Jointly held or jointly accessed funds are a convenient means of managing two or more people’s finances. It is common, for example, for a couple to share a bank account. Business owners also use joint accounts. Now, joint accounts have become more commonplace with aging parents and adult children, especially for those who need help managing their daily financial affairs.
If you share a bank account with your spouse, it automatically passes to them when you die. The account is not considered part of the deceased spouse’s estate and generally not subject to probate fees. However, that is not necessarily the case where joint account holders are a parent and an adult independent child, where the parent added the child to the account for the purpose of managing finances.
What is a Joint Tenancy Agreement?
A joint tenancy agreement allows people to have shared access to property or assets. Generally, it is associated with real estate dealings. A good example is a couple who own a home together. When one dies, the house would pass to the surviving spouse without having to go through the probate or the court system.
With a couple who is married or living together, there is a presumption that the proceeds of a joint bank account will go to the surviving spouse. However, that presumption does not exist between a parent and an adult child who has access to the bank account. It is more likely to be seen that the funds in the account are being held only to take care of your parent’s finances. You would have to establish a right of survivorship, demonstrating that your parent intended to leave you the account and its assets.
Assessing Your Parent’s Intentions
Proving you are the rightful owner of joint assets is no easy task. Joint tenancy agreements prepared by the bank at the time the account is created are not, in and of itself, sufficient proof your parent intended to gift you the proceeds of the account upon death.
Assisting an elderly parent with activities of daily living may also not entitle you to the proceeds of the account. As well, you must meet legislative requirements and provide corroborating evidence that your late parent intended for you to take control of the account.
You cannot simply rely on your own evidence of conversations you had with the deceased.
Supreme Court of Canada Ruling on Jointly Held Assets
In the foremost case on the issue of jointly held accounts in Canada, the Supreme Court established that the deposit of money by a parent into an account shared with their child does not necessarily mean the child deserves to take possession of the asset when they die.
“People are living longer, and it is commonplace that an ageing [sic] parent requires assistance in managing his or her daily affairs … Almost invariably, the duty of assisting the aging parent falls to the child who is closest in geographic proximity. In such cases, Powers of Attorney are routinely given. Names are ‘put on’ bank accounts and other assets, so that the child can freely manage the assets of the parent,” the Court writes in Pecore v. Pecore, 2007 SCC 17. “Given these social conditions, it seems to me that it is dangerous to presume that the elderly parent is making a gift each time he or she puts the name of the assisting child on an asset. The presumption that accords with this social reality is that the child is holding the property in trust for the ageing [sic] parent, to facilitate the free and efficient management of that parent’s affairs. The presumption that accords with this social reality is, in other words, the presumption of resulting trust.”
For this reason, conflicts arise when the surviving child claims to be entitled to the joint account. Other relatives may also feel they should share in the asset.
We Can Offer Advice on Jointly Held Accounts
If you held a joint account with a parent who has now passed away and would like further information on your rights, or if you are an executor or beneficiary of an estate and would like further information on the recovery of jointly held accounts, please contact us.
Initial consultations are free of charge.