Get your power of attorney right
Prepare your power of attorney online, Our review can iron out the errors that lead to costly delays.
Find out more'Can a joint bank account help me manage a loved one's finances?'
Every week we help you with your money problems
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
'Be careful: joint bank accounts and lasting power of attorney don't mix well'
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.
Which? Money 1-to-1 guidance
Our team of money experts can answer your questions big and small, on topics from pensions to tax and savings to scams.
They're impartial so they don’t give regulated financial advice or recommend particular products or providers – they’re here to support you and to help you make more confident financial decisions in these areas and more:
Which? Money members and their immediate family get unlimited access to 1-to-1 guidance sessions.
If you're a Which? Money member, you can book an appointment online. If you're not, you can find out more about membership.
