Joint bank accounts are commonly used as a convenience tool.
Parents often add an adult child to an account so that bills can be paid, banking can be completed more easily, or assistance can be provided if health issues arise in the future.
Unfortunately, joint accounts can also become a source of serious estate and capacity disputes.
The decision in Marttunen v. McDevitt serves as an important reminder that being named on a joint account does not automatically mean you own the money inside it. It also highlights the significant responsibilities that come with acting under a Power of Attorney.
Why Parents Add Children to Joint Accounts
As people age, managing financial affairs can become increasingly difficult.
For convenience, a parent may add an adult child to a bank account so that the child can:
- Pay bills;
- Assist with banking transactions;
- Manage day-to-day finances;
- Access funds in an emergency; or
- Help if the parent later becomes incapable.
Many families assume that adding a child to an account automatically grants ownership rights.
In reality, the legal analysis is often much more complicated.
Joint Ownership Does Not Always Equal Beneficial Ownership
One of the most misunderstood concepts in estate law is the difference between legal ownership and beneficial ownership.
A person may be listed on a bank account and have legal authority to access it.
That does not necessarily mean the funds belong to them.
Courts frequently ask an important question:
What was the parent's intention when the account was created?
If the parent added the child for convenience and assistance, the money may still belong entirely to the parent.
This issue becomes especially important after incapacity or death.
The Presumption of Resulting Trust
Canadian courts have repeatedly held that when a parent places assets into a joint account with an adult child, the law generally presumes that the funds continue to belong to the parent unless there is clear evidence of a gift.
This is known as the presumption of resulting trust.
The adult child bears the burden of proving that the parent intended to transfer beneficial ownership.
Evidence that may be relevant includes:
- Written instructions;
- Banking documents;
- Estate planning records;
- Statements made by the parent; and
- The overall circumstances surrounding the account.
Without convincing evidence of a gift, courts may conclude that the child was holding the funds for the parent's benefit.
Powers of Attorney Create Significant Responsibilities
The case also highlights the fiduciary obligations imposed on attorneys acting under a Power of Attorney.
Many people view a Power of Attorney as broad authority to manage finances however they see fit.
That is incorrect.
An attorney must generally:
- Act honestly and in good faith;
- Act in the donor's best interests;
- Keep proper records;
- Avoid conflicts of interest;
- Preserve the donor's assets; and
- Use funds only for the donor's benefit.
These obligations become even more important once the donor loses capacity.
A Power of Attorney is a position of trust, not an opportunity for personal enrichment.
Taking Funds for Personal Use Can Have Serious Consequences
One of the most important lessons from the decision is that unauthorized withdrawals can lead to significant liability.
Courts take a particularly dim view of situations where:
- Funds are removed without disclosure;
- The donor is unaware of the withdrawals;
- Records are incomplete;
- The attorney personally benefits; or
- The donor is suffering from cognitive decline.
The fact that an attorney believes the donor has "more than enough money" is generally not a valid justification.
The money remains the donor's property unless a lawful transfer occurs.
Record Keeping Matters
Attorneys and financial decision-makers should assume that every transaction may eventually be reviewed.
Good records should include:
- Bank statements;
- Receipts;
- Transfer records;
- Investment documentation;
- Reimbursement records; and
- Notes explaining significant decisions.
In many estate disputes, the problem is not merely the transfer itself but the inability to explain what happened afterward.
Courts expect attorneys to account for their actions.
Family Relationships Do Not Eliminate Fiduciary Duties
Many disputes involving Powers of Attorney arise between close family members.
Parents often trust children implicitly. Children may feel entitled to assistance because they provide support, caregiving, or maintenance of family property.
However, family relationships do not eliminate fiduciary obligations.
The legal duties imposed on an attorney continue regardless of:
- Family ties;
- Informal understandings;
- Expectations of inheritance; or
- Perceived fairness.
An anticipated future inheritance is not the same as permission to use a person's assets during their lifetime.
Removing an Attorney
When misconduct is established, a court has broad powers.
Possible remedies may include:
- Removal of the attorney;
- Orders to repay funds;
- Accounting orders;
- Tracing orders;
- Cost consequences; and
- Other equitable remedies.
The court's primary focus is protecting the vulnerable individual and restoring improperly used assets.
Practical Lessons for Families
Document Intentions Clearly
If a parent intends to gift money or ownership rights, that intention should be documented.
Keep Finances Separate
Joint accounts should not become personal spending accounts.
Maintain Records
Attorneys should be prepared to account for every transaction.
Review Powers of Attorney Regularly
Estate planning documents should be updated as circumstances change.
Seek Advice Early
Questions about joint accounts and Powers of Attorney are often easier to address before disputes arise.
The Bottom Line
Marttunen v. McDevitt serves as a powerful reminder that access to money is not the same as ownership of money. A joint account created for convenience does not automatically authorize a child or attorney to use those funds for personal purposes.
Courts expect attorneys to act loyally, transparently, and exclusively for the benefit of the person whose finances they manage. When those obligations are breached, the consequences can include repayment orders, removal as attorney, and significant costs awards.
How MerGen Law Can Help
At MerGen Law, we assist clients throughout Alberta with Powers of Attorney, joint account disputes, fiduciary duty claims, estate administration, capacity matters, and estate litigation. Whether you are concerned about the misuse of a Power of Attorney or seeking guidance regarding a disputed financial transaction, we are here to help.
This article is intended for informational purposes only and does not constitute legal advice. Individuals facing concerns about elder abuse should seek professional advice tailored to their specific circumstances.