The dangers of joint accounts (2 of 3), and in this case, Durable Powers of Attorney.

April 18, 2013, by

meeting with broker.jpgAlfred and Sarah named their kids, or at least two of them, Don and Dawn. These homophonic siblings ended up opposing each other in Court. After dad died, Dawn got a Durable Power of Attorney to act for Sarah, and put a bunch of mom's money in an account with Edward Jones titled in their two names as joint tenants with right of survivorship. Dawn made some gifts and loans to friends from this fund, but when mom died there was still more than $400,000 in the account. Dawn took it by right of survivorship, and put it in her own account at the same broker.

When mom died, brother Don was Trustee of her Living Trust that served in effect as her Will (see our earlier blogs on Living Trusts). Apparently most of the trust was to go to charity, but despite a lessened self-interest Don went to Court to challenge Dawn's taking the Edward Jones account by survivorship, claiming that as mom's property it should be part of her trust instead.

Dawn countered with RCW 30.22.100(3): " Funds belonging to a deceased depositor which remain on deposit in a joint account with right of survivorship belong to the surviving depositors unless there is clear and convincing evidence of a contrary intent at the time the account was created." She was confident Don couldn't come up with the clear and convincing evidence needed to upset the right of survivorship.

Don the trustee refuted Dawn's statute and argued on a different one at trial and on appeal. First he asserted RCW 30.22.100(3) applies to bank accounts but not to brokerage accounts.

Second Don pointed out that RCW 11.94.050(1) forbids an Attorney-in-Fact from taking certain actions unless the Durable Power of Attorney specifically authorizes them: "...the attorney-in-fact or agent shall not have the power to make, amend, alter, or revoke the principal's wills or codicils, and shall not have the power, unless specifically provided otherwise in the document: To make, amend, alter, or revoke any of the principal's life insurance, annuity, or similar contract beneficiary designations, employee benefit plan beneficiary designations, trust agreements, registration of the principal's securities in beneficiary form, payable on death or transfer on death beneficiary designations, designation of persons as joint tenants with right of survivorship with the principal with respect to any of the principal's property," and certain other things. If this is so then the joint account was unauthorized and of no effect from the start.

The trial court bought Don's two arguments, and on appeal it was upheld. Dawn was liable to return the joint funds, gifts and loans, and pay interest and Don's attorney fees as well as her own. Ouch.