Whose money is it? Succession planning for joint bank account holders

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Published July 2018

It is common for individuals to open a joint bank account simply for the convenience of having multiple signatories in respect of the bank account and not necessarily for the reason of giving all the account older(s) a beneficial interest, equal or otherwise, in the funds held in the bank account. Although this approach may appear to be a convenient and practical arrangement, upon closer scrutiny, having a joint account may present several problems when it comes to succession and wealth planning if one of the account holders dies.

A bank account held jointly with an “and/or” clause generally means that the account can be operated by any signatory and that the beneficial ownership of the funds will vest in the last surviving account holder and will form part of the last survivor’s estate. Any account holder(s) who died before the last surviving account holder would not be able to give the benefit of the funds in the account to their beneficiaries/next of kin as the funds would automatically vest in the last surviving account holder.

It is prudent to review a bank account opening form carefully to understand the consequences of holding an account jointly. This was highlighted recently in the case of Whitlock, et al. v Moree [2017] UKPC 44 in which the deceased had opened a bank account together with his friend. The friend was also one of the beneficiaries named in the deceased’s will. Upon the deceased’s death, the other beneficiaries named in the will claimed the funds in the joint bank account had become part of the deceased’s estate as he was the sole contributor of the joint account and therefore, all of the deceased’s beneficiaries should be entitled to the said funds and not the friend alone, in his capacity as the last surviving account holder. The friend had not made any contribution to the account but was a mere signatory.

Upon review of the facts, the Privy Council held that where two or more people sign account opening documents containing a statement relating to beneficial ownership of funds passing to the surviving account holder(s) in the instance of one of the account holders death, that statement would be conclusive. As such, upon the deceased’s death, the friend became the sole beneficial owner of the funds in the joint bank account.

In light of the above, prior to signing an account opening form, it is advisable to read the fine print to confirm whether there is an express declaration on how funds in the account are to be dealt with upon death of one of the account holders. In case of any uncertainty, further clarification should be sought from the bank to ensure that funds are dealt with in accordance with the wishes of the account holders.


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