Joint Bank Accounts – recent case of Re Northall (deceased) 2010

This recently reported case of 'Re Northall (deceased) 2010' relates to the principles behind joint bank accounts where one party provides the funds for the account. Click here to read the full report in the Law Gazette 22 July 2010.

The deceased, a frail Mrs Northall, sold her property in December 2006 and as she did not have an account in her own name she asked one of her sons to open an account for her. He opened an account in their joint names and paid the sum of £54, 836 into it. Payments of £28, 625 were subsequently made from the joint account with the son making a number of withdrawals on the instructions of Mrs Northall.

When the deceased passed away, the son transferred the balance into his own joint account with his wife.

The son argued that the account with his mother was a joint account and that she had wanted him to retain any funds that were left in the account, for himself. He had made withdrawals from the account on behalf of his mother and on her instructions.   He argued that he was entitled to the funds under the rule of survivorship.


The following legal principles applied:


  1. When one person puts money into joint names there is a presumption of a resulting trust to the provider of those funds. The presumption can be ‘rebutted’ if the circumstances give rise to something called  the presumption of advancement, which was not the case here (and which this article does not go into), or,   by evidence that the provider intended to transfer the beneficial interest;
  
  2. The burden of proving such an intention is on the person who is alleging it.

The court found that there was not enough evidence to show that the deceased had intended that the funds were to be a gift to her son, who, in his own admission, had demonstrated that Mrs Northall was the beneficial owner of the funds. Further, even though the account was opened in joint names and that the bank instructions provided for survivorship, there was no evidence to show this was drawn to the attention of the deceased at the time.

The court found that the remaining funds did not belong to the son and that he must account for them.

Opening a joint account is a common scenario amongst us so it is important to understand the implications of this case. If a joint account is opened, and only one party is paying money in, they must be advised of the rule of survivorship in order for the other joint owner to become the sole owner of any such funds on the death of the party who pays the money in.  

The intentions of the parties are also closely looked at where one person pays money into a joint account – i.e. how are these funds to be treated and how do they belong to?  There was not enough evidence in the case of Northall to show that the deceased intended to gift the remaining funds to her son.

From an Inheritance Tax point of view it is also important to know that any funds in a joint account where one party has provided the funds, are to be included in full in their IHT return (which is completed during the Probate process), when they die.

This is due to the fact that they would have been entitled to draw on all the funds when they were alive and not just part of the funds.