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07th May 2013

Banks freeze joint accounts if husband loses capacity

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Couples often think that owning everything jointly means that they don’t need to protect each other by giving a Lasting Power of Attorney (LPA) to their spouse. However, there has been a reminder that this isn’t the case.

The Law Society has set up an agreed protocol with the British Bankers Association and Nationwide, following concerns that counter staff at banks were confused by Powers of Attorney (which allow someone else to sign for the account holder). This is welcome as the agreed training should make life easier for the many people who rely on such Powers, particularly in the care of elderly relatives. However, the framework is a reminder not only of how much more difficult life can be without a Power of Attorney in place but also of a little known trap for joint account holders.

Banks can, and often do, choose to have a policy that if one holder of an “either to sign” joint account loses capacity, then the account is frozen until an LPA, EPA or Deputyship Court Order is produced. Similarly, if a husband or wife loses mental capacity the other cannot sell the jointly owned house (perhaps to move to sheltered accommodation) unless there is an LPA, EPA or Court Order. As you might imagine, the cost and delay of obtaining a Court Order (necessary if the spouse hasn’t made an LPA or EPA before losing capacity) is considerable.

If you have been under the impression that an LPA isn’t needed by couples, then now is the time to read our Guidance Note on Lasting Powers of Attorney.

For more information, please contact Carolyn Bagley on 01604 233233 or click here to email Carolyn.