Signing away your savings

Joint bank accounts are increasingly being used to defraud seniors and effectively rewrite wills

by Risha Gotlieb

Signing away your savings

Skip Nall/GETTY IMAGES

At 85 and with failing eyesight, Donna (not her real name) was relieved when her daughter returned to Toronto to assist her. Eventually, she added her daughter’s name to her bank accounts to facilitate bill payments. A year and a half later, Donna’s eldest son, who works overseas, hired Jayne-Ann Steele, a long-term care specialist, to surrogate some of his sister’s duties. “One day Donna asked me to read her bank statements aloud,” says Steele. “She was shocked when I read out the huge sums of money being withdrawn like clockwork every month—to the tune of over $200,000″ in the span of 18 months. When I saw her daughter’s name beside hers, I instinctively knew who was taking the money.” Today Donna no longer speaks to her daughter. She must rely on her other three children to subsidize her retirement expenses. “These families never recover from the betrayal,” says Steele.

Joint bank accounts are increasingly being used as a vehicle to defraud Canadian seniors. Although the banking industry recognizes the problem, most banks do little to curtail it, say experts. Toronto lawyer Jan Goddard, an estate and elder law specialist, says banks are making it dangerously easy for their senior clients to add others to their accounts. In fact, sometimes the bank staff “steers” them into this arrangement, she says, because they recognize they need help with the simplest of banking tasks. (Raising the question: are seniors giving informed consent if they can’t even decipher a bank statement?) It’s a process that can take mere minutes, ruin lives, and yet seniors may be encouraged to do it without the benefit of legal advice.

Often aging parents are adding adult children to their accounts simply to assist with the logistics of bill payments and managing the account. “The child knows this is the parent’s intent and so does the bank, yet the bank forms proclaim that the asset in the account is equally and rightfully the property of the child,” explains Goddard. In a recent joint account case Goddard is litigating, the grandchildren are alleged to have absconded with $650,000.

Kelly D’Amour, an investment sales coach with Scotiabank, says her bank is educating its staff and customers to recognize the pitfalls of joint accounts. “There are many types of joint accounts,” she explains, “but the most commonly used is called joint tenants with right of survivorship.” This means two or more people have the same cheque-writing and withdrawal privileges, and if one of the account holders dies, the other automatically obtains ownership of the account long before the deceased’s estate is settled. In the wrong hands, says D’Amour, a joint account is “the perfect vehicle” for an adult child to abscond with savings from the estate. “It’s a backdoor method of rewriting the parent’s will.”

Douglas Melville, Canada’s ombudsman for banking services and investments, who investigates public complaints, acknowledges that abuse of joint accounts is a growing problem. “Many Canadians don’t understand that once you add your adult children to your account, it’s legally as much their money as it is yours.” Some say that it’s wise to avoid joint accounts altogether, because your money and your adult child’s personal life become legally entangled. According to Michael Solnes, a financial planner in Vancouver, “If your child’s marriage goes off the rails, their ex can now make a claim on the senior’s joint account. If your child owes money to creditors or is successfully sued, your money can be garnished or seized.”

Judith Milliken, a Vancouver lawyer who specializes in estate litigation, says any parent considering a joint account should document their intentions and provide copies of this documentation to multiple trusted individuals. Melville suggests opening up a new account with just enough money to cover regular expenses. “Set up most of your bills to be paid automatically from that account or provide cheques to the other individual on that account, but watch out for two things,” he advises. “Don’t let your joint account holder set up a line of credit and make sure there are no overdrafts on this account.”

D’Amour says an even better alternative is to use a power-of-attorney document that precisely spells out your intentions and which powers you’re granting and which ones you choose to limit. At least with a POA there is a legal requirement for accountability.

Melville warns every adult should have a plan in place. “Often people don’t take the initiative until there is a medical problem or a cognitive deficit kicks in, and then it becomes too difficult or too late.”




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Signing away your savings

  1. The banks are as much at fault as any if not more. In my Sr. year with a small $50,000 down payment which had to be insured I was trapped into Joint ownership with out any choice with my son for the balance of a cmhc mortgage (chattal) on rented land for a small insignificant home badly in need of repairs costing $105,000. He had offered to be a guarantor, not a joint owner because of the implications of Capital gains for one thing which restricted him if he became responsible on my death to sell…or he if he wanted to upgrade from his modest home, fixed income in another province. It scares me as to what will happen to his state of affairs when I die and what he has to put out during probate from his own pocket while dispensing my estate and selling it. This joint ownership was a forced situation because of my only income, the insufficient $1400 a month I get as a pension from the gov. ( I can't find a job and have tried to in this small community but if I do and earn over $3500 a year – or $500 when I initiated this – I lose basically what I make on the restricted pension). I do not qualify for anything, not even a standard of living. I am rated 'poverty' income. When the Feds suggested they where doing Seniors a big favor by benefiting us with an extra $600 a year, I equated it to a cup of coffee per day at McDonalds (certainly not Starbucks) on my daily walk –
    In my case I had no options except to allow joint ownership – condos where too expensive and didn't allow a pet, I wanted a yard to keep me busy; my mortgage and utilities equate to 75% of income – I am left on $500 a month for all else, cable, car insurance and gas, food, health needs. It's a sad life. Then years ago when I was in charge life was not like this. It is the bank and government that causes these pitiful circumstnaces.
    It is the banks and cmhc transfer funds and taxes on utilities, and no analog signals for TV (the necessity of internet to fill out gov. forms) and all that add up including my 5 1/2% mortgage when the going rate was 3% dependent on how rich you where. -the whole thing is a sham. Protection? – certainly not for me or my son – instead of being able to invest a portion of my money to offset the mortgage as I had planned and have a safety net in case of an emergency, I have nothing left in the bank. They made me do what they wanted to protect themselves despite my considerable investment and sterling record.
    That is the problem with systems – they are restrictive and the banks given too much latitude. If they can create such beneficial rules for themselves, they certainly are capable of creating one for joint accounts that would benefit the account holder not someone entrusted with administering the account for theft.

  2. “It's a backdoor method of rewriting the parent's will.”

    "use a power-of-attorney document that precisely spells out your intentions and which powers you're granting and which ones you choose to limit. At least with a POA there is a legal requirement for accountability"

    Hind-sight is 20/20. The saddest part is that you not only lose a parent but a sibling as well.

  3. “It's a backdoor method of rewriting the parent's will.”

    "use a power-of-attorney document that precisely spells out your intentions and which powers you're granting and which ones you choose to limit. At least with a POA there is a legal requirement for accountability"

    Hind-sight is 20/20. The saddest part is that you not only lose a parent but a sibling as well.

  4. The bank and government is at fault, yet they are the ones feeding you money? I don't get it. What happened to your savings and investments?

  5. The bank and government is at fault, yet they are the ones feeding you money? I don't get it. What happened to your savings and investments?

    • The Banks and Governments are not at fault… Who would steal from their parents… The nasty children are at fault.
      If parents come in and demand to make an account joint with their chidren and the bank advises them of the risks.
      They can't stop the parent or anyone for that matter if they still insist on making a joint account. The parents trust their children and never would they think their own kids would steal from them….

  6. Excellent article. Elder abuse by family members is all too common- with financial abuse occurring on a regular basis- under no one's watchful eye. Families are complicated and sibling rivalry often heightens with age. Legal advice for drafting of powers of attorney is critical- both for care and for finance. Banks are reaching out to elder care experts in order to better understand their client's needs and are working with community groups and police, learning to be aware of suspicious activities- at the teller and trust levels alike. These are necessary precautions because sadly, human nature is just that. Awareness, education and advice- good ingredients for most things.

  7. Excellent article. Elder abuse by family members is all too common- with financial abuse occurring on a regular basis- under no one's watchful eye. Families are complicated and sibling rivalry often heightens with age. Legal advice for drafting of powers of attorney is critical- both for care and for finance. Banks are reaching out to elder care experts in order to better understand their client's needs and are working with community groups and police, learning to be aware of suspicious activities- at the teller and trust levels alike. These are necessary precautions because sadly, human nature is just that. Awareness, education and advice- good ingredients for most things.

  8. Donna's daughter is a disgusting dog. That type will steal from anybody if they steal from their own parents. I am an only child and all of my very elderly mother's accounts are held jointly with me. But I am meticulous in handling them, not one cent goes to my benefit and I keep my mother fully informed. The accounts were only set up jointly for convenience when she passes away.

  9. Donna's daughter is a disgusting dog. That type will steal from anybody if they steal from their own parents. I am an only child and all of my very elderly mother's accounts are held jointly with me. But I am meticulous in handling them, not one cent goes to my benefit and I keep my mother fully informed. The accounts were only set up jointly for convenience when she passes away.

  10. Ladies and gentlemen, meet the Vulture Generation.

  11. Ladies and gentlemen, meet the Vulture Generation.

  12. Many individuals used joint accounts as a way to avoid probate fees. With those fees, in Ontario, being only 1.5% why make an account joint to save 1.5% when you could wind up losing 100% of the balance. The joint holder could be sued, go bankrupt or become divorced at which point the joint account assets now become vulnerable. Power of Attorney is a better option all around due its accountability. Banks have a role in ensuring their clients are not being coerced into making an account joint, however, if someone is capable and wants it to be so, a banker cannot stop the transaction from being done. Trust companies, via all the big banks, can be named as someone's corporate POA.

  13. Many individuals used joint accounts as a way to avoid probate fees. With those fees, in Ontario, being only 1.5% why make an account joint to save 1.5% when you could wind up losing 100% of the balance. The joint holder could be sued, go bankrupt or become divorced at which point the joint account assets now become vulnerable. Power of Attorney is a better option all around due its accountability. Banks have a role in ensuring their clients are not being coerced into making an account joint, however, if someone is capable and wants it to be so, a banker cannot stop the transaction from being done. Trust companies, via all the big banks, can be named as someone's corporate POA.

  14. The Banks and Governments are not at fault… Who would steal from their parents… The nasty children are at fault.
    If parents come in and demand to make an account joint with their chidren and the bank advises them of the risks.
    They can't stop the parent or anyone for that matter if they still insist on making a joint account. The parents trust their children and never would they think their own kids would steal from them….

  15. As a Certified Financial Planner and a senior's advisor I see this issue on a regular basis. It is not only selfish, thieving family members or caregivers that create havoc. It is also well meaning people who have the best of intentions. I have seen parents lose a portion of their savings because their child experiences a bankruptcy. The child was as distraught as their parent. I have seen a child have a business reversal and dispite all efforts the business fails. He used his mother's money believing he was safeguarding her future as well. I have the discussion with all of my clients who are exploring estate issues and probate issues. It takes all of five to ten minutes to explain the pitfalls of joint bank accounts and joint ownership of other assest. I have never had a client not understand and in almost all cases they make the safest decision. I believe anyone who is setting up a joint account be given a letter of understanding outlining the risks before they make that choice. This would help the banker who may not be as experienced or informed to clearly inform their client. I am glad to see this issue being discussed.

  16. As a Certified Financial Planner and a senior's advisor I see this issue on a regular basis. It is not only selfish, thieving family members or caregivers that create havoc. It is also well meaning people who have the best of intentions. I have seen parents lose a portion of their savings because their child experiences a bankruptcy. The child was as distraught as their parent. I have seen a child have a business reversal and dispite all efforts the business fails. He used his mother's money believing he was safeguarding her future as well. I have the discussion with all of my clients who are exploring estate issues and probate issues. It takes all of five to ten minutes to explain the pitfalls of joint bank accounts and joint ownership of other assest. I have never had a client not understand and in almost all cases they make the safest decision. I believe anyone who is setting up a joint account be given a letter of understanding outlining the risks before they make that choice. This would help the banker who may not be as experienced or informed to clearly inform their client. I am glad to see this issue being discussed.

  17. What has been done since 2011? Where are the letters from lawyers and politicians? Is not one single lawyer in Canada “frustrated”? Why has this magazine “forgotten” the senior abuse rampant across Canada? Is there a single law or reform passed in Ontario in the last two years? Where are more Gotlieb articles exposing this “legal” elder abuse??

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