Vancouver Estate Lawyer-Joint Accounts and Adult Children

vancouver estate lawyer

Trevor Todd and Jackson Todd have over 60 years experience in handling contested estate matters including the often thorny question of parents transferring financial assets into the name of their children.

Such transfers  could amount to a gift, a loan or a trust depending on the intention of the parent transferring the assets.

The Law

In Kolic v Kolic 2019 BCSC 1463 the court discussed a number of cases , starting with Pecore v Pecore re dealing with parents transferring financial assets into the names of their adult children.

The presumption, where funds are held jointly by a testator with an adult child, is there is a resulting trust in favour of the testator. The onus is on the adult child to prove the funds were intended as a gift. As Rothstein J. stated in Pecore v. Pecore, 2007 SCC 17 at para. 53:

… [T]he presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the transferor’s estate to be distributed according to the transferor’s will.

[82] The process for determining a transferor’s intention is addressed at length in Pecore:

What Evidence May a Court Consider in Determining Intent of the Transferor?

55] Where a gratuitous transfer is being challenged, the trial judge must begin his or her inquiry by determining the proper presumption to apply and then weigh all the evidence relating to the actual intention of the transferor to [determine whether the presumption has been rebutted …

Evidence Subsequent to the Transfer

[56] The traditional rule is that evidence adduced to show the intention of the transferor at the time of the transfer “ought to be contemporaneous, or nearly so,” to the transaction: see Clemens v. Clemens Estate, [1956] S.C.R. 286, at p. 294, citing Jeans v. Cooke (1857), 24 Beav. 513, 53 E. R. 456 (Rolls Ct.). Whether evidence subsequent to a transfer is admissible has often been a question of whether it complies with the Viscount Simonds’ rule in Shephard v. Cartwright, [1955] A. C. 431 (H.L.), at p. 445, citing Snell’s Principles of Equity (24th ed. 1954), at p. 153:

The acts and declarations of the parties before or at the time of the purchase, [or of the transfer] or so immediately after it as to constitute a part of the transaction, are admissible in evidence either for or against the party who did the act or made the declaration. … But subsequent declarations are admissible as evidence only against the party who made them …

The reason that subsequent acts and declarations have been viewed with mistrust by courts is because a transferor could have changed his or her mind subsequent to the transfer and because donors are not allowed to retract gifts. As noted by Huband J.A. in Dreger [(Litigation Guardian of) v. Dreger (1994), 5 E.T.R. (2d) 250], at para. 33: “Self-serving statements after the event are too easily fabricated in order to bring about a desired result.”

[59] … I am of the view that the evidence of intention that arises subsequent to a transfer should not automatically be excluded if it does not comply with the Shephard v. Cartright rule. Such evidence, however, must be relevant to the intention of the transferor at the time of the transfer: Taylor v. Wallbridge (1879), 2 S.C.R. 616. The trial judge must assess the reliability of this evidence and determine what weight it should be given, guarding against evidence that is self-serving or that tends to reflect a change in intention.

Bank Documents

[61] While I agree that bank documents do not necessarily set out equitable interests in joint accounts, banking documents in modern times may be detailed enough that they provide strong evidence of the intentions of the transferor regarding how the balance in the account should be treated on his or her death: see B. Ziff, Principles of Property Law (4th ed. 2006), at p. 332. Therefore, if there is anything in the bank documents that specifically suggests the transferor’s intent regarding the beneficial interest in the account, I do not think that courts should be barred from considering it. Indeed, the clearer the evidence in the bank documents in question, the more weight that evidence should carry.

Control and Use of the Funds in the Account

[64] First, it may be that the dynamics of the relationship are such that the transferor makes the management decisions. He or she may be more experienced with the accounts. This does not negate the beneficial interest of the other account holder. Conversely, evidence that a transferee controlled the funds does not necessarily mean that the transferee took a beneficial interest. Ageing parents may set up accounts for the sole purpose of having their adult child manage their funds for their benefit.

[65] Second, in cases involving an ageing parent and an adult child, it may be that the transferee, although entitled both legally and beneficially to withdraw funds, will refrain from accessing them in order to ensure there are sufficient funds to care for the parent for the remainder of the parent’s life.

[66] Finally, as previously discussed, the fact that a transferor controlled and used the funds during his or her life is not necessarily inconsistent with an intention at the time of the transfer that the transferee would acquire the balance of the account on the transferor’s death through the gift of the right of survivorship.

[83] As the Court of Appeal emphasized in Bergen v. Bergen, 2013 BCCA 492, “the actual intention of the grantor is the governing consideration” (at para. 38).

[84] The burden is on Mary to establish the funds she received, either jointly or in her sole name, were a gift from Violet. In Unger v. Unger Estate, 2017 BCSC 1946, Forth J. noted:

[56] Historically when a father has transferred property to his child it was presumed that the transfer was intended as a gift. This is known as the presumption of advancement. In Pecore v. Pecore, 2007 SCC 17 [Pecore], the Supreme Court of Canada, however, narrowed this presumption and held that it does not apply in cases where the child was at the age of majority at the time of the transfer. Instead, transfers to children at the age of majority give rise to the presumption of a resulting trust, which places a burden on the adult child alleging that the transfer was a gift: Pecore at paras. 22-36.

[57] At the time of the transfer Lorrain was an independent adult, and therefore she bears the burden of proving that the transfer was intended as a gift. In situations involving the transfer of financial assets, such as joint bank accounts, a key question is whether the parent transferred the assets into the joint account in order to have the child assist in managing the financial affairs of the parent or whether the parent indeed intended it as a true gift. The Court noted in Pecore at para. 45:

[45] In cases where the transferor’s proven intention in opening the joint account was to gift withdrawal rights to the transferee during his or her lifetime … and also to gift the balance of the account to the transferee alone on his or her death through survivorship, courts have had no difficulty finding that the presumption of a resulting trust has been rebutted and the transferee alone is entitled to the balance of the account on the transferor’s death.

[85] In Williams v. Williams Estate, 2018 BCSC 711, Marzari J. summarized several possible scenarios:

[87] With respect to joint accounts, Pecore (see paras. 45-47) establishes that it is possible for a transferor to intend to transfer only the right of survivorship, without transferring the benefit of the account during their lifetime.

[88] It is the actual intent of the transferor at the time of the transfer that is determinative of whether the account is to be treated as joint during the lifetime of the transferor, whether the right of survivorship in a joint account applies, or whether a resulting trust arises for the benefit of the estate in the entire amount: Pecore at paras. 5 and 59.

[89] In cases where, as the defendant alleges here, the intent of the transferor is to grant the right of survivorship only, the gift is not the specific amount in the account at the time of the transfer, but rather whatever the account balance is at the time of death. The Court in Pecore accepted that the account balance may fluctuate over time, and though the intent at the time of transfer must be to transfer the right of survivorship, it need not be to transfer a specific amount:

[50] Some judges have found that a gift of survivorship cannot be a complete and perfect inter vivos gift because of the ability of the transferor to drain a joint account prior to his or her death: see e. g. Hodgins J. A. ‘s dissent in Re Reid, [[1921] O.J. No. 250]. Like the Ontario Court of Appeal in Re Reid, at p. 608, and Edwards v. Bradley, [[1957] S.C.J. No. 37] at p. 234, I would reject this view. The nature of a joint account is that the balance will fluctuate over time. The gift in these circumstances is the transferee’s survivorship interest in the account balance – whatever it may be – at the time of the transferor’s death, not to any particular amount. [Emphasis added in Williams.]

 

[92] In Omelaniec Estate v. Manly, 2010 BCSC 1226, this Court considered the evidence of bank employees who handled the transfers. Just like the case at bar, there were two types of such evidence.

a) First, detailed evidence of a bank employee who could speak to the deceased’s intention; and

b) Second, financial representatives who had less specific recollections, but testified to their usual practices.

[93] Both types of evidence were found to be admissible for the purposes of establishing the intent of the transferor to transfer the funds in the accounts to the joint account holder upon death. This Court also relied upon similar evidence from bank representatives as to “normal practice” in the context of advising as to the right of survivorship on joint accounts in Halfpenny v. Holien, [1997] B.C.J. No. 1486 at paras. 20, 34 and 40 and Mordo v. Nitting, 2006 BCSC 1761 (see paras. 234-236, 428).

[94] However, a bank document that simply marks that the account is to be joint or with a right of survivorship, even together with evidence that this was explained by a bank representative, does not necessarily rebut the presumption of resulting trust on its own. For example, in Stade Estate (Re), 2017 BCSC 2354, the court was critical when there was no supporting or additional evidence:

[83] Randall also claims that Mrs. Stade’s “lawyers and bank employees told her (and I) that a right of survivorship meant I would get the money in the account when she died”. Randall’s counsel submits this is admissible as evidence of what was said to Mrs. Stade and Randall at the time. However, I am unable to rely on Randall’s evidence alone. Further, this specific evidence is vague; Randall does not identify these lawyers and bank employees; he does not explain when these people made the statement he claims they made; and there is no explanation as to why a lawyer would have been involved at the time the Bank Account, Term Deposit or Shares were put into joint names. For these reasons, I am unable to give this evidence any weight.

[95] In Madsen Estate v. Saylor, 2007 SCC 18, Rothstein J. for the majority held that financial institution documents along with testimony in relation to them did not constitute sufficient evidence to rebut the presumption of resulting trust in that case:

[18] Van Melle J. found that there was no evidence to support Patricia’s position that her father intended to gift the contents of his joint accounts to her – there was no documentation to that effect, there was no clear statement to anyone and the father’s conduct vis‑à-vis the joint accounts while he was alive did not support this contention. Indeed, she also did not believe much of Patricia’s evidence, finding that she was “evasive and gave conflicting evidence” and that she “purposely misrepresented events” (para. 51). Van Melle J. found that the father had sole control of the assets in the accounts during his lifetime and he declared and paid all income tax on the income generated from the joint accounts and investments. She concluded that the joint account agreement was not determinative of the father’s intention. She could not find evidence of an intention to benefit Patricia financially over the other children.

[27] Having regard to the lack of clarity in the documents on this critical point, I would accord them little weight insofar as the issue of beneficial entitlement to the assets in the accounts is concerned.

[96] In Kyle Estate v. Kyle, 2017 BCCA 329, the Court of Appeal upheld the trial judge’s finding that the presumption of resulting trust had not been rebutted, noting that bank documents are not necessarily sufficient to rebut the presumption:

[29] Nor do I consider the judge’s failure to analyze the long form agreement an error that is either palpable or overriding. The judge concluded it was the short form agreement that was shown to Jack. In any case, neither agreement precluded a resulting trust. They appear to me to fill the primary function of clarifying the rights of the joint tenants on one part and the financial institution on the other, affirming the bank’s obligation to allow withdrawal of the funds by a surviving joint tenant. They cannot be taken as conclusive evidence that as between the joint tenants there was no resulting trust, although without doubt they establish the joint account discussed in Pecore.

[87] As a result, joint bank account documents in and of themselves are not necessarily sufficient to rebut the presumption of resulting trust.

[88] In Shkuratoff v. Shkuratoff, 2007 BCSC 1061, purchasing a GIC solely with the deceased’s funds was sufficient to create a presumption of resulting trust, and despite Rothstein J.’s comments “regarding the evidential effect of bank documents”, a signature card on the investment portfolio did not overcome the presumption because it was “not sufficiently detailed to indicate the intentions of the Deceased upon her death” (at para. 33).

[89] The presence of the giftee when the transfer is made, even in the presence of a notary, may be a factor that favours upholding the presumption of a resulting trust. In Modonese v. Delac Estate, 2011 BCSC 82, Groves J. stated:

[152] The presumption is applicable since, after consideration of all of the evidence, I am of the view that the defendant has failed to adduce sufficient evidence to rebut the presumption. I am not satisfied that the defendant has met the onus of proving on a balance of probabilities that his mother intended to gift the property to him through the transfer into joint tenancy. The only evidence that exists in support of the defendant’s claim is statements made by the defendant himself, whose evidence I do not accept.

[153] On the contrary, there is ample evidence that, at best, Regina was confused or uncertain about the transfer and at worst did not know what the transfer involved. Additionally, despite attending before a notary public to witness her signature, there was no real effort by that notary public to obtain the independence of Regina’s thought process and her intention to transfer. In fact, the entire circumstances of the transfer, arranged by Marko, paid for by Marko, with Marko being physically present, vitiate against any level of independence of mind by Regina. The notary public did not know Regina and did not have an opportunity to get to know her under the circumstances of this transfer such that he could in any way be satisfied as to the independence of her actions.

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