Death of a joint account holder and transfer of funds to estate

[Wiseoldelf]

My Grandfather recently died, leaving his estate split broadly between grandchildren and my father.
My father had 2 joint bank accounts with my Grandfather, one savings and one current; both set up for ease of managing finances and paying bills.

My Father has been told by the solicitor that as the money was deposited solely by my Grandfather, that the money forms part of the state and the accounts are to be closed and money transferred to solicitor.

We understood that the money now legally belonged to my father, and whilst liable for inheritance tax, any remainder would be Dad's. I didn't think it mattered who deposited the money; can you advise of the best way to proceed?
The bank has transferred the account into my Father's name and consider the money to be his, so legally whose money is it? The estate of my Grandfather or my Father as joint account holder?

How long ago were the deposits made by your grandfather?

Probably the bulk of it about 10 years ago.
The current account was used as the account pension went in to, day to day deposits / withdrawals and more recently care home payments.

Having dealt with an estate liable for IT before (I'm not a lawyer) I think that the tax has to be paid before any distribution of assets. See the article below for more details. I suspect the solicitor is right.

www.boodlehatfield.com/the-firm/articles/joint-accounts-whose-money-is-it.aspx

I know IT will be payable on the estate, but shouldn't that sit at 40% of the balance and then the rest is Dad's?
What the solicitor is saying is the whole balance of the accounts must be paid to the estate; IT paid and the balance distributed from that point with the terms of the will.

You can ring the HMRC helpline yourself if you wish for further advice.

Cotswold's link is very informative. I would guess the solicitor believes that since the only depositor was your GF, that is was set up with your DF as administrator of your GF asset, rather than joint asset owner, and thus 100% belonged to your GF and is included in assessment.

If you or he have written evidence to the contrary IE that this was not just an administrative arrangement then I'd fish that paper out and have a chat.

I think it depends how the account is held. If held as joint tenants then the amount automatically passes to the other joint tenant/s and does not form part of the deceased's estate. The idea of joint tenancy is that each joint tenant effectively owns all the money, not a specific share of the money.If held as tenants in common then the deceased's share of the account forms part of the estate and is distributed as per the will.
You need to find out from the bank exactly how the joint account was held in order to establish which scenario is applicable.

As Poundland says - you need to establish if this was an administrative arrangement or a joint account.

No evidence to the contrary unfortunately.

But my DF has had tax liability added on from these accounts onto his tax return, so in effect, the money has been treated as part his for a number of years by HMRC.
There seems to be no clear answer in law as to who the money legally belongs to now. We'd assumed the balance after IT was paid was for DF.

It was a full joint account. DF wasn't just a signatory. This has been confirmed by the bank. Currently, the status of the account is solely in DF name now that they have been notified of GF death.

I would take DF tax returns with HMRC point to solicitor and argue from there.

The point re administrative account is more a common law type of point rather than technical point regarding the contract...but if HMRC has set precedent with agreement that your DF was fully accepted as joint asset holder then I believe this is the most logical defence of your point.

I'd also speak with HMRC about this context.

Lots of "points" there, I now see . Good luck OP and my condolences on the death of your grandfather

arguably your grandfather gifted the full amount or half the amount in the saving account to your father when it was deposited, assuming it was either to sign for withdrawal, making the bulk of it exempt from inheritance tax as it was more than 7 years ago. I think that is the line I would take with the solicitor. However unless your grandfather indicated anything to the contrary the will indicates how he wanted it shared. The current account is a different matter and he ought to give that money to the solicitor for inclusion in the estate.

Having been in a similar position but below the IT threshold so no tax implications I distributed all the money that was transferred to me in accordance with the will. Morally your father should do that.

Thank you all.
I just feel for my DF as he just wants all of the money handed over to the estate to save hassle, but I feel if it is 'his' then he should dig his heels in a bit. As ever with families..... it's complicated!!

Yes these things can be very difficult.

I think any gifts qualifying for exemption under the 7 year rule would have to have been demonstrably given without any reservation...putting it in a joint account where he retained full rights and facility to take back the money doesn't cut it on that front, I don't think. Hope it all works out for you.

morally there isnt an issue, is there? If your father is content with that then what's your problem as you'll get the share your grandfather wanted you to have.

Poundland is probably right and the tax people will insist on their cut.

Your DF would have only paid income tax on half the account surely, though? Not the whole amount?

A joint account does not automatically mean the money belongs to the survivor