I have seen so many times over the years where one spouse has died the remaining spouse whilst waiting for Probate often has great difficulty in paying bills because they never had a joint bank account.
It makes sense to have some money in a joint bank account to overcome this problem, especially when Probate or should I say a straightforward Probate with no questions takes on average now 14 to 16 weeks. Before COVID it was around a couple of weeks. If there are questions on Probate it can take very much longer.
What is unfair is that because of these long delays it is often lasting longer than six months from the end of the month from the date of death of the first death. HMRC then charge interest at 2% or 2.5% above Bank base rate on the Inheritance Tax liability. That for me is a big windup especially when is not the fault of the remaining spouse that the delays have occurred.
It even got me thinking what other assets can we own where we have access to them on the death.
Where a house is owned as joint tenants as opposed to tenants in common ownership does automatically fall in the hands of the remaining spouse. However, they will not be able to obtain access to cash from the remaining house quickly.
What else?
There are some joint National Saving certificates, but I thought a good one is Premium Bonds as they automatically transfer to the survivor.
There are certain joint share portfolios, but I would prefer not to rely on this and only then you have to sell shares to raise capital.
Although pensions cannot be jointly owned where there is a nomination form or appropriate trusts on death funds can be passed to the survivor. There is usually a delay of two or three weeks to obtain access to these funds. I should add that as these funds in future will be liable to Inheritance Tax this benefit to obtain cash reasonably quickly may disappear.
As I have just mentioned earlier Premium Bonds, in my view, are an attractive fun investment to have funds automatically available for a remaining spouse. Incidentally the current rate of interest on Premium Bonds overall as at December 2024 is 4.15%. And these funds are paid tax-free. That’s not a bad rate of tax-free interest, especially when you consider the current UK bank base rate is 4.75%.
Trevor Downing FPMI FPFS
