Tuesday, April 23, 2024

EVERYDAY LAW: Misuse of joint accounts


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ONE OF THE ISSUES discussed at last week’s Ermine Holmes Lecture was the subject of joint accounts.
The typical joint account permits each party to the account to deposit and withdraw from the account. It may also result in the monies standing to the account passing to the survivor or survivors as the case may be on death.
In the case of an elderly person, very often an account is taken out with one of his or her children to facilitate the use of the funds for the care of the elderly person who may not be sufficiently mobile to deal with the day to day demands associated with operating an account.
Where it is intended that the monies in the account should pass by survivorship to the joint account holder, this ought to be clearly stated at the time the account is taken out.
Apart from the issue of the legal ownership of the monies in the account the fact that another person has access to the funds that are primarily intended for the use of the elderly person provides opportunity for financial abuse of the elderly.
It is well recognized now that financial abuse of the elderly is very much on the increase internationally.
The extent to which abuse of the elderly can occur is well exhibited in the criminal case which was recently tried in Bermuda where two sisters who had tricked their grandmother in order to get their names onto a joint account with her, ending up stealing from her the equivalent of almost BDS$1 million.
This was done by transferring the funds belonging to the grandmother to a separate account in the name of the sisters.
Choose carefully
The sisters are due for sentencing before Justice Carlisle Greaves. The case illustrates the ease with which monies in a joint account can be misused and clearly illustrates the importance of choosing carefully the people whom you want to be joint holders of your account.
Sometimes a joint account is deliberately used to avoid the necessity of applying for probate when the elderly person dies. However, the fact that the joint account holder can freely withdraw from the account means that he can deprive the elderly person of the full use of his money.
It is not in every case, however, that a joint holder of a bank account will be able to claim ownership of the monies on the account.
The English case of RE NORTHALL (2010) is evidence that sometimes it is not always easy to ascertain the interest of the deceased in joint accounts.
In that case Mrs Northall had deposited the sum of £54 836 (BDS$174 447) representing the sale of a house, into an account with one of her sons since she did not have a bank account. Soon after the account was opened £28 625 (BD$ 91 064) were paid out of the account by the son.
Mrs Northall then died and the day after her death the son transferred the remainder of the monies in the joint account to an account held jointly with his wife.
The son said that his mother had authorized the payment out of the sums totalling £28 625. He also said that she told him that she would use the funds in the account as she desired but any funds remaining were to go to him.
The judge took the view that since it was the mother who instructed the son to make the withdrawals that this was evidence that she was the beneficial owner of the monies on the account.
The court held that when a person puts money into joint names there is a presumption of a resulting trust in favour of the person providing the money (that is, the legal ownership remains with the person providing the funds).
The presumption could be rebutted if the circumstances give rise to a presumption of advancement.  Alternatively, evidence could be given to show that the provider had intended to transfer the beneficial interest.
The court held that there was no evidence to show that the money was intended to be a gift to the son.
Mrs Northall had shown clearly that she had intended that the money was to remain hers to spend as she wished.
Of course, the presumption in favour of a resulting trust can be displaced if there is clear evidence that the account holder who provided the funds intended that the other joint account holder should be given a legal interest in the property.
RE NORTHALL was a case in which only one of the joint account holders had put money into the joint account. The decision therefore, is to read, as applying in the context of the particular facts of the case.
l Cecil McCArthy is a Queen’s Counsel. Send you letters to:? Everyday Law, Nation House, Fontabelle, St Michael.


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