Joint bank accounts - The implications of Lynch v Burke on probate tax
The Taxation Committee has received a query concerning probate tax on joint accounts in light of the Supreme Court decision in the case of Mary Lynch v Burke and Allied Irish Bank plc (1996 1 ILRM).
When receiving instructions concerning wills, practitioners should enquire as to the existence of any joint account, the purpose to which any such account was set up and to whom the monies are intended to pass on death.
Similar enquiries should be made on death (prior to completing the Inland Revenue Affidavit) to ascertain whether a clear intention has been shown or alternatively whether a presumption of advancement or a presumption of resulting trust applies. The effect of the Lynch v Burke decision is that a presumption of resulting trust would not be applied if it would be inequitable given the weight of evidence indicating an intention to benefit the surviving joint account holder.
If the circumstances do not involve a presumption of advancement (for example, a surviving spouse or child) and there is no evidence of intention to rebut the presumption of resulting trust, then the joint bank account will form part of the deceased's estate and will be subject to probate tax (and should be inserted in Part 3 of the Inland Revenue Affidavit).
If the probate tax is not discharged within nine months of the date of death, interest becomes payable.
Where a joint bank account passes by survivorship, no probate tax will be payable. In this instance, the details of the account should be inserted in Part 5 (Question 7) of the Inland Revenue Affidavit.