In Albert v. Cowart, decided April 3, 2012, the North Carolina Court of Appeals reviewed a case in which a person using a power of attorney (the attorney in fact) had deposited funds into a joint bank account in the name of the attorney in fact and the person giving the power of attorney (the grantor). After the death of the grantor, the attorney in fact removed the money from the joint account. The administratrix of the grantor’s estate sued the attorney in fact, claiming that he had wrongfully transferred funds in breach of his fiduciary duty to the grantor.
At trial, a jury found in favor of the attorney in fact and the administratrix appealed. The Court of Appeals found that using the power of attorney to transfer money to a joint account did not amount to a gift to the attorney in fact and, upon the death of the other party to the joint account, the attorney in fact was entitled to the funds.
The attorneys at Cannon Law, P.C. caution our clients about the danger of joint accounts that are payable on death to the survivor. In this case, the grantor and the attorney in fact had signed a Customer Access Agreement agreement with the bank that made any new accounts created after the agreement automatically payable on death joint accounts. We continue to encourage our clients to be very sure of the type of bank or investment account that you are opening and the effect that the death of one party will have on the funds in the account.