Joint bank accounts, and joint tenancy in general, can be a useful tool which can allow more than one individual to manage an asset and can ensure that if one of the owners passes away, the asset will pass automatically to the other individual outside of the estate thus bypassing the probate process.
Under the usual rules of joint tenancy, when one of the joint tenants dies, the remaining owner takes full title by way of survivorship. However, as joint tenancy has become a common tool for estate planning, it has complicated how it is treated at law on the death of the first joint owner.
There are two common estate-planning reasons to transfer title of an asset to be held jointly: (i) avoidance of probate fees and (ii) intention to pass the asset to the surviving joint tenant on death of the first owner. Most commonly, an elderly parent may wish to put an adult child’s name on title to an asset, such as the family home or the parent’s bank account so that the child will be able to help the parent manage the asset, pay bills, etc. as the parent ages and may be less able to do so. Depending on the intention of the transferor at the time the transfer is made, putting assets into joint tenancy may result in two very different outcomes on the death of the transferor.
There are two different outcomes that can result on a transfer of an asset into joint tenancy: the presumption of advancement or a resulting trust. If, for example, an individual transfers property into joint tenancy with their spouse or a dependent child, there is a presumption of advancement (that this was done as a gift of survivorship). Where, on the other hand, an individual transfers property to an independent, adult child, there is a presumption that the parent intends that on death of the parent, the asset will fall into the estate to be distributed amongst all of the beneficiaries. This is called a resulting trust. These presumptions are rebuttable, however, based on indirect evidence of the deceased’s intention.
What happens on death when there is insufficient evidence to determine the intention of the deceased parent who had put an asset into joint name with one of his or her children? The Supreme Court of Canada (“SCC”) decision in Pecore v. Pecore is the leading case in this area. In Pecore, the SCC held that where assets are put into joint names with adult children, a rebuttable presumption of resulting trust arises.
Recent Ontario case law has continued to look at the issue of the intention of the arrangements by the deceased as beneficiaries fight over the assets after the transferor’s death. Swiderski v. Walsh is a recent example of a situation where the Court had to determine the intentions of a deceased parent. In this case, a mother had opened two bank accounts jointly with her daughter. In her will, she divided the residue of her estate equally between her daughter and son. When she passed away, the dispute arose between her children as to whether the joint accounts formed part of her estate.
As discussed above, because the accounts were held jointly between a parent and an adult child, the presumption of a resulting trust applied.
However, the facts in this case demonstrated that the testatrix had not treated her children equally and led the Court to the conclusion that she had likely intended for her daughter to inherit the joint accounts through survivorship. The which led to this conclusion included:
- the accounts had been held jointly for 25 years – this indicated that the transfer had not occurred because the mother had needed her daughter’s help managing her affairs, since she did not need help at the time;
- the testatrix’s daughter, and not her son, was named as executrix of her estate as well as her power of attorney – the Court found this to weigh against the argument that she intended to treat her children equally; and
- the daughter was also the only beneficiary named on the testatrix’s RRIF.
These facts were sufficient for the Court to find that the presumption of a resulting trust was rebutted and a gift of survivorship had been intended.
An Added Complication: Tax and Probate Considerations
In addition to the above uncertainty which may arise around a transferor’s intention where an account or asset is transferred into joint title, an added consideration where joint assets are concerned is the tax and probate fee implications arising from the transfer. Generally speaking, where an asset is transferred into joint tenancy with the intention of a gift to the surviving joint tenant, for tax purposes there is a deemed disposition of the asset at the time of transfer and the transferor is liable for tax on the transferred property. Where the transfer is made for probate purposes and there is a presumption of resulting trust, if the deceased had only one Will, there is a possibility that, notwithstanding that the particular asset or assets are held in joint names, if probate is required for any other asset comprising part of the estate, the entire value of the estate assets, including assets held in joint names, will be subject to probate fees, thus defeating the purpose of the transfer.
Tax and estate planning with jointly held assets can be complicated and care must be taken in such planning to ensure that unintended tax consequences do not arise. It is important to consult with a tax and estate planning professional to ensure that the estate is properly dealt with. Contact any of the lawyers in DSF’s Wills and Estates Group for assistance.
 Pecore v. Pecore, 2007 SCC 17 (hereinafter “Pecore”).
 Swiderski v. Walsh, 2015 ONSC 3443.