Joint accounts: A greek gift? PART2

Joint accounts for Universal Credit payments

If you and your partner are claiming Universal Credit, you’ll get a single payment for your household rather than individual payments for each of you. However, you don’t have to open a joint account for this payment to go into. Instead, you’ll be asked to nominate an account to have your money paid into and this can be either:

• A single account in either your name or your partner’s name, or
• A joint account in both of your names

Find out more in Joint Universal Credit payments for couples.

Opening a joint account

Opening a joint account isn’t so different from opening a normal current account. Each account holder just needs to fill in their section of the application form and provide proof of address and proof of identity.

During the application process, your bank should clearly explain:

• Who, if anyone, can take out money without getting permission from others on the account
• How overdrafts will be handled – typically, each account holder is responsible for paying back all the money owed and the bank may take money from someone’s sole account to cover the overdraft in the joint account
• How to handle disagreements or the end of a relationship between joint account holders

The formal agreement on who gets to do what with the account is called the mandate. All account holders have to sign the mandate when you open the account.

If things go wrong

How to handle disagreements with other account holders

If you’re having problems with your fellow account holders, cancel the mandate. This will freeze the account so no one, including you, will be able to withdraw money.

Your bank will only unlock the account once everyone agrees on how to split the money. And, if you can’t reach an agreement, the only option may be to let the courts decide who gets what.

The courts look at joint accounts differently depending on your relationship with the other account holders and where you live:

• Married couples or civil partners in England or Wales split the money equally, no matter who paid in
• For others in England or Wales, if only one person pays in, the money in the account is theirs
• In Scotland, the money belongs to whoever paid it in
• In Northern Ireland money is split equally unless a court rules otherwise

There can be exceptions, however, if you can clearly show that you and the other account holders intended to share the money no matter who paid in.

If your bank or building society goes bust

Just like other accounts, joint accounts are protected by the Financial Services Compensation Scheme (FSCS).

The FSCS savings protection limit for consumers will change on 1 January 2016 when a new £75,000 limit takes effect. In the meantime the existing £85,000 limit will still apply. The transition period will give you time to consider moving your money if you have more than the new limit in your account. If you do have more money than the new limit on 1 January 2016, some of your money will be at risk if your bank, building society or credit union fails.

For joint accounts, the FSCS assumes that each account holder holds an equal share. So, for a two-person joint account, you could deposit £170,000 - £85,000 each – and it would all be protected, assuming you have no other savings with the authorised institution.