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26th November 2013

Joint Bank Account - When you can't sign a cheque

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If your partner loses mental capacity, can you continue to use your joint bank account if it’s “either to sign”? Apparently not.

Many people think a Lasting Power of Attorney (a document signed in advance of being needed, which allows someone else to sign on your behalf if you ever need help) is not necessary until they have no spouse or partner. They assume they can carry on using the joint cheque and savings accounts. Until relatively recently, this may indeed have been possible.

Now, however, the banks have realised that losing mental capacity means losing the ability to consent to “either one” making withdrawals.

If a bank becomes aware that one of the joint account holders is mentally incapable, then they will treat that as notice to cancel the joint authority for either to sign to be able to withdraw funds. A bank can change mandate terms as they wish at any time back to the default position, which is that all parties must sign.

Effectively they freeze payments until a Deputy is appointed by the Court – or until a pre-signed, and registered, Lasting Power of Attorney is produced. (An Enduring Power of Attorney made before 1 October 2007 would also be valid.) Although they allow Direct debits or Standing orders already set up for utilities to continue, this could be terribly awkward for the other party.

Is that an argument for everyone to have a Power of Attorney in place and registered ready for use? Yes.

For two more reasons. One is that even if you think you are financially content to have the joint and sole name accounts of your partner frozen – what about reductions in interest rates? The other is that the same rule has always applied to the jointly owned home – and many people would want to have the freedom to move house if their partner lost mental capacity.

For more information, please contact Carolyn Bagley on 01908 247015 or click here to email Carolyn. Click here to view our information sheet on Lasting Powers of Attorney or view the British Bankers' Association leaflet here