Confusion often occurs with how jointly owned assets will be treated after the death of one party, with the assumption that the surviving partner will then take full ownership. How can you ensure your interests are being protected? Private Client Solicitor, Sarah White, discusses:
If someone dies with money in a joint bank account, who will this money pass to?
On the assumption that the account is held by the account holders as joint tenants, then the monies will pass to the surviving joint owner automatically, under the rules of survivorship. The account would be moved in the sole name of the surviving owner upon production of a death certificate. On occasion, a person may add a joint owner to an account to allow that individual access to funds if needed (for example, an elderly parent might do this to ensure that someone can easily access the account to pay his or her bills). Whilst the funds pass to the joint owner on death, that person has a moral obligation to pay those funds to the estate of the original account holder rather than retain them, as the account is in joint names for convenience only and not because the original account owner intended the funds to pass to the surviving owner.
Whilst less common, it is possible for account holders to agree to hold joint monies as tenants in common. There would usually be a signed agreement to this effect, setting out the proportions of the monies that each owner is entitled to. In that scenario, the portion belonging to the deceased person would fall into and form part of their estate and be dealt with either under the terms of their Will or intestacy provisions.
What is the difference between ‘joint tenants’ and ‘tenants in common’ and how does this affect what you can leave in your will?
If you own an asset (for example, property or a bank account) as joint tenants with someone else, then you each own the asset in its entirety. On the death of the first owner, their interest in the asset passes automatically to the survivor under the rules of survivorship. You cannot bequeath an asset that you own as joint tenants to someone else by a Will. Conversely, if you own as tenants in common, you each own a distinct share in the asset. There is a presumption that you each own equally, but you can decide to own in unequal shares (usually by means of a Declaration of Trust). You can direct what happens to your share in the asset under the terms of your Will.
Is it possible to leave personal items, such as furniture or artwork, to another person in your will if the item is located in your shared property?
Yes, you can bequeath personal possessions (commonly referred to as chattels) to a specific person or people by your Will. It would be the responsibility of your Executor(s) to retrieve these specific gifts and distribute them to the persons named in the Will.
How can a solicitor help to make sure the assets you leave behind go to the right people?
The only way to ensure that your assets pass to beneficiaries of your choosing is to make a Will. Without a Will, your estate will be divided in accordance with a very strict set of rules known as the intestacy rules. These rules do not take into consideration your personal circumstances nor the closeness of your relationships, and monies can often be distributed in ways that you may not want. Using their years of professional training and experience, your solicitor will be able to guide through the Will making process, often prompting you to think of things you may not have considered. Using a solicitor will also help ensure that your instructions are clearly set out and that the Will has been validly executed, minimising the risk of potential mistakes being made or challenges to the Will later on.
What is a letter of wishes and how can it benefit people with shared assets?
A letter of wishes can be written by the testator (the person making the Will) to accompany their Will. It is not legally binding, but sets out their wishes and intentions of how they would like their estate to be distributed. You can also use a letter of wishes to provide guidance to your executors on matters which might require their discretion, for example, how to manage monies which are to be held on trust.
How can Ellisons help?
At Ellisons our specialist Private Client Solicitors are able to help you plan for your future. By instructing our respected Wills, Trusts and Probate Solicitors in Essex and Suffolk you can plan ahead making sure your family is provided for in the future. Contact the Ellisons’ specialist Private Client Solicitors today on 01206 764477 or email us at [email protected].