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02071834884
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02071834884

Joint bank accounts & mental capacity

You may think you don’t need to make a lasting power of attorney, because your money is held in a joint bank account with your partner. Most people assume that if they were to suffer a stroke or develop dementia, their partner would be able to carry on operating the account and would continue to have full access to their pension and other income paid into the account.

But beware, for things are not so simple.  In accordance with guidance from the British Bankers’ Association, it is common practice for high street banks to freeze withdrawals from a joint account if one of the account holders is mentally incapable.

If your partner has lost mental capacity, you will not automatically be able to access the joint account unless you have a lasting power of attorney, enduring power of attorney or have been appointed as deputy by the Court of Protection.

The reasoning behind this is that the joint account can only operate if there is continuing agreement of both parties that both can withdraw from the account, up to its limit. If one party loses mental capacity, they are unable to agree to those terms. The same applies to third party signatories on bank accounts. Once you lose mental capacity you can no longer agree to the terms of the third party mandate.

Once the bank becomes aware of the incapacity and blocks the account, it could take several months to appoint a deputy, if there is no power of attorney in place. Once you have lost mental capacity it is too late to make a power of attorney and there is no alternative but to apply to the Court of protection for a Deputy to be appointed.

This is yet another reason why you should make a lasting power of attorney, while you are still in good health.

We would like to thank RHW Solicitors for providing this content.  If you would like any more information about joint bank accounts and mental capacity, please contact Edward or Rachel in their Tax, Trusts and Estates team on 01483 302000.