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Joint Bank Account - For Convenience?

It is frequently the case that an elderly person may add a child or other relative onto their bank account to enable that other person to operate the bank account for the convenience of the elderly person.

A recent case heard in the UK Privy Council (whose Judges are for the most part Judges of the UK Supreme Court) has highlighted the need for care to be taken when making these arrangements.

In the case (Whitlock –v- Moree) the deceased was a 90 year old business man.  At the time of his death he had a substantial sum in his bank account.  The year before he died he added Mr Moree to his bank account.  On his death the Court had to consider whether the funds in the bank account passed to Mr Moree as the surviving joint owner of the account or whether the funds formed part of the deceased’s Estate to be dealt with on the terms of his Will.

When adding Mr Moree to the bank account the deceased and Mr Moree had signed the bank’s standard form which read as follows:-

“Joint tenancy.  Unless otherwise agreed in writing, all money which is now or may later be credited to the account . . .  is our joint property with the right of survivorship.  That means if any one of us dies, all the money in the account automatically becomes the property of the other account holder”.

Both parties signed the form although there was a note in the section stating the purpose of the account which indicated that the account was “to pay utilities”.

When the case came before the Privy Council the Court delivered a split decision with three of the five Judges effectively finding that the situation was governed by the wording of the bank mandate and it was unnecessary and impermissible to go beyond that by considering what the actual intentions of the parties may have been.  As a result the party who was added to the account was entitled to all of the money in the account.  The argument that the money should form part of the deceased’s Estate was defeated.

This has been a controversial decision.

If a party is to be added to the bank account purely for the convenience of the former sole account holder then the intentions must be clearly stated and any bank mandate must be considered carefully to ensure it does not conflict with what the intentions of the parties are.

Whilst this was a decision of the Privy Council and therefore technically not binding as a precedent on UK Courts, it will be a very persuasive authority should the same issue come before the UK Courts.