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Savings in a joint account with another family member

WROTricia
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Good afternoon, if an older person has a joint account with their adult child, does PC normally treat the money as 50/50 each or do they want to investigate who puts money in, how much and how often?

Paul_Treloar_AgeUK
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Assumed to be equal shares unless shown otherwise.

Capital jointly held
23.  Where a claimant and one or more persons are beneficially entitled in possession to any capital asset they shall be treated as if each of them were entitled in possession to the whole beneficial interest therein in an equal share and the foregoing provisions of this Part shall apply for the purposes of calculating the amount of capital which the claimant is treated as possessing as if it were actual capital which the claimant does possess.

Reg.23 State Pension Credit Regs 2002

John Mesher
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I don’t disagree with the proposition that there are not necessarily equal shares, but that can’t flow from reg.23 of the SPC Regs, which contains no exception for “unless shown otherwise”. If reg.23 applies, then the people have to be treated as if they each possess an equal share as tenants in common. But the case law on reg.52 of the Income Support Regs, whose terms are identical to reg.23, shows that those provisions have a very limited application (Hourigan v Secretary of State for Work and Pensions [2002] EWCA Civ 1890, [2003] 1 WLR 608, R(IS) 4/03). They can only apply where the people are entitled to the beneficial interest as joint tenants, i.e. each entitled to the whole asset subject to the others’ share, which in practice means equal shares.

In a great many cases, especially say between partners, the beneficial interest in a bank or building society joint account will be held on a joint tenancy, where it can be assumed that whatever their source the assets are intended to be shared between the people involved and probably used for joint expenses. But if the circumstances, not limited to express declarations or expressions of intention but extending to implications from conduct and wider circumstances, indicate that the intention was not for the share to be equal, then the only way that that can be expressed in English law is by the conclusion that the people hold the beneficial interest as tenants in common (i.e. they are each entitled to their separate share) in the appropriate share. So in Hourigan the beneficial interest in the house bought in the claimant’s sole name with a contribution of five-sixths of the price from her son was held by her and her son as tenants in common with shares of one-sixth and five-sixths respectively. She was not to be deemed to have a half-share under reg.52 as the DWP had argued and only the capital value of her separate one-sixth share was to be counted. Commissioner Howell’s decision in CIS/7097/1995 (in the Rightsnet archive I think) is very helpful and instructive on how the technical legal concepts relate to the practical outcome. The claimant’s husband went into a nursing home and cashed in some National Savings certificates to provide a fund to meet the fees, putting the proceeds of £7,000 into their joint bank account. The DWP applied reg.52 to deem the claimant to have capital of half the balance of the account, including the £7,000. The Commissioner overturned that on the basis that the plain intention was that the £7,000 was to remain the husband’s sole property, so that in relation to that sum he and the claimant were not joint tenants and her capital was to be calculated excluding that amount. Those are decisions on English law. Scots law does not use the concept of trusts in the same way but JK v SSWP (JSA) [2010] UKUT 437 (AAC), [2011] AACR 26 suggests that similar outcomes would follow from asking whether a presumption of ownership had been rebutted.

So, in the case of a joint account with an adult child, it would all depend. If the contents of the account all came from the SPC claimant, e.g. pension payments and savings, and the adult child was put onto the account simply to make withdrawing of cash or the writing of cheques or other mechanical aspects of dealing with the account easier, it might be that while the two of them held the legal interest in the money in the account as joint tenants that would be in trust for the claimant alone, who would be entitled to the whole beneficial interest. If the two lived together and maintained a joint household with the adult child looking after the claimant, both putting income into the joint account, even if not in equal amounts, and using the account for joint household expenditure as well as personal expenditure, it might be said that there was not enough to show an intention for there not to be a joint tenancy of the beneficial interest, so that reg.23 would apply. There could of course be all sorts of circumstances in between in some of which the answer would be very debateable. But I have no idea how closely the SPC authorities investigate such matters in practice.

Paul_Treloar_AgeUK
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This is how they address unequal shares in the DMG.

84264 A person who is the joint legal owner of a bank, building society or PO account does not have a joint beneficial interest in any asset in that bank, building society or PO account if

1. there is clear evidence to show that person does not beneficially own a part of any of the assets in the account and
2. the asset, which that person does not beneficially own, is not for the use of that person.

The person who beneficially owns the asset may be one of the joint legal owners of the account. The joint legal owners of the account are holding on trust any asset to which 1. and 2. applies for the people who are the beneficial owners.

Example
On 8 March Andrew makes a claim for SPC. He has a joint bank account with his mother, Hilda, who is in a care home. There is no dispute that Andrew and Hilda are the joint legal owners of the account in which, on 8 March, there is the sum of £22,400. Andrew provides evidence that he received a legacy of £5,000 which he paid into the account and that Hilda has made all other deposits. The only withdrawals have been made to pay Hilda’s care home fees. The DM decides that Andrew has capital of £5,000, the amount of his beneficial interest in the account.

Note: Although beneficial owners of bank accounts have the right to the credit or debit, such as an agreed overdraft, in the account, the bank owns the account.

DMG Chapter 84: Deemed weekly income from capital

John Mesher
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Hmmm. I find DMG 84264 fairly confusing, but not as much as 84263, which seems impenetrable:

84263 A person does not have a joint beneficial interest in a trust if more than one person has an
interest in that trust. Each person’s interest belongs to that person. It is not shared with the other people
having an interest in the trust.

The example in 84264 does not explain to someone who happened to read reg.23 why that reg would not apply (though it’s correct that it wouldn’t). The effect of reg.23 and Hourigan is sort of addressed from 84695 onwards in the section on valuation, but again without really getting to grips with how to tell when the reg does and doesn’t apply.