Samantha specialises in personal taxation and trusts. She enjoys being able to demystify these complex areas.
I’ve read that it makes sense to have a joint bank account with someone that you hold a lasting power of attorney (LPA) for.
The article said when they have passed away, you still have access to the funds in the account.
Is this correct and what would be the tax position?
Gary from Oxfordshire
Samantha Galloway, Which? money expert, says…
We don’t recommend opening a joint bank account with someone for whom you also hold lasting power of attorney (or its equivalents in Scotland and Northern Ireland).
It could be perceived as an abuse of power, as you’d technically be making some of their assets legally yours, rather than managing them on their behalf.
The maximum penalty for misuse of power of attorney is an unlimited fine, 10 years’ imprisonment or both.
The money that came from the deceased will still count towards their estate for inheritance tax purposes
An LPA should give you the control you need. If you already have a joint bank account with the person you are attorney for then there are some points to keep in mind.
Tax on interest earned would typically be split 50:50 between you. You’ll need to let HMRC know all the money is one person’s for it to treat all the interest and possible tax bill as that person’s responsibility.
LPA powers end when the donor has died, with the personal representative or executor taking control, so a joint bank account would mean you’d retain your access to the funds.
However, the account should be reported as part of the probate process. The money that came from the deceased will still count towards their estate for inheritance tax purposes.
Most banks will release funds before probate for a funeral if presented with a funeral director’s bill.
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