Joint account query

[clarityneede]

My Mother would like to set up a joint current account with me, so that if anything happens to her, I can access her money without going through probate. We have had a lot of deaths in the family, and she has seen the problems not being able to access the deceased’s funds can cause.
I’m not sure if that’s the best thing to do. I have a bit of debt, and I don’t want that to affect her in any way. Would anyone have an alternative suggestion please?

Get power of attorney for finance and log with the bank while doing that get one for health too. It also means you will be able to act on her behalf at anytime even if she has capacity.

She should give you the PoAs the previous poster has mentioned and name you as her executor in her will. If you have a joint account, you are merging your finances, causing potential issues for any siblings because any funds in the account will pass to you on your mother's death as the joint account holder. It could also open you up to tax issues.

I'm not so sure there are any alternatives. Power of attorney dies with the donor, so whilst it would allow you to operate the account while she's alive, it wouldn't once she dies and the accounts would still be frozen.

The contents of a joint account would become yours on her death. I had a similar set up at HSBC with a relative, and when he died the joint account became one in my sole name. The contents of a savings account (not joint) were simply transferred to the current account without probate.

If the account is interest bearing, you'd need to declare half of it as your own. Also, check whether any payments your mum receives can go into a joint account. Some organisations will only pay in to sole name accounts.

I didn't realise that POA ends with death. Do you know that you will have to go though probate. It depends on how much assets you have. My DF didn't have to go through probate.

I have a joint account with my sister, and DH has one with his mum. We are also both named as their LPA for finance. The joint accounts were set up to cover their expenses/bills in the period between them losing capacity and the LPA being operational. After their death, funds are to go towards their funeral. All close family members know about these arrangements. The cards/PiNs for the accounts are kept in their safe.

Most banks allow deceased funds to be accessed for funeral expenses or allow accounts to be closed if under their limit for probate (all vary). You don’t say how old your mother is. Perhaps start by checking her banks probate limit to put her mind at ease. Joint account is useful you could always have one with a ringfenced amount designed for a particular purpose.

Is anyone else due to inherit from your mum?

We did this in my family a couple of years prior to the death of an elderly family member.

There was no property to deal with or probate, about 30k in the accounts.

The sibling with the joint account used it to pay the funeral and settle final bills and then shared the balance between the siblings. There was a lot of trust involved but worked well within my family, it made everything very simple indeed and gave peace of mind to the elderly person.

POA ceases upon death so would be no use.

@clarityneede

I have a joint account with my Mum. I am clear the money belongs to my Mum, she funds it, I track all payments on a spreadsheet and keep receipts. The money will be declared on my Mum’s probate, even though the account will become mine on her death.

I agree with pp you also need LPAs putting in place.

If you want to share it with other relatives after the death that's your prerogative but for goodness's sake don't include it for probate if there's any chance your Mum is close to the IHT threshold.

It’s call integrity.

OP's context is easing the access to money after mother's death, a POA will not achieve that as power of attorney automatically ends on death of the person whose money it is

for IHT purposes that would be tax fraud then since HMRC views a joint account between anyone other than husband and wife as an attempt at tax evasion by passing money between generations
HMRC therefore looks at the account in terms of who funded it and who spend from it. In the case of a child who paid nothing in then the balance will be treated as part of the parent's estate for IHT for very obvious reasons, it is!

There is a legal way to avoid that by showing expenditure is part of the routine of the parent paying for the child, but best to take proper advice on how to construct that so it survives post death scrutiny.

As others have said with a joint account you become joint owner of the assets in a joint account, so if you were to get divorced they could potentially be taken into account in any divorce settlement.

It could also have implications if you’re claiming any means-tested benefits (or might claim in the future).

Your Mum can give you £3k a year and it not be considered part of the estate for IHT purposes.

In our family there would be complete trust between siblings if one was holding an emergency fund.

To avoid being taxed on interest (which would only happen if you already have about £20k of taxable savings already, you could put it in ISA if your ISAs are not maxed out, or Premium Bonds if not maxed out on holdings (£50k)

This is just your Mum giving you a gift. Which is allowed. And you choosing to save it for a Mum-related need.

But the benefits / divorce risk remains.

How much money are you talking? Is your Mum currently fit and in good health? Are you and your siblings very short of funds and couldn’t cash flow any expenses ? Sorry to be morbid but you are allowed to take funeral expenses out of the estate.

Might your Mum be overthinking this?