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Joint Accounts

If a bank account is in joint names and one of the account holders dies, the account does not automatically pass to the surviving owner.

A number of considerations must be taken into account in dealing with the account. Various details should be sought from the bank, the personal representative, the surviving account holder and any other person who has information on the account.

The following details are important:

1. Who provided the funds for the account?

2. To whom was interest paid?

3. What control had the account holders over the asset? Could both parties withdraw funds?

4. What was the intention of the account holders when they started the account?

5. Was the account ever in the sole name of either of the parties?

6. The date the property was put into joint names.

When a person voluntarily transfers property, owned by him, into joint names or provides the majority of the funds for an asset held in joint names, the presumption of resulting trust arises, which in effect means that the Courts will presume that the property will be deemed to fall into the estate of the donor on his death and not to the surviving owner. The survivor, however, can rebut or set aside this presumption, by providing proof of a clear intention to the contrary. The considerations to take into account in this situation, are the intentions of the donor at the time the account was opened, the control or power the donor has over the asset and the contributions of the parties.

One exception to the presumption of resulting trust, is the presumption of advancement. As discussed, where a person puts property into joint names, but provides all the funds for the asset, controls it during his lifetime and receives the entirety of the income from the asset, the presumption of resulting trust would apply and it would be likely that the asset would revert to the donor's estate on his death, unless a contrary intention can be established. If, however, the person who survives is a spouse or child of the deceased, the Courts will presume that the property was intended to be a gift to the surviving joint owner, and the property will not revert to the estate of the deceased, but will go to the surviving owner, unless, the estate can establish and prove that the deceased did not intend to gift the property.

The law in the area of joint accounts has been clarified by the case of Mary Lynch v AIB Bank Plc (unreported 7th November 1995. The case involved a joint bank account held between the deceased, Frances McFadden and her niece, Mary Lynch. All funds were provided by the aunt and she controlled the account during her lifetime. Endorsed on the pass book were the words "Payable to Frances McFadden only or the survivor." The Supreme Court held that the presumption of resulting trust was rebutted and that the niece, Mary Lynch was entitled to the account as the clear intention of the deceased was to benefit her niece. The outcome of this case changed the law, as, prior to this case, it is likely that the funds in the account would have reverted to the estate.

Each individual situation must be examined to determine who is entitled to the proceeds of a joint account on the death of one of the owners. A way of avoiding any confusion, would be for the joint owners to sign a form of mandate or statement, detailing their clear intentions when setting up the account.

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