We Have Joint Accounts. Do We Still Need an LPA?

It is common for a couple, whether married, civil partnered or cohabiting, to choose to pool their resources into joint accounts and investments. The couple each have a card for the account, each have online banking set up, either of the couple can access funds at any time and with direct debits set up there is little or no paperwork from one year to the next. Often this arrangement is in place and works well for many years.

It is often assumed that this can continue even if one of the couple becomes unwell. Payments continue to go in and out of the joint account, the bank doesn't need to know that one party is unwell or be involved in any way, the other person can continue to manage their joint money surely?

It is also assumed that if one half of a couple were to become unwell, that the other party could speak to doctors for them and make decisions about their medical care on their behalf. A spouse or civil partner as "next of kin" can decide about care, surely?

These common assumptions mean people can believe they don't need anything legal in place for the future. However, that is not the case, and the situation is more complicated than it appears.

What happens to your money and property if you lose mental capacity?

If a person loses mental capacity to make decisions about their own finances, managing their money can become very difficult very quickly. Not only does access to accounts get frozen, but financial transactions go from paying utilities and everyday expenses to having to sign care home contracts and even selling a property to pay for 24 hour care.

Unlike in the past, families can no longer muddle through with the help of signed cheques and a friendly bank manager. Even if couples know each other's pin numbers and online banking login, this is not a safe way to plan for the future when larger transactions to pay for expensive care may be needed.

Losing mental capacity is extremely difficult for the person themselves and wider family. Knowing what is likely to happen to their money and planning for this eventuality takes away some of the burden.

Accounts you own in your sole name

If a person loses mental capacity, nobody else can use their accounts, investments and property held in their sole name. Access is denied even to a spouse or civil partner and even if the money is needed to pay for care for the person themselves.

If no LPA has already been set up, then an application to the Court of Protection for Deputyship must be made and only once a Deputy has been appointed can that Deputy access the funds. Deputyship takes months and costs a significant amount.

Our advice: if you have accounts, assets or income in your sole name, then you need a financial LPA. If a financial LPA has been set up prior to the loss of capacity, then the Attorney can immediately step in and access money to pay for expenses and care.

Accounts you own jointly with your spouse, civil partner or cohabitee

If a person has joint accounts or assets, and if they lose mental capacity, it often surprises people to know that the banks are likely to freeze the account so that neither the other joint account holder nor anyone else can access it. Banks may (but it is not definite) allow existing direct debits and standing orders to continue but usually will block more significant transactions.

This is the case even if the other joint owner is the person's spouse or civil partner or cohabitee and even if the spouse, civil partner or cohabitee contributes some or more of the funds in the joint account.

Why do they do this? Banks can and do take a cautious approach to protecting the money of the person who has lost capacity, particularly when that person cannot themselves give consent to any transactions.

If no LPA is in place, then again, a Deputyship application can be made, which is time-consuming and expensive.

Our advice: if you have joint accounts, even if they are held jointly with your spouse, civil partner or cohabitee, you need a financial LPA. Having an LPA in place will allow your Attorney to give authority on your behalf for the joint account to continue.

What about my wages, pension or income?

Your spouse, civil partner or cohabitee has no automatic authority to say what should happen to your income. This is the case even if your income has been paid into a joint account for many years. Nor can they change where your income is paid to.

It is very frustrating for pension payments to be rolling into a frozen account (whether that account is a joint account or sole account) when nobody, not even a spouse, civil partner or cohabitee, can use the money, and all the while care fees mount up.

Again, sensible planning avoids all this worry. You need a financial LPA.

What if I need medical care but have lost mental capacity?

The assumption that a spouse, civil partner or cohabitee, as "next of kin", can make medical or welfare decisions on behalf of their loved one if they have lost mental capacity is unreliable.

Yes, it is true that in many situations, family members are consulted and between them the family and doctors agree the appropriate treatment. But if there were to be any uncertainty about the best treatment, people are surprised to learn that the "next of kin" has no legal authority to make medical decisions. This is the case even if the "next of kin" is a spouse, civil partner or cohabitee.

Our advice: if you want your spouse, civil partner or cohabitee or family to have the legal authority to speak for you in deciding medical treatment, you need a medical LPA.

My finances are simple. Can't I just wait and see?

Capacity can be lost suddenly at any age (accident, illness, stroke), not just gradually in later life. If you do not have LPAs in place, the only option is to apply via the Deputyship route, which is extremely time-consuming and expensive.

With direct debits set up, joint accounts and everyone healthy, finances can be simple. But even straightforward financial setups can quickly become complicated when someone loses mental capacity or needs expensive care.

What is an LPA?

A Lasting Power of Attorney (LPA) is a document by which you can appoint someone to make decisions on your behalf. There are two types of LPA; one which covers financial decisions and one which covers medical decisions. You can make one type or both types of LPA. Most people make both.

Crucially, LPAs give legal authority for your chosen Attorney to make decisions for you if you lose mental capacity.

LPAs aren't set up only when there is complexity or mistrust. They are valuable tools for everyone to avoid delay and cost if capacity is ever lost.

For more information see our guide What Is a Lasting Power of Attorney (LPA)?

Belief and reality

Belief	Reality
I'm married or in a civil partnership, so I have greater legal standing over my spouse or civil partner's money.	Being someone's spouse or civil partner gives you no right to access their funds or use their money, whether for your own benefit or theirs.
If something happens to my spouse or civil partner, I can just carry on managing our finances.	A bank can freeze or restrict a joint account if it suspects one party has lost mental capacity, even though the account is in both names.
I'm listed as next of kin, so I can make care or medical decisions for them.	Next of kin has no formal legal authority. Without a Health and Welfare LPA, decisions may fall to doctors or the Court of Protection.
This only matters for complicated finances or older couples.	It matters for anyone. Capacity can be lost suddenly at any age (accident, illness, stroke), not just gradually in later life.
If we don't have an LPA and something happens, we'll sort it out then.	Without an LPA, the only route is applying to the Court of Protection for deputyship, a process that is slower, costlier, and more intrusive than setting up an LPA in advance.

Our guide on how to make an LPA takes you through the steps in order, and it is worth reading what happens if you have no LPA at all. Our pricing page sets out the cost of one LPA or both, and a solicitor on our team checks every LPA before you sign it.

This article is for general information and is not legal advice. If your partner has already lost mental capacity, or you want to talk through what powers to give your Attorneys, please get in touch for advice on your own situation.

Sources

• Manage a bank account for someone else on GOV.UK. Office of the Public Guardian guidance. Where a joint account holder loses 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)". Where a power of attorney is registered, "the bank will allow the attorney and the account holder (with capacity) to operate the account independently of each other, unless the account holder (with capacity) objects".
• Section 9 of the Mental Capacity Act 2005 on legislation.gov.uk. Creates the LPA and allows it to cover personal welfare, property and affairs, or both. An LPA can only be made by someone who has capacity at the time.
• Section 16 of the Mental Capacity Act 2005 on legislation.gov.uk. Where someone lacks capacity and there is no LPA, the Court of Protection may make the decision itself or appoint a deputy. Marriage or civil partnership is not an alternative route.
• Section 4 of the Mental Capacity Act 2005 on legislation.gov.uk. The best interests test. Section 4(7) requires the decision-maker to take into account the views of anyone interested in the person's welfare, which is a duty to consult family rather than a power for family to decide.
• Deputy fees on GOV.UK. Applying to be a deputy costs £432, with a £100 assessment fee for a new deputy and £100 for a court hearing if one is needed. Supervision then costs £320 a year, or £35 for minimal supervision. A security bond may also be required.