Joint Bank Account Rules on Death in the UK: What You Need to Know

Joint Bank Account Rules on Death in the UK: What Happens Next?

A joint bank account is often used by couples, family members, or business partners to manage shared finances. But what happens to a joint bank account when one account holder dies? Does the money automatically transfer to the surviving holder, or do probate rules apply?

In the UK, joint bank accounts typically operate under the right of survivorship, meaning that the surviving account holder automatically inherits the funds. However, there are exceptions, particularly when dealing with probate, inheritance tax, and debt liabilities.

Here’s what you need to know about joint bank accounts and death in the UK.

What Happens to a Joint Bank Account When One Holder Dies?

In most cases, when one joint account holder dies, the account automatically transfers to the surviving holder. This is due to the right of survivorship, a legal principle that allows the remaining account holder to take full ownership of the funds without needing probate.

Key Points:

✔️ The surviving account holder retains full access to the account.
✔️ The bank removes the deceased’s name after receiving a death certificate.
✔️ The funds do not form part of the deceased’s estate (unless exceptions apply).

Example:
John and Sarah have a joint bank account. When John passes away, Sarah automatically becomes the sole owner of the account, and she can continue using it as normal.

Do You Need Probate for a Joint Bank Account?

In most cases, probate is NOT required to access a joint bank account after one account holder dies. The money automatically passes to the surviving owner without legal delays.

However, probate may be required in the following situations:

1. If the account was NOT truly joint – If one person was added for convenience (e.g., an elderly parent adding an adult child), the funds may still belong to the deceased’s estate.
2. If there is a dispute over ownership – Family members or beneficiaries of the estate may challenge the transfer.
3. If the account is frozen due to legal reasons – Some banks temporarily freeze accounts in complex estate cases.

What Happens to Direct Debits and Payments?

When one account holder dies:

• The joint account remains open, and standing orders, direct debits, and payments continue.
• The surviving account holder should review and update automatic payments if needed.
• The bank may cancel payments in the deceased’s sole name, such as personal loans.

Is Inheritance Tax Payable on a Joint Bank Account?

A joint bank account usually avoids probate, but inheritance tax (IHT) may still apply depending on the account ownership.

Inheritance Tax Rules for Joint Bank Accounts:

• Married couples & civil partners: No inheritance tax applies when one spouse inherits from another.
• Unmarried partners, family members, or friends: The deceased’s share of the account may be subject to inheritance tax if their estate exceeds the £325,000 threshold.
• If ownership was not equal: HMRC may investigate contributions to determine taxable amounts.

Example:
If two siblings jointly own an account with £40,000 and one dies, HMRC may assume a 50% ownership (£20,000 each). The deceased’s £20,000 share would be added to their estate for tax purposes.

Can a Joint Bank Account Be Frozen on Death?

In rare cases, banks may temporarily freeze a joint account, particularly if:

• There is a dispute over ownership.
• The deceased’s estate is under investigation for unpaid debts or fraud.
• The account was primarily funded by the deceased, meaning it may form part of their estate.

If the account is frozen, the surviving account holder must provide:
✔️ A death certificate
✔️ Proof of relationship or financial contribution
✔️ Legal documents if required (e.g., will or probate if applicable)

Are Debts Deducted from a Joint Account When One Holder Dies?

If the deceased had individual debts, creditors cannot take money from the joint account unless:

• The debt was jointly signed (e.g., a joint loan or overdraft).
• The deceased was the sole contributor to the account, meaning it may be treated as part of their estate.
• There is a court order or legal claim against the estate.

Joint Debt Responsibilities:

• If the joint account has a joint overdraft, the surviving holder remains responsible for repaying it.
• If debts are solely in the deceased’s name, they are usually written off if there are no estate assets.

How to Remove a Deceased Person’s Name from a Joint Account

To update a joint bank account after a co-owner’s death, the surviving holder must:

1. Notify the Bank’s Bereavement Team – Provide a death certificate and complete any required forms.
2. Confirm Account Status – The bank may ask whether the account will remain open or be closed.
3. Remove the Deceased’s Name – The bank will update records, allowing the surviving owner to continue using the account.
4. Review Standing Orders & Payments – Ensure that essential payments continue and unnecessary ones are cancelled.

How to Prevent Issues with Joint Bank Accounts After Death

To ensure a smooth transition, consider:

✔️ Clarifying joint ownership – Ensure both names are equally registered with the bank.
✔️ Keeping clear financial records – Document contributions to avoid inheritance tax disputes.
✔️ Having a will in place – Clearly state intentions for shared finances.
✔️ Reviewing estate planning options – Consider life insurance or trusts to protect assets.

Conclusion: Joint Bank Account Rules on Death in the UK

In the UK, most joint bank accounts follow the right of survivorship, meaning the surviving account holder automatically inherits the funds without probate. However, inheritance tax may still apply, and exceptions exist in cases of disputed ownership or estate claims.

Understanding these rules can help ensure a smooth financial transition during a difficult time.

For expert advice on estate planning, probate, and financial management, Fraser Bond is here to help.

Contact Fraser Bond today for professional guidance on joint bank accounts, inheritance planning, and estate administration.