Joint bank accounts: Who owns the money?
4 April 2023
A joint account is, of course, a bank or building society account held in the names of two or more people. Such accounts are commonly opened by couples to manage payment of shared utilities, rent and mortgage instalments. But who owns the money in the account?
While joint accounts between partners can be very useful, disputes can arise over ownership of the funds held in the account, and any property purchased using joint bank account monies. Such disputes understandably come to the fore if the relationship between the joint bank account holders breaks down or if one of them should die.
It is important to recognise that joint bank accounts are subject to the standard rule of ‘survivorship’. This means that, if one party should die, the account passes to the surviving account holder without the need for probate or letters of administration.
While the bank will often treat the surviving joint account holder(s) as entitled to the money in the account as a result, this does not necessarily indicate anything about the beneficial ownership of the money in the account. The bank, like the Land Registry, is primarily concerned with legal ownership, rather than beneficial ownership. So how is beneficial ownership of the account determined in the event of dispute?
The starting point has been forcefully confirmed by the Privy Council in Whitlock v Moree  in terms familiar to TOLATA practitioners. Where the account holders sign an account opening document which declares the parties’ beneficial interests in the account, this will generally be definitive of the beneficial shares, and the subjective intentions of the account holders, or an analysis which of them paid money into the account, will not be relevant. In the absence of a signed declaration, the common intention of the parties must be considered to establish their shares. In other words, the Privy Council’s view was that the approach to be taken on the issue of beneficial ownership of money in a joint bank account is equivalent to the principles used to resolve a dispute over beneficial ownership of a property under TOLATA (the Trusts of Land and Appointment of Trustees Act 1996).
However, the courts of England and Wales are yet to extend such ‘TOLATA principles’ into the field of joint bank accounts, and the decision in Whitlock (being a decision of the Privy Council) is not strictly binding on them.
The existing case law authorities in England and Wales are difficult to reconcile and replete with conflicting legal presumptions. The authorities vary, depending on how the account was used in practice and whether one or both of the account holders put money into the account.
Money provided by only one account holder
Where one person alone puts money into the account, a presumption arises that the money is held on trust for that person (known as a ‘resulting trust’). A court is particularly likely to reach this conclusion where the account was opened in joint names for convenience (for example, where an account is opened in order that one party can help the other to manage their finances).
This is, however, a rebuttable presumption, which the other account holder may seek to challenge where it can be shown that there existed a contrary common intention to share the money in the account. Similarly, even where an account is opened for convenience at the outset, it may be possible to show that the reasons of convenience ceased to apply later on, such that the money in account is owned beneficially by both account holders.
An exception to the above rule arises where the account is in the names of spouses or parent and child, and one spouse or the parent provides the money. In such circumstances, a rebuttable presumption of ‘advancement’ arises. The effect of this is that, upon the death of the spouse or parent, the beneficial interest in the balance of the account at the date of death passes to the other account holder.
Money provided by both account holders
Where the account holders are husband and wife and both contribute to the account (significantly, albeit unequally) and both draw from it, previous case law has found that the parties will be presumed to be ‘joint tenants’ (i.e. jointly entitled to the money in equal shares). It has not yet been decided whether the same presumption applies in the case of an unmarried couple.
Even where this presumption applies in respect of the money in the account, property purchased by a husband or wife using money from the account is not necessarily subject to the beneficial joint tenancy.
If there is evidence that the account was intended to be a common pool to provide funds for joint investments, then investments purchased with money from the account will be subject to a beneficial joint tenancy irrespective of the name of the purchaser. So a wife would have a 50% beneficial interest in property bought in her husband’s sole name, even though she was not included on the title.
In the absence of evidence of an intended common pool, and where both parties are authorised to draw on the account, each spouse can draw upon the account for the benefit of the other, but also for his or her own benefit. This means that if one spouse buys a property in their sole name, the equity in that property will belong to them alone.
It is yet to be seen what approach the higher courts in England and Wales will take on the issues concerning joint bank accounts. While we have some guidance on cases involving spouses, the position in respect of unmarried couples is less clear. Further, it is yet to be seen what weight will be given to account opening documentation and whether ‘TOLATA principles’ will be adopted when determining disputes of this nature.
In the meantime, there is scope for numerous different arguments to arise, and careful consideration must be given to the circumstances of the opening, funding and management of the account.
If you need advice on a dispute concerning money in a joint bank account, or if anything in this article resonates with you, please do contact our specialist property litigators:
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2023.