We regularly advise couples on tax and protection issues. Quite often, during a routine consultation, we inform them that their joint accounts will be frozen should one of them lose their mental capacity in the future. More often than not, the couple simply can’t believe that this is true. Unfortunately, it is! That’s why we strongly advise couples to pay close attention to their financial arrangements, particularly if they give up their individual bank accounts and rely on one joint account.
As this advice from the British Bankers’ Association states http://www.bba.org.uk/content/1/c6/01/45/51/jointacc.pdf, things can get tricky if one joint-account holder becomes mentally incapacitated. For those of you in England, your bank or building society would have to obtain an order from the Court of Protection (which protects the rights of mentally incapacitated people) before they can let you use the account. This can take time and cause extra heartache at a difficult time for the family.
We’ve blogged in the past about the importance of setting up a Lasting Power of Attorney. We’ll mention it again here, because it could have a real impact on access to your joint funds should one of you lose mental capacity. If the other joint-account holder had appointed you as attorney you will be able to register the power of attorney and run the joint account. However, if they appointed someone else, that person would have to agree with you (and the bank or building society) on the matter of how to run the joint account. In addition to this, the bank or building society may need a new mandate from you both.
Unfortunately for all those couples who think we’re joking when we say that joint accounts will be frozen if they lose their mental capacity – we’re not. Please take steps to protect yourself, and your hard-earned savings, against this outcome. We can advise you on how to set up protection quickly and easily.
Photo Credit http://www.flickr.com/photos/14777449@N07/2628532097/
