I'm not surprised there is concern about this. I'm concerned too. This is a completely inappropriate way to deal with the money. The money should be in the Mom's name only.
An account that is set up as "Joe, power of attorney for Mom" is still considered to be in their Mom's name because it makes it clear that Joe has no ownership of the money and must use it for Mom's benefit only.
Why would the funds be placed in a joint account in the first place? Joint ownership of a bank account means joint ownership of the money. When Mom passes away, on the face of it the funds will belong to Joe. As we know she has more than one child, it's quite likely that she wants her estate to be divided among them when she passes away. If it was Mom's house, why is Joe effectively giving money to himself by putting it in a joint bank account? This can be viewed as theft, depending on what happens next.
Often the excuse given for joint bank accounts between parent and child is that the parent wants the child to have access to help with the banking. That excuse isn't going to wash in this case. This decision wasn't made by the parent, but by Joe. Joe already had access to the funds by using the Power of Attorney. So there is no logistic excuse.
In cases like this, a person in Joe's position will often say that his Mom told him to set up the account because she wanted him to have the money, usually as a thank-you for looking after her. This isn't going to wash either. If the Mom still had the mental capacity to deal with her money to the extent of dealing with what is probably her largest asset, Joe wouldn't need to act under a Power of Attorney in the first place.
Besides, a person acting under an Enduring Power of Attorney isn't allowed to benefit personally from his or her position (other than as specified in the document itself).
A further problem is the fact that a large amount of money (I don't know the sale price of the house) is sitting in a bank account rather than being invested. Another mistake by Joe. He should keep a reasonable amount on hand for operating expenses, then invest the rest to make the most of it.
The only two ways that Joe's actions in setting up the joint account with himself could be seen as appropriate are that a) his Mom's Power of Attorney specifically asked for that to happen (possible but not probable) or b) Joe has seen his Mom's will and knows that he is supposed to inherit the house on her death. And even then, the ground is shaky on the second possibility because their Mom is still alive.
Joe should immediately remedy this situation. Perhaps he really doesn't understand why he should not have opened a joint account. He wouldn't be the first person doing his best under a Power of Attorney but flying blind. Perhaps my reader should show Joe this blog post! This will give Joe a chance to explain his actions and reveal any good reason he may have that his sibling doesn't know about. And if it was a mistake, Joe can fix it by setting up the account properly.
By the way, Pecore seemed odd to me.
ReplyDeleteThe court is said to be creating a new precedent which would help ensure that assets made jointly owned in order to avoid probate fees would still be distributed according to the terms of Wills.
Yet the Pecore decision was that the assets that had been made jointly owned that became the sole property of the surviving heir to the detriment of the other heir would remain the sole property of that surviving heir.
The proof the court took that the parent wanted things this way were verbal remarks overheard by witnesses, some of whom had proven to the court, by lying to it, that they were liars on other subjects.
Never mind the Will.
Never mind that the parent had left clearly written documents telling the banks that the joint ownership was only for the purpose of avoiding probate, that the change was not done to create a gift. The court decided that these documents left at the banks were lies designed by the parent to deceive Canada's Revenue Agency so that the daughter would be able to avoid capital gains tax.
The lawyer who drew up the Will for the parent testified that he satisfied himself that the parent had considered where he wanted all his assets to go upon his death, yet he admitted he did not ask about and I think he said he knew nothing about the joint accounts that the parent had told the banks, in writing, essentially, that these would be distributed according to the terms of the Will. Most of the estate assets were in these joint accounts. The lawyer says he's satisfied the parent told him about everything, yet the lawyer knows nothing about the elephant in the joint accounts. To me, this lawyer's testimony is not credible, yet the court bought it.
The court took no position on whether their decision should affect whether jointly held estate assets that would now be distributed according to the terms of Wills would now also be subject to probate fees. They left that matter up to heirs and the collectors of those fees.
Can you recommend a good lawyer in the Lower Mainland of BC who could act for me now to force a bank to recognize my right, as an enduring PoA holder, to see all documents the bank has that would show me why and how that bank allowed my sister to become joint owner of my mother's accounts? I know my sister believed our parents to be incompetent at the time, and I believe the bank account manager also believed my parents were incompetent. They were colluding to avoid probate fees. There are so many red flags I assume a more foul outcome is possible. I assume I will be forced to take court action after my mother dies if my sister is still joint owner when that event occurs, so I am looking for a lawyer who can act for me now, and at that time.