Treatment of Joint Accounts on Death
The nature of a joint account is such that upon the passing of one joint account holder, the funds automatically flow to the surviving joint account holder by way of rights of survivorship.
However, as it is common practice for aging parents to open a joint account with their adult children to obtain assistance in managing their financial affairs, the Courts have confirmed a rebuttable presumption that in doing so the adult child is merely holding the funds in trust for the aging parent, amounting to a resultant trust.* Where a resultant trust arises, the funds held in the joint account do not automatically flow to the surviving joint account holder, but rather they fall into the estate of the deceased joint account holder to be distributed pursuant to the deceased joint account holder’s will or intestacy.
Being a rebuttable presumption, it is available to a surviving joint account holder to show that the deceased joint account holder intended to gift the right of survivorship of the joint account to the surviving joint account holder (Pecore v Pecore, 2007 SCC 17 (CanLII)). This was the argument made in the recent decision of Guglick Estate (Re), 2020 ABQB 561, in which the Court was tasked with determining whether the funds of a joint account properly formed part of the estate of the deceased joint account holder pursuant to the presumption of resultant trust or whether the presumption has been successfully rebutted and the funds passed to the surviving joint account holder by way of rights of survivorship.
In Guglick Estate, two joint accounts with funds in the amount of $226,490.00 and $27,752.20, respectively. In setting up these accounts, a duly checked-off right of survivorship was executed. The banking documents, however, were not satisfactory in themselves to rebut the presumption of resulting trust. Rather, the Court found that the banking records proved nothing more than an intention to create joint interest with rights of legal survivorship and that nothing in the banking documents specifically suggested the deceased joint account holder’s intent regarding beneficial interest to the accounts.
Ultimately, the Court concluded that neither joint account holder satisfied the onus upon them of overcoming the legal presumption of a resulting trust, having not been persuaded that the deceased joint account holder intended the funds to be a gift to either of the surviving joint account holders. In coming to this decision, the Court commented on and considered the following facts:
- that neither surviving joint account holder had any meaningful use or connection to the funds during the deceased joint account holder’s lifetime;
- that the decreased joint account holder intended for the residual beneficiaries to his will to receive his cash;
- the absence of even the barest evidence of actual intention by the deceased joint account holder to transfer substantial monies to the surviving joint account holders as consideration for services rendered at some uncertain time prior to the transfers in question;
- a lack of corroborative evidence of the deceased joint account holder’s intention to make a gift;
- that no powers of attorney were in evidence; and
- neither surviving joint account holder incurred tax on the accounts during the testator’s lifetime.
*The Counts have extended the presumption of resultant trust in relation to joint accounts to include relationships those beyond those of only parent/adult child relationships, as was the case in Guglick Estate.