Laws of Eve | More on joint bank accounts
In response to last week's article about joint bank accounts, one reader requested that I do a further article on the topic. He is a medical practitioner, whose concern for elderly, vulnerable patients is that they sometimes become careless in their trust of others because, although they remain mentally competent, their feeble bodies force them to rely on others. It is that reliance that sometimes leads to them adding other persons' names to their bank accounts with, possibly, unintended consequences.
The decision of the Privy Council in the case of Whitlock and Another v Moree  UKPC 44 now makes it clear that, generally, the account-opening documents will determine whether the survivor will benefit from the funds remaining in a joint bank account after the other joint account holder dies. Where there is no evidence of undue influence or fraud, it is therefore highly probable that a younger person whose name is added to the bank account of an elderly person will take the balance of funds in the account when that elderly person dies.
The law addresses one of the reader's concerns about the safety of an elderly person after the addition of another person's name to the bank account, by providing that a person should not be allowed to profit from his wrongdoing. An old case from New York, USA demonstrates the point - Riggs v. Palmer, 22 N.E. 188 (1889). Palmer was the main beneficiary under his grandfather's will. When he learnt that his grandfather was about to disinherit him, Palmer (then 16 years old) poisoned him. Although his grandfather's will remained valid, Palmer was barred from claiming the legacy on grounds of public policy and equity.
The often-cited text from the case is that, "No one shall be permitted to profit by his own fraud, or to take advantage of his own wrong, or to find any claim upon his own iniquity, or to acquire property by his own crime. These maxims are dictated by public policy, have their foundation in universal law administered in all civilised countries, and have nowhere been superseded by statutes."
That position is also true in relation to life insurance policies if the beneficiary is implicated in the death of the policyholder. Of course, it will be important for that wrongdoing to be proven, if it is to be effective in preventing the alleged wrongdoer from benefiting from his own wrong.
If we are to truly protect the vulnerable, however, it will be important to educate them and their loved ones.
Although most joint bank accounts are set up so that each account holder has equal access to the funds in the account and with rights of survivorship, so that the balance in the account automatically goes to the survivor, aren't there other options? For example, when adding someone's name to an existing account, could these questions be asked of the bank?
Is it possible to stipulate that the person's name is being added for convenience only? In that way, in the event of the death of the original account holder, the balance in the account could go to the deceased person's estate or a named beneficiary.
tenants in common
Could the funds be held as tenants in common in defined shares (rather than as joint tenants), so that the survivor will not take all? If the existing account holder wants the intended joint account holder to benefit from some (but not all) of the funds in the account when he dies, holding the funds as tenants in common could be a solution.
In my experience, once you have indicated that you want to add someone's name to your bank account, the bank usually presents you with standard form documents to sign. Although you are entitled to read those documents before signing them, the average person neither has the time to read all of the fine print nor the ability to understand them.
Should banks be required to explain the options available to joint bank account holders and what they mean?