Joint Account Holders Are Fiduciaries

Joint Account Holders Are Fiduciaries

MacKay v. MacKay Estate,2015 ONSC 7429, held that one joint account holder may serve as a fiduciary in relation to the other simply via the traditional indicia of such a relationship as set out in Frame v. Smith, [1987] 2 SCR 99 (i.e., the ability by the fiduciary to exercise unilateral control over the beneficiary’s interests; the vulnerability of the beneficiary).

In MacKay, supra, the defendant daughter-in-law had been added as a joint account holder to her mother-in-law’s account in order to help her with her day-to-day finances; this occurred while the mother-in-law retained capacity. The daughter-in-law did not hold power of attorney. She was her mother-in-law’s main caregiver, emotional support and confidante. In her capacity as joint account holder, in addition to covering the mother-in-law’s expenses, she paid herself a modest weekly sum in compensation for her services. The son (ex-husband of the daughter-in-law at the time of litigation), who held power of attorney for his mother, brought an action against his ex-wife seeking an accounting and repayment of the funds in question.

The court held that the daughter-in-law had a fiduciary obligation to her mother-in-law in her management and operation of the joint bank account, but that she had not breached her duty; her payments to herself were reasonable in the circumstances.

The holding in MacKay underscores the principle that the prima facie nature of a joint account—that is, of its being equally owned and equally subject to the discretion of all account holders—will give way, in some circumstances, before deeper considerations of equity.

In some respects MacKay stands for this proposition more strenuously than Pecore itself, as the former is less reliant on traditional doctrines concerning gifts and donors’ intentions. MacKay does not treat the nature of a joint account as an either/or proposition by which either a gift or trust is created. Rather, MacKay concerns itself solely with the question of fiduciary obligations, specifically as they may arise in the context of a “typical” joint account where one party is vulnerable to the discretion of the other.

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