You may assume that having a joint account with a spouse/partner, other close family member or friend will eliminate the need for a Lasting Power of Attorney for Property and Financial Affairs as the joint account holder would be able to access your money if you were unable to do so, but this is not the case and it can often cause more problems.
When the bank is made aware that one of the joint account holders has lost or is losing mental capacity, the bank will prevent access to the account to safeguard the account holder. If they do so, then a Lasting Power of Attorney for Property and Financial Affairs would be required to access funds.
If there is no existing Lasting Power of Attorney in place, and capacity is now in doubt, then it may be that an application to the Court of Protection is needed to appoint a Deputy to access these funds. These applications are often expensive and very time consuming.
Why shouldn’t I use a joint account instead of a Lasting Power of Attorney?
It is important to remember that funds in a joint account are seen as the joint funds of the account holders.
It is possible that the joint account holder could access these funds for their own benefit or receive these funds into their estate on the death of the other joint account holder, when actually the funds were never intended to pass to them in this way.
Joint bank accounts will pass by survivorship on the death of an account holder and not under the terms of a Will or the Intestacy Rules. This means that any funds within the account will automatically pass to the surviving account holder on the death of the other.
This could be problematic if the joint account is held with one of your children, but your intention is for all your children to share equally in your estate. As a result, there could be disputes and claims made against your estate after your death.
Why do I need a Lasting Power of Attorney?
As you can see, joint accounts are not effective substitutes for Lasting Powers of Attorney for Property and Financial Affairs. Trying to use a joint account instead of making a Lasting Power of Attorney can cause further issues and is best avoided.
It is also important to remember that the use of Lasting Powers of Attorney for Property and Financial Affairs extends beyond simply accessing cash in a bank account.
Lasting Powers of Attorney for Property and Financial Affairs can also provide authority for your Attorneys to liaise with your investment providers, utility providers and pension providers.
Further, they can be used to enable your Attorneys to deal with the buying and selling of property on your behalf i.e. if your house had to be sold to pay for care.
Lasting Powers of Attorney can also be prepared for others to make decisions (only if you are unable to make these yourself) in relation to any matters concerning your health and welfare i.e. where you should live and what medical treatment you should/should not receive.
Lasting Powers of Attorney provide clarity as to who can make these financial and health decisions for you, and they are a useful tool for providing guidance to these people as to what your instructions and preferences would be in relation to the same.
Next Steps...
If you have any questions about making Lasting Powers of Attorney, please do not hesitate to contact me via telephone on 01283 214 231 or via email on s.wildsmith@timms-law.com.
For more information about Wills and Probate, visit our webpage here.
