When someone dies there’s not only the huge emotional stress, there’s usually a lot of financial admin to sort as well. So what happens to any joint accounts they have?
If you have a joint account with a partner or friend and they die, you can usually carry on using the account or choose to close it.
But you’ll need to inform the bank, so the account can be updated, then it’s up to you whether you close it or continue using it.
Here we explain everything you need to know to keep using it.
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When someone dies, does their joint bank account automatically close or freeze?
When a person dies, their joint bank account will remain open and it should not be frozen or automatically closed.
The remaining partner named on the bank account will be able to continue using the account, as they had done previously.
They will have to tell the bank, and provide a death certificate, to have the deceased person’s name removed.
Do I need to wait for a grant of probate to access the money in a joint account?
No, you usually do not need to wait until probate to access money in a joint account.
This is because the bank will follow the ‘right of survivorship’, which means any money within the account will automatically go to the surviving account holder.
Unlike with other money and assets belonging to the person who has died, money within a joint bank account does not form part of their estate.
However, this isn’t the case in Scotland where money doesn’t automatically pass to the remaining partner.
In Scotland, the surviving bank account holder is required to calculate how much money each person paid into the account, and then this money goes to the person (or persons) named on a will (or if there is no will in place the rules of intestacy will apply).
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What do you need to do when someone with a joint bank account dies?
The joint bank account will remain open as usual but the surviving account holder will need to do a few things including:
Notify the bank or building society
You will need to let the bank know about the account holder who has died. This is so they can update the account details and put it solely in your name. It’s possible to let all of the banks and building societies know about the death in one go with the free Death Notification Service.
Provide a death certificate
Usually you will need to show the bank a death certificate, so they know the details of the person who has died.
Update the account
The account will then be updated to just be in one person’s name. You can then choose whether to continue using the account or to switch to a different provider.
There’s no pressure to change the account straight away either, as you may have a long list of admin to get through during an already emotional time. However, if you do at some point switch accounts, it’s well worth comparing the offers available, which could include a cash lump sum, better interest rates, or other rewards such as cashback.
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Are there any tax considerations when someone with a joint bank account dies?
Yes there are some tax implications to be aware of when it comes to joint bank accounts. They include the following:
Inheritance tax
Money within a joint bank account is looked at when it comes to inheritance tax and the surviving partner will need to tell HMRC how much money they put into the joint account. HMRC will then look at the deceased person’s estate – including any money they have put into a joint bank account – when calculating if inheritance tax is due or not.
IHT limits
Inheritance tax rules in the UK state that anything worth more than £325,000 may face inheritance tax of 40%. However, this isn’t usually applied to people who were married or in a civil partnership.
Exceptions to the rule
There are some exceptions to inheritance tax when it comes to partners who were married or in a civil partnership. This comes under the spouse and civil partner exemption which means if money passes to a person who had either of these relationships, the money is usually free of inheritance tax. However, this doesn’t apply if there was no marriage or civil partnership in place.
