be - bearing in mind that your mum will have both your dads and her own allowance - and maybe she puts that into a joint account?

All other household costs should be frozen until probate is granted, eg utilities, water etc. Council tax is not due for a given time after Probate.

I paid for funeral deposit and sundries from own money, plus probate cost (200ish?), the bank gave me a cheque from her account for funeral invoice. That was all that needed paying up front.

Given that my mum had terminal cancer diagnosed a year before she died, I had already helped her sort finances, so I knew exactly what she had, where (most amalgamated into one institution) so doing the probate form was very easy, just needed house valuations, which we got after funeral. Would your mum let you help her do similar?

So the only sticking point I can see in your situation is paying IHT, if likely to be due, and paying for funeral deposit etc if you have no cash of your own. (My DB had none, doesn't work - not sure how he would have managed if I wasn't around, but presumably mum would have given him some money upfront)

kath6144 Fri 12-May-17 20:06:24

Oop, sorry for double posting, the first attempt didn't seem to post!!

IamSlave Fri 12-May-17 20:51:15

It is worth getting correct advice for your particular situation and bank though

yes - each bank has different threshold and process to follow.

Not sure about paying taxes BEFORE probate as far as aware - probate is granted then you pay taxes - certainly on estate under IHT threshold this is the case. Ie no money released until have sealed probate form.

Power of attorney doesn't apply after death

No its doesnt your right but its something to consider if ops mum is in good health NOW and can look into this as a future provision. I have heard horror stories on here and elsewhere of relatives handed over the to the state - you cant have any say over anything.

I've found shares were the most difficult thing to deal with, had to open specific executor account

I am dealing with shares now - why did you find them difficult?

Don't automatically pay credit cards or any tax. I paid credit cards out of insurance money(didn't have to) and Hmrc waived income tax because there was no money in the estate

Is there a threshold for no money in the estate? does that include property.

VeuveVera Fri 12-May-17 21:18:21

With Shares I had to change shareholder name, provide all original certified documents to stockbroker and open up a new account for them to be credited. Just all took time.
Property is included in the estate for inheritance tax.
Threshold is 375k, I think.
425k for dependents i.e. Parent to child.
If one parent died first their threshold goes to spouse, then double threshold transfers to child-really not sure how that works

IamSlave Fri 12-May-17 21:33:27

Do you mean you sold them and had to transfer the name first? Which company I have been told they can be sold or transferred.....

Finding the certs is a bugger....I am several short but told I could pay special fee to cover this.

Re income tax - do you know threshold for paying it re money in estate ie if there is no property or other funds, or just other funds leaving out property?

DancingLedge Fri 12-May-17 21:43:08

Haven't read whole thread.

IF IT'S A COMPLEX ESTATE WITH INVESTMENTS AND IHT LIABILITY ,GET GOOD PROFESSIONAL ADVICE.

Sorry to shout, but whatever else you do, please take this on board. This stuff is simply too complex for the amateur. Simple estates, sure, you can sort this without paying for advice.
Estates liable to IHT or CGT, you can do something that on the face of it looks reasonable, but in reality, makes you liable for huge tax implications.
And , if you need it, get sensible benefits advice elsewhere: tax advisors don't usually know what they're talking about re benefits.

Good luck.

DancingLedge Fri 12-May-17 21:45:30

And if it was under two years that your father died, GET ADVICE URGENTLY. Cause you're about to cross a 2 year deadline re minimising the tax implications of his estate, via a variation of his will.

DancingLedge Fri 12-May-17 21:49:50

No, Veuve, there is no transfer of IHT alliance from parent to child. Only between spouses.

IHT is, seriously, a matter for professionals.
Unless you enjoy passing 40%of your capital to HMRC.
In which case, do carry on.

DancingLedge Fri 12-May-17 21:52:18

IHT allowance.
Sorry, it's been a long week.

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