Missouri Court Held Agent Opening a Joint Account with Principal Violates Duty

An agent under a durable power ofattorney closed the principal’s bank accounts and opened new accounts in nameof the agent, the co-agent, and the principal as joint tenants with rights ofsurvivorship. The power of attorney authorized the agent to make gifts toherself in the amount of the gift tax annual exclusion.  After theprincipal’s death, one of the agents withdrew the funds. The principal’ssiblings began an action to recover the funds from the agent and her husbandand received a summary judgment against both parties. 

 In re Estate of Lambur, 397 S.W.3d 54(Mo. Ct. App. 2013), the intermediate appellate court held that an agentopening a joint account with principal deemed to violate fiduciary duty. Thecourt affirmed with respect to the agent for all sums in excess of the annualexclusion, reiterating established Missouri law that opening the joint accountwith rights of survivorship was a gift to the agent, that any authority givenan agent to make gifts must be in writing, and that powers of attorney arestrictly construed.  The court reversed as to the agent’s husband, findingthat there were issues of fact as to whether he benefited from the funds. 

Special thanks to William LaPiana (Professor of Law, New York Law School) for bringing this case to my attention.