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What Happens If A Joint Account Holder Loses Mental Capacity?

It is not uncommon for individuals to have a joint bank account with a spouse, partner or adult child. This arrangement provides easy access for both parties to make withdrawals or to manage joint expenditure such as household bills. Joint accounts may also provide administrative support for individuals being cared for. 

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

According to guidance provided by the British Bankers’ Association, “banks and building societies can use their discretion to determine 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 is registered.”

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.

How can this situation be avoided?

Forward planning including 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 your property and financial affairs, and another which allows someone to make health and welfare decisions on your behalf. 

From the issues described above an LPA for property and financial affairs would be required. When registered, your attorney(s) can act immediately. (However, you may stipulate that your attorney(s) may only act in the event that you lose capacity.) 

When choosing your attorney(s) it is important that you appoint someone you trust. You may wish to consider appointing a spouse, or partner or adult children. You can also appoint more than one attorney to act jointly and / or severally. 

What if I lose capacity and have not created an LPA?

If it is deemed that you do not have capacity and an LPA has not been created or you do not have an 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.

This highlights the importance of planning for the future and what better way to start than by making an LPA. You may never have to use it but if you were to lose capacity, an LPA can be a valuable asset in ensuring that your finances are managed properly and in your best interest.

For more information about making Lasting Powers of Attorney please visit our attorney page

If you would like advice from one of our Private Client Solicitors, please email or phone 01295 270999 (Banbury Office), 01869 252161 (Bicester Office)