It’s a common occurrence for individuals to have a joint bank account with a spouse, partner or adult child. This arrangement provides easy access for both parties to manage joint expenditure such as household bills.

But there is a general misconception that when one party loses capacity the party who still has capacity can still access the funds in the joint account. Unfortunately this is not the case!

Once the bank or building society learns that one of the account holders has lost capacity, they will usually freeze the account irrespective of it being held in joint names.

As a consequence of this, it may not be possible for either account holder to make non-essential withdrawals from the account. This is because the validity of the joint account relies on the expressed consent of both parties. This can then cause issues with having the funds for daily payments such as groceries or any bills. But it’s worth noting that ‘standard’ withdrawals such as direct debits and standing orders will normally be able to continue as these would have been arranged when both account holders could give their consent.


The British Bankers’ Association guidance states that ‘if one joint account holders loses mental capacity, banks and building societies can decide whether or not to temporarily restrict the use of the account to essential transactions only (for example, living expenses and medical or residential-care bills) until a deputy has been appointed or a power of attorney registered ’.


The bank will usually require one of the following:

  • a registered lasting power of attorney for property and financial affairs;
  • a registered enduring power of attorney; or
  • a deputy order from the Court of Protection.
  • The reasoning why Banks require such evidence is to protect the account from fraudulent use. This, of course, can be very frustrating for the capable account holder who simply wants to manage an account in which they have an interest.



How clients can avoid this situation

Creating a Lasting Power of Attorney (LPA) can help to mitigate the life changing impact of illness such as a stroke or dementia. There are two types of LPAs: one that deals with property and financial affairs, and another which allows someone to make health and welfare decisions on someone’s behalf.


From the issues described above an LPA for property and financial affairs would be required. When registered, the attorney(s) can act immediately, but it can be stipulated that the attorney(s) may only act in the event that capacity is lost.


When choosing an attorney(s) it is important that someone trusted is appointed. The client may wish to consider appointing a spouse, or partner or adult children. More than one attorney can be appointed to act jointly and / or severally.


What if capacity is lost and there is not an LPA?


If it is deemed that a person does not have capacity and an LPA has not been created or there is no Enduring Power of Attorney (made pre October 2007) an application will need to be made to the Court of Protection for the appointment of a financial deputy. This process can be lengthy, complicated and significantly more expensive than creating an LPA.

An LPA can be a valuable asset in ensuring that finances are managed properly and in a person’s best interest.


What can you do next?

The solution is for you to speak with clients and educate them to the reasons to consider an LPA that will enable them to make financial and property decisions on behalf of the person with reduced capacity. This will need to be drafted, signed and registered with the Office of the Public Guardian.


We talk about LPAs in more detail here and strongly recommend that people act early to put any relevant LPAs in place before anybody involved loses capacity.


BTWC can help with all aspects of the LPA process and registration as well as providing guidance and advice if an LPA has to be implemented and used.