Issues with Joint Bank Accounts and Mental Capacity
Most people would assume that by making a joint bank account with a spouse, their children or even someone who they trust, would allow that person to continue operating that account, and make withdrawals as needed, if you were to lose your mental capacity.
However, according to guidance provided by the British Bankers’ Association, the banks can use their discretion to determine whether or not to temporarily ‘freeze’ the joint bank account so as to prevent any withdrawals from the account (besides living expenses and residential care bills applicable for both individuals), should one of the account holders become mentally incapable. Therefore, this means that you may not be able to access the account automatically.
This is because the purpose of the joint bank account is that both individuals agree that they can both withdraw from the account, up to it’s a limit. If one person loses their mental capacity, then they are unable to agree for both individuals to withdraw from the joint bank account.
One solution to this problem is to create a ‘Lasting Power of Attorney’ (LPA). This allows someone to act on your behalf should you lose your mental capacity. There are two types of LPAs: one that allows someone to look after your property and financial affairs, and another which allows someone to make health decisions on your behalf. In regards to the situation in question, an LPA for property and financial affairs is the most ideal. Any LPA will need to be drafted, signed and registered with the Office of the Public Guardian. An advantage of a LPA for property and financial affairs is that an attorney can act before or after you lack capacity (unless you state that the attorney cannot act for you until you have lost your capacity). You can also appoint more than one attorney to act jointly and severally.
However, should you lose your mental capacity before being able to authorise your LPA, then a person must apply for Deputyship from the Court of Protection (this can take up to several months). Typically, such orders will take longer and are more expensive. Therefore, it is advisable to have some foresight and have an LPA drafted, signed and registered in case the unthinkable were to happen.
At Foskett Marr Gadsby & Head LLP, we have the expertise and the experience to guide you through the wilderness that is LPAs. Should you wish to speak further about this with someone, then please contact our Wills and Probate Team.