I have clients (mother and son) who lived in Texas but had assets in UK.
Amongst other assets, they had joint bank accounts.
On the mother’s death the bank accounts passed to the son by survivorship. The texas lawyers have asked me to provide them with a statute or the caselaw that establishes the principle of transferring joint assets by survivorship.
As far as I was aware, this is just a principle we go by, and there is no particular law stating this - please can anyone let me know of there is any?
Or will it just be set out in the bank’s terms and conditions?
Whilst the legal title of the joint bank account will pass to the surviving account holder (the son), depending upon which law applies to the rights of succession, it may be that the mother’s beneficial interest forms part of her estate and passes under the terms of her will, or other testamentary instrument.
Accordingly, if English succession law applies, the mother’s beneficial interest will accrue to the son. However, if a non-English succession law applies, and under that law the severable share of joint property passes into the estate of a deceased joint holder, then the son will be responsible for accounting to the estate for its entitlement.
I suggest the Texas lawyers be asked to confirm both their understanding of the succession law applicable to the deceased’s moveable property in England (and their reasoning behind that) and the provisions of that law in relation to jointly held property.
An extra word of caution – unfortunately, not all lawyers outside of the UK recognise the different jurisdictions within the UK and I have seen some trying to apply, say, Scots Law to an estate governed by English Law.
There is another civil law possibility, which incidentally applies in Jersey and elsewhere. The ius accrescendi passes the whole property by accession to the survivor without any form of transfer being required. The civilian concept of accession is there to avoid property remaining at any time without an owner, and treats the past interest as being extinguished, and the property remaining as one with the ownership. For example, were it not for article 617 Code civ. stipulating its extinction on death in the French civil code, a usufruit interest would accede without any succession as a matter of property law to the owner ensuring that the property has an owner at all times. Napoleon merely codified existing Roman principles, of wider application than in France. I am not sure to what extent Spanish influenced Texas may have retained some civilian notions, although under a different influence to its neighbour Louisiana.
Halsbury’s Vol 80 para 829 on Personal Property quotes the following in the footnotes as examples for survivorship:
Lady Shore v Billingsly (1687) 1 Vern 482; Morley v Bird (1798) 3 Ves 629; Williams v Hensman (1861) 1 John & H 546; Re Cohen, National Provincial Bank Ltd v Katz [1953] Ch 88 at 95, [1953] 1 All ER 378 at 381–382.
The last one might be slightly easier to find than the earlier examples. I suspect you could also use Halsbury’s and the related passages on land as an authority.
I would tentatively take issue with Paul’s suggestion that a foreign succession law might apply to an English joint bank account as I have always understood that 2 or more joint tenants all have an undivided property interest in the whole. Accordingly, the property (an account in this case) passes legally and beneficially to the survivor(s) under the law of property and does not pass into the estate. As a matter of pure property law, no succession law (English or otherwise) is ever applied.
It is possible that a foreign law of succession may contained forced heirship provisions, and in some circumstances these may require the joint tenant to bring the assets into account when calculating shares of other estate assets or allow family members to bring a claim to claim their compulsory shares, but I don’t believe that the latter would be directly enforceable over joint assets in England. So far as the English Court is concerned, absent a trust, an English joint bank account would pass to the survivor(s).
Andrew has put his finger on an important distinction between property law and the PIL/conflict issues involved.
In my view, he is quite right, there is no point in pushing PIL/conflict considerations where there is no issue involved to be resolved. However that may not help the Texan lawyer in his jurisdiction which might attempt to classify or reclassify the issue differently.
I would amplify that this is personalty, and therefore the issue of an implied trust under s.36 LPA 1925 as to estates in land is not relevant.
The US tax viewpoint joint ownership in a succession duty context, is a separate issue resolved in theory at least by an overriding Federal IRS Regulation.
I stress here that the issue is important, as attempts at PIL overwriting such as the Succession Regulation-- not effective in these islands - will also be blocked by this classification as an issue of the law of property, not of succession.
Again, the shared civilian/common law concept of accession, as opposed to succession, as evidenced in Anglo-latinate terms by the concept of ius accrescendi can resolve issues reasonably clearly if one starts from the law itself s opposed to rewriting it through PIL spectacles.
The use of personal issues such as residence, nationality or domicile does not in principle alter the property laws applicable: an issue that Regulation 650/2012 had immense difficulty in addressing, and will struggle with for years to come.
My comment upon the possibility of a deceased’s beneficial interest in a former joint account being subject to non-English succession law is based upon legal advice received whilst I was providing support to an asset holder.
There were a number of instances where the asset holder was “attacked” for allowing the survivor(s) in joint account either to close the account, or significantly reduce the value within it. From memory, on the most part the claims were made on behalf of the surviving spouse, which could be the relevant aspect. The advice received (from an eminent London law firm) in relation to a claim from a Greek national was that whilst there may be merit in the claim, the asset holder was bound to comply with its mandate and deal with the account in accordance with instructions from the surviving co-owner(s); any claim in relation to the account was between the widow and the surviving co-owner(s).
In the light of Andrew’s comments, I suggest it is more important for the Texas lawyer to explain their claim that the estate is entitled to a share of the former joint account, than for the original contributor to have to justify their position. If they are seeking to apply the law of Texas (or some other jurisdiction), then that should more easily be rebuttable.
I hesitate to venture an opinion concerning bank matters when Paul has
already advised, but wonder if another approach may not have been
considered.
When the account was opened, would this not have been subject to the bank’s
terms and conditions? If so, did these stipulate that English/Welsh law
should apply, and/or that survivorship might operate?
I have just picked up my copy of Sangar on the Rules of law and administration relating to wills and intestacies of January 1914 which reads as follows at Page 1 §1, second sentence:
"A person clearly cannot dispose by will of an interest which ceases on his death, further, a joint tenant cannot by will deprive the other joint tenant of his right ot take by survivorship … but with those exceptions it is almost accurate to say that by virtue of sect. 3 of the Wills Act all property may be disposed of by will."
This might be relevant here, as this is clearly a common la issue and remains so despite the LPA 1925.
I was looking at a usufruit case where HMRC were still attempting to assert some form of succession or transfer within a deemed administration context, forgetting of course that administering an extinction is somewhat tautologous.