Joint account holder has access to cash

WHAT happens to a joint bank account when one of the account holders dies? This is a recurring question from Family Money readers and it is one upon which we have reported in the past.

Recently, the Supreme Court, in the case of Lynch -v- Burke and AIB plc, introduced new criteria for determining the entitlement of proceeds of the joint account after the death of one account holder, in this case an aunt. Nicola Dunleavy is a solicitor in the Private Client Department of A & L Goodbody who has made a study of the case:

This case involves the common situation where one person, in this case an aunt, provided the money to open a joint account with her niece. On the aunt's death, the question arose: Who gets the money?

According to Ms Dunleavy, in an article in the most recent edition of the A & L Goodbody Irish Law Newsleller, both the aunt and niece opened the account, and although the aunt retained the sole power to make withdrawals from the account it was clear that her intention was that on her death her niece should inherit the balance in the account.

When accounts are opened by parents and children or between spouses, the understanding is that a gift is intended to the other person should one party die. But the law makes no such presumption for other relationships and in this case it was presumed that the niece held the account following the aunt's death on trust for the aunt's estate.

The Supreme Court found in favour of the niece and held that she was entitled to the balance of the account, writes Ms Dunleavy. The court was persuaded by two factors: one, the niece was a party to the contract with the bank and thus had a contractual right to sue the bank for a debt and, two, the niece proved that the aunt intended to benefit the niece.

The most significant aspect of this ruling is the removal of the requirement that the person who provides the money must relinquish control of the capital in the joint account. A person may now use the money in a joint account freely without prejudicing the rights of the survivor to the account.