22 June 2012 | Firm news | Article by Matthew Evans

Joint ownership and survivorship: the importance of making your intentions clear

With many of us helping to care for older relatives, a joint account seems like a simple solution in order to help with weekly shopping and other tasks. Adding family members to the bank accounts of their elderly relatives is now a fairly common occurrence.

However, it’s important for those putting their wills into place to make their intentions clear in relation to jointly held bank accounts, particularly in cases where family members are added simply to help out with weekly tasks, and where there might be other family members with a claim to the estate of the deceased.

Where bank accounts are held jointly between family members – such as between a husband and a wife - it is presumed that, on the death of one of the joint account holders, the entirety of the account will be inherited by the surviving joint account owner. This process is known as ‘survivorship’. However, this can be challenged, particularly in cases where family members have been added to an account to help out an elderly relative with weekly tasks.

Whilst the presumption of inheritance by survivorship would still stand in cases like this, if it can be shown that the individual was merely added to the bank account for purposes of convenience and that the monies in the joint account were only input by the elderly relative, the presumption of survivorship may be challenged and/or invalidated. In those cases, the monies held in that bank account will be classed as belonging to the estate of the deceased, rather than the surviving joint account holder. Those monies would then be divided in the same manner as the rest of the deceased’s estate.

The complications of joint accounts were highlighted in a recent High Court decision in Drakeford v Cotton and Stain.  In this case, Mrs Stain was added as a joint account holder to the two building society accounts of her elderly mother, Mrs Cotton.  The accounts contained sums in excess of £50,000 and, upon the death of Mrs Cotton, the ownership of the account and the monies contained within the account passed to Mrs Stain. Mrs Stain’s sister, Mrs Drakeford, disputed this position and brought a claim against Mrs Stain. Mrs Cotton’s will declared that her estate should be split equally between her three children. Therefore, if Mrs Drakeford were to be successful in her claim, she would be entitled to inherit a third of the money in the accounts.

It was eventually agreed by the parties that Mrs Stain had initially been added to the accounts for the purposes of convenience. However, it was argued in support of Mrs Stain that Mrs Cotton had made statements regarding her intentions for the monies in the joint accounts to pass to Mrs Stain. This followed a serious falling out between Mrs Drakeford and her family regarding a phone conversation during which she was allegedly abusive to her mother. Further evidence was also put forward that Mrs Cotton intended to alter her will to exclude Mrs Drakeford, however she had not managed to complete this before her death.

The High Court held that whilst Mrs Stain would not have initially been entitled to benefit from the joint account by way of survivorship, there was scope for altering this position where there was clear evidence that the intentions of the account holders had changed. Here the court found that, following her falling out with Mrs Drakeford, Mrs Cotton had a settled intention that the monies in the accounts should pass to Mrs Stain on her death, to the exclusion of Mrs Drakeford. Accordingly, Mrs Stain would not be prevented from inheriting the entirety of the monies from the accounts, despite the fact that Mrs Cotton had not made clear these intentions in her will.

Hugh James partner and specialist wills dispute solicitor, Matthew Evans, commented: “It is certainly not uncommon for family members to jointly own bank accounts and indeed it can be both convenient and practical to assist family members in day to day circumstances.

“However, this case illustrates the importance of avoiding the potential for conflict, through taking precautionary steps in executing a will that makes your intentions clear. Unfortunately, whilst Mrs Stain was successful in retaining her benefit in the account monies, the fact that the late Mrs Cotton had not taken such steps meant that her family had to endure further emotional stress and the significant expense of legal fees.”

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