Joint account - Probate/CAT issues where second account holder was agent only

[MARTYM8]

I have a slightly thorny issue relating to an estate I am executor/personal representative for. Apologies in advance for the length.

The deceased owned two accounts - current and savings - in joint names with a third party (a relative) who acted as their agent only while they were housebound/in hospital. All the funds paid into the account were from the deceased's sources only - the other account holder merely undertook transactions on their behalf and paid nothing into the account from their own funds. Total balances are below 50k euro - so no need to formally notify the tax authorities.

This third party is not however named in the deceaseds will - although the bank is advising me the funds can be transferred to them on provision of the death certificate. The will, however, specifies that any assets not relating to their house be passed to another named beneficiary - it is a group B transfer and the beneficiary has already used their 30k euro tax free threshold so full CAT is payable at 33% in theory on any sums they receive.

My question is:

are the entire sums in the joint account at death deemed part of the estate as the deceased funded the entire account

if so are the entire sums in both account subject to CAT

does the CAT liability fall to the named beneficiary in the will - i.e. 33% must be paid in tax -
even though the account might be assumed to transfer to the third party joint account holder who is not named in the will?

Can the beneficiary therefore really be asked to pay CAT on funds they cant' access and can the third party be made to pay the funds over to me in the account (less any funeral expenses) to pass to the named beneficiary in line with the intentions of the will - I presume not?

Both parties are family members - so I don't want to create issues. But I just need to know what the tax and probate position is - and whether I can use the funds in the account to meet sums due on the estate (legal, probate fees etc) without being out of pocket before passing the sums to the beneficiary.

The only other asset is their house - which may not be easy to sell - left 50% to me and 50% to another relative.

Sorry for the long question.

At present I feel like disclaiming to avoid the whole mess - but that would be wrong!

 

[terrysgirl33]

I had the impression that the main reason for having a joint account was so that the funds transferred automatically to the second person on the death of the first person? If it was needed for another person to handle financial affairs, a power of attorney is used to give someone the power to manage bank accounts. I'm not sure that the deceased in your case knew this, or had planned things this way though.

ETA: so the will leaves the house to two people, and everything else to a third person. But 'everything else' is in a joint account, which is not held jointly with the person named in the will?

 

[mf1]

The issue is whether the "joint" account holder is claiming the money in the accounts. Or whether there is an acceptance that the monies are for the estate.

In answer:

"are the entire sums in the joint account at death deemed part of the estate as the deceased funded the entire account"

Not necessarily. If the intention by the deceased was to benefit the other joint holder, then no.
See Part 6 of the CA 24
[broken link removed]ca24.pdf

"if so are the entire sums in both account subject to CAT"

If the funds are part of the estate, then yes.

"does the CAT liability fall to the named beneficiary in the will - i.e. 33% must be paid in tax -
even though the account might be assumed to transfer to the third party joint account holder who is not named in the will?"

As above

"Can the beneficiary therefore really be asked to pay CAT on funds they cant' access and can the third party be made to pay the funds over to me in the account (less any funeral expenses) to pass to the named beneficiary in line with the intentions of the will - I presume not?"

You're the executor - you have to work this out. You should be thinking in terms of securing the funds to prevent them being withdrawn. You can write to the bank and confirm that your understanding is that the funds belong to the estate.

"Both parties are family members - so I don't want to create issues. But I just need to know what the tax and probate position is - and whether I can use the funds in the account to meet sums due on the estate (legal, probate fees etc) without being out of pocket before passing the sums to the beneficiary."

If the funds belong to the estate, not the named joint account holder, the funds can be frozen by notifying the bank.

In terms of whether the funds , if belonging to the estate, can ultimately be used for the payment of expenses, it depends on (a) the wording of the will - do the funds form part of the residue? and (b) whether the estate is solvent?

mf

 

[MARTYM8]

Thanks for the above replies.

I accept I will have to try and resolve this amicably - but this wil be dependent on the goodwill of the joint account holder and agent.

I am afraid elderly people lacking proper advice often do what's easiest rather than what is legally correct - without appreciating the legal or inheritance tax issues in Ireland. Not their fault - just lacking understanding.

The will states (excluding the house left to me and a another nephew) that 'the rest residue and remainder of my estate I give devise and bequeath to ....the other beneficiary ....to be theirs absolutely.'

So it is dependent on the goodwill really of the joint account holder to do what the deceased intended in their will.

I assume if they agree to let the funds be allocated as directed then this can be Deemed part of the estate and no gift tax is due from them to the intended beneficiary as well as CAT.

If they want to keep the money though I presume I cannot prevent that.

 

[mf1]

"So it is dependent on the goodwill really of the joint account holder to do what the deceased intended in their will."

No. It's not. You are the executor. You are circling this. If you say that the "joint" account was for convenience only, then it forms part of the estate and you should secure the money now by notifying the bank.


"I assume if they agree to let the funds be allocated as directed then this can be Deemed part of the estate and no gift tax is due from them to the intended beneficiary as well as CAT."

Why are you using the expression "if they agree"?

"If they want to keep the money though I presume I cannot prevent that."

You are the executor - it is for you to deal with this. If you believe that the funds belong to the estate, you have a legal obligation to deal with it. Notify the bank.

mf