BASQUE COUNTRY AND NAVARRE: Shared bank account with the deceased

When the holder of a bank account dies, the bank usually withholds the money until the heirs prove that they have settled the Inheritance and Gift Tax (ISD) and have declared the balance of that account.

Do you know how you can prevent the bank from blocking the account?

To make it easier for the heirs to access the balance of the accounts immediately, some people choose to include them as joint account holders of their accounts and deposits. In this way:

• The bank considers that all of them are owners of the money equally.
• When the actual owner dies, the bank only withholds the part it considers belongs to them, and the heirs can access the rest of the balance from day one.

How does this affect the Inheritance and Gift Tax (ISD)?

If you are considering including your children as joint account holders, take the following into account:

• You may wonder if the Tax Office will consider it a donation. Well, the mere fact that a child is a joint account holder of one of your accounts does not make them the owner of the money; it only means they have disposal powers over the balance.
• Ownership of that balance is determined by the internal relationships between the joint account holders and the origin of the money. Therefore, if you are the only one contributing money to the account, you are considered the sole owner.
• However, it is important that, after the death, the heirs declare the total balance of the accounts. If they only declare a part (as if all joint account holders were equal owners), the Tax Office could start an investigation and regularize the Inheritance and Gift Tax (ISD) of the inheritance, or consider that there was a prior donation to the heirs and demand the tax from them.

Our professionals will clarify any doubts you may have about these matters.