The ownership rights while the original depositor is living, has been determined in Maryland not to be governed by Financial Institutions § 1-204. Instead, one still looks to the intent of the creator of the account to determine those rights. A person creating a joint tenancy account with his or her sole funds potentially could intend to create one of three arrangements: (1) a true joint account where both account tenants are entitled to use the funds as they wish, (2) a pay-on-death account disguised as a joint account, or (3) an agency or convenience account that permits the person added to the account to use those funds but only for the benefit of the creator of the account.[1]
A recent Court of Appeals case addressed the issue of the withdrawal rights to such an account. In Wagner v. State, 445 Md. 404 (2015), a father added his daughter to a multiple party account as a “joint owner.” He testified that he was having difficulty managing his affairs and placed his daughter on the account to help him pay bills. Under the account agreement, the daughter enjoyed the right of survivorship and upon the death of her father would have become the rightful owner of the account in accordance with Financial Institutions § 1-204. Once the daughter was added to the account, however, she began drawing out funds for her own purposes. When the father discovered what she was doing, he filed a criminal complaint against her for theft and embezzlement. The daughter was tried and convicted by the circuit court and the conviction was upheld by the Court of Appeals.
The daughter appealed the decision based on a seemingly simple proposition: how could a joint accountholder be guilty of theft from an account upon which she was legally permitted to withdraw funds? Of course, a multiple party account gives all accountholders equal rights to withdraw funds. In deciding the issue, the Court of Appeals held that while Maryland Code Annotated Financial Institutions § 1-204 applies to vest ownership of the funds in the surviving joint owner upon death of one of the accountholders, it does not control the ownership of the funds in the account during the lives of the joint accountholders.
The court focused on the purpose of the General Assembly in establishing the statute and that such purpose was merely to clarify the ownership interest following the death of the joint accountholder. According to the majority opinion (it was a split decision) the statute did not attempt to speak to the rights of the co-tenants during their lifetimes.
To determine ownership of the account proceeds during the lifetime of the parties, the court held that one must ascertain the intent of the parties from the facts and circumstances of the case. Thus, the power to access or withdraw funds from the joint account is not the equivalent of “ownership” of the funds and ownership is established by the intent of the parties. Accordingly, the daughter in Wagner committed theft because her father established that she was added to the account simply for his convenience and ownership of the funds did not transfer when she was added to the account. The dissent in Wagner, on the other hand, pointed to the fact that the statute carved out the convenience or agency account as not being a multi-party account. It observed that although the father may have wanted to create a convenience account, he decidedly had not done so. The dissenting opinion was concerned that the majority in Wagner permitted a crime to come into being in effect after the account was established by someone changing their mind as to what they wanted done with those funds.
[1] Dukeminier and Sitkoff, “Wills, Trusts, and Estates,” 490 Wolters Kluwer (9th Ed. 2013).
