Joint bank account trusts and the protection of older adults from financial abuse: Exploring equity’s preference for beneficiary direction over beneficiary protection

The equitable doctrine of resulting trusts plays a significant role in defining and allocating the rights and responsibilities of adult children and older adult parents who are co-holders of joint bank accounts. Where equity deems the adult child to be a resulting trustee for their parent, it also imposes a rule that the adult child must follow the directions of the older adult, that is, a beneficiary-direction rule. This rule suffices to hold to account a financially abusive adult child co-holder, but it appears to preclude a beneficiary-protection power, that is, a power of an honest adult child co-holder to take protective action, against the wishes of the older adult, to safeguard the parent from financial abuse by others. This article explores, from a Canadian perspective, but with comparative aspects, the preference of equity for a beneficiary-direction rule over a beneficiary-protection power in the context of joint bank account resulting trusts. While it is contended that it is possible for equity to recognize a beneficiary-protection power, by analogizing such resulting trusts to express trusts, it is ultimately concluded that the preference for the beneficiary-direction rule is reasonable. That conclusion is reached on the basis of considerations of precedent and policy that give rise to a number of interconnected barriers to this analogy. However, since it can be anticipated that a need for protective action might arise, it is argued that equity should respect an express grant of protective power. This, in turn, has implications for lawyers and other advisors on financial affairs and related legal matters.