I would welcome members’ views on the following [I feel sure I have read a thread on this issue before in respect of bank accounts, but cannot find it; my apologies for any duplication]:
Harry and Sally are spouses, both previously widowed. They have a joint investment bond plan paying 100% on 2nd death, and other investments in an ordinary joint name account. Harry is now terminally ill and would like to draw his half of the investments to enjoy while he can. Sally lacks capacity, but has adult children from her first marriage who are her attorneys (Registered LPA P/F).
Q1: Is Harry free unilaterally to draw down his one half share of the joint investment account and/or bond?
Q2: If he needed to sever any Joint Tenancy over the investment products, could Harry serve Notice on Sally unilaterally, as he might for an interest in land?
Q3: Is it within the jurisdiction of the OPG to intervene on behalf of Sally’s Attorneys to prevent Harry acting to draw ‘his’ part the joint investment account and/or bond?
Thanks as always.
Q1: The basic rule of joint ownership is that they both own the whole, rather than half, so if it were a simple account, one joint owner can empty it. Here. it depends entirely on the terms of the bond as to whether a single holder can withdraw funds early.
Q2: In theory, but I doubt that is a way forwards as a joint owner could withdraw monies just as well as a tenant in common.
Q3: If he has power to draw it, there is no standing to prevent him. “His” part is the whole asset.
Osborne Clarke LLP
Q1. As Andrew says, the bond will usually be owned jointly and so in most cases two owners signatures would be required to action any changes. Some policies only require a single signature but this would be rare and the beneficial rights of the other joint owner would need to be taken into account.
Q2. Ownership of a bond can be changed by way of assignment. The majority of life assurance bonds are created by way of multiple segments and so the cleanest way to split up a bond between joint owners is to assign half of the segments to Harry and half to Sally as individual owners. This has the added benefit that each person, as well as having control has ownership of the taxation of the segments they own. If Harry was to sell half now the tax due, (if any) would be liable on both Harry and Sally which may not be fair. Tax advice here is quite easy and simple so long as Harry and Sally’s positions are clear.
I hope this helps! 1st time posting!
Beware the tax consequences of a major withdrawal and breaching the annual 5% tax free withdrawals.