The Joint Account Misconception
What happens to your joint bank or savings account if you lose mental capacity?
You might already know that a spouse is unable to access your sole name accounts if you lose mental capacity, unless there is a Lasting Power of Attorney in place, or the spouse has applied for a deputyship through the Court of Protection.
However, there is a general misconception that when one party of a joint account loses capacity to make decisions the party who still has capacity can still access the funds in the joint account. Probably, much to your surprise, this is not the case, even when you both have the authority to access the account alone! The British Bankers' Association guidance states that:
" if one joint account holders loses mental capacity, banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only (for example, living expenses and medical or residential-care bills) until a deputy has been appointed or a power of attorney registered.
In fact though, a Power of Attorney can only registered if one was made before a person has lost capacity, and the registration process if there is one, takes around ten weeks (longer if there are queries). During this time, important purchases might need to be made which are not permitted.
If there is no Lasting Power of Attorney in place, then an application must be made to the Court of Protection to appoint a deputy, who will be given permission, possibly limited permission to make financial decisions on behalf of the person who has lost capacity. The cost to apply for and act as deputy over a period of time, can outweigh the costs of setting up a Lasting Power of Attorney, by multiples of ten, twenty or even more. It may also take a long time for the deputyship application to be heard and approved.
If you still have capacity we can provide you with advice and professional services to set up Lasting Powers of Attorney. If someone has already lost capacity, or sister firm has an established Court of Protection team which can help you submit an application for deputyship.
If you saw the process for deputyship, and the costs involved, you would understand the importance of having a Lasting Power of Attorney in place while you are fit and well, even if you felt that losing capacity was a long way off. We do not know what is around the corner!