Joint Bank Accounts

Joint Bank Accounts

Joint bank accounts are frequently the subject of estate litigation , the battle line being whether the joint account holder  is to personally receive the funds by way of right of survivorship or whether the funds are not truly a joint asset but instead are held on a resulting trust and thus properly belong to the estate.

Kolic v Kolic 2019 BCSC 1463 reviews many of the leading cases on the presumption of resulting trust that can apply to joint bank accounts and found  that the bank account was not gifted to the defendant  by the deceased who contributed all the funds to the account , and since the rebuttable presumption of resulting trust was not rebutted , the bank account belonged to the estate.

Most of the assets in Kolic were comprised of  joint bank accounts. The deceased was a simple woman with poor English reading and writing skills, was frugal, used only one bank account and was unsophisticated.

The court found that there was no evidence that the deceased intended to benefit the defendant anymore than she did in her will, and the bank accounts were found to properly be an estate asset based on a resulting trust.

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, and the onus of proof is on the adult child to prove that the bank account funds were intended as a gift .

In Pecore  v Pecore 2007 SCC 17 at para 53 stated:

” The presumption of resulting trust means 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.”

In Kolic the plaintiff  had commenced a wills variation action that was adjourned pending a hearing on what actual assets formed part of the estate of the deceased.

The value of the estate as of the time of death of the deceased must be determined before a testator’s moral duty can be assessed for the purposes of a wills variation claim. Sim v Sim Estate 2016 BCSC 1222 at para.  74.

That assessment also includes consideration of inter vivos dispositions and assets passing by right of survivorship. Inch v Battie 2007 BCSC 1249.

Intention of the Transferor

Pecore stated that the process for determining the intention of the transfer or begins with determining the proper presumption to be applied and then weigh all the evidence relating to the actual intention of the transferor ( to determine whether the presumption of resulting trust has been rebutted).

The courts prefer evidence of intention to be contemporaneous or nearly so, but evidence of intention that arises subsequent to a transfer should not automatically be excluded , but must be relevant to the intention of the transferor at the time the transfer is made. The court must assess the reliability of the evidence and determine what weight it should be given , guarding against evidence that is self serving or tends to reflect a change in intention.

Control and Use of the Bank Account Funds

Evidence that the transferee controlled the funds does not necessarily mean that the transferee took a beneficial interest as aging parents may set up joint bank accounts for the sole purpose of having an adult child manage their funds for their own benefit.

Conversely the fact that a transferor controlled or 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 right of survivorship.

In Bergen v Bergen 2013 BCCA 492 the court of appeal emphasized “ the actual intention of the grantor is the governing consideration.”

Thus the onus of proof was on the joint bank holder to establish that the funds she received, either jointly or in her sole name, were a gift from the deceased.

Unger v Unger 2017 BCSC 1946 followed Pecore and held that transfers to adult children, including joint assets with a right of survivorship give rise to the presumption of resulting trust , which places the burden on the adult child alleging that the transfer was a gift.

Where the Defendant alleges that the intent of the transfer or is to grant a right of survivorship only, the gift is not the specific amount in the bank account as of the time of the transfer, but rather whatever the account balance is at the time of death.

A bank document that simply marks that an 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.

In Slade  Estate 2017 BCSC 2354 the court was critical that there was no supporting or additional evidence other than bank employees and lawyers told her that “a right of survivorship meant I would get the money in the account when she died”.

There was no specifics of who gave the advice and the advice was vague and there was no evidence of why a lawyer would be involved in setting up a bank account.

In Kyle Estate v Kyle 2017 BCCA 329 the appeal court upheld the trial court decision that the presumption of resulting trusts had not been rebutted, noting that the bank documents are not necessarily sufficient to rebut the presumption of resulting trust.

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. A signature card on the investment portfolio did not overcome the presumption because “ it was not sufficiently detailed to indicate the intention of the deceased upon her death”

Courts Must Scrutinize Claims Against Estates

Courts Must Scrutinize Claims Against Estates

Wharton v McMinigal 2014 BCCA 434 is authority for the legal proposition that claims against deceased persons estates must be approached by the courts with the most careful scrutiny and indeed at the outset with some suspicion.

The defendant was the executor of the estate of her late husband. They had lived in a common-law relationship for 22 years and then separated.

Title to the matrimonial home had been in joint tenancy, but several years after separation the deceased severed the joint tenancy without the plaintiff’s knowledge.

The plaintiff asserted that she and the deceased had an agreement between themselves not to sever their joint tenancy.

The court held that the plaintiff had not proven, on the balance of probabilities, that there was such an agreement between herself and the deceased not to sever the joint tenancy.

In fact, the court stated that as an owner of one half interest in the property, the defendant had a prima facie right to partition the property and have it sold. The court in fact did order that the estate be partitioned and the net proceeds divided equally.

In finding that claims against deceased persons must be approached with the most careful scrutiny and indeed at the outset with some suspicion, the court followed two decisions by previous BC Supreme Court judges, namely:

Miller v Miller (1987) 14 BCLR 42 at paragraph 51

Miller was followed and quoted with approval in Fraik v Pilon 2012 BC SC 528 at paragraph 2

Resulting Trust Applies to Joint Tenancy Survivorship

Bergen v Bergen 2013 BCCA 492 at paragraph 42 states that when a property is purchased by one party, but held in joint tenancy, there is a presumption that the transferor intended to retain the entire beneficial interest, including the right of survivorship, unless there is evidence to the contrary.

Either joint tenant in land is at liberty to sever the joint tenancy at any time, thus undermining the notion that as a matter of law, a joint tenant receives of full and perfect inter vivos gift of the survivorship.

Severance, which occurs automatically upon the destruction of the four unities, results that each owner becomes entitled to a distinct share in the land, rather than an undivided interest in the whole.

For example, a joint tenant may sever the joint tenancy, and thus the survivorship, by transferring the property to himself or herself and need not even notify the co-owner.

In Simcoff v Simcoff 2009 MBCA 80 , a case involving land, stated the fact that a complete a gift included a writer survivorship does not, prima facie prevent a donor from dealing with the retained interest, while alive. The right of survivorship is only to “what is left”. In the case of real property, nothing remains of the right of survivorship.

Bergen went on to state that it remains true that once a gift has been made of an interest in real property or any other type of property, the gift cannot be revoked whether the transfer retakes is a joint tenant or a tenant in common.

As stated in Fuller v . Fuller  2010 BCCA 421 the gift of a joint interest in real property is in inter vivos rather than a testamentary gift and cannot be retracted by the donor is a “complete and perfect” inter vivos gift. (Paragraph 53)

At the same time, in cases where the property was provided by the transferor, the transferee must still prove that a gift was intended i.e. he or she must rebut the presumption of resulting trust.

At paragraph 53 of the leading case on resulting trust Pecorev Pecore 2007 SCC 17 , the court stated, of course, the presumption of a resulting trust means that it will fall to the surviving joint account holder to prove that the transfer or intended to gift the right of survivorship to what it ever 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.

Transfer of Property Registered After Death Valid

Transfer of Property Registered After Death Valid

Chung estate v. Chan 1995 BCJ 2195 was a decision of the BC Court of Appeal that held that a transfer of real property from a deceased person to himself and another person as joint tenant, was valid despite the fact it was registered at the land title office after the deceased’s death.

This decision was subsequently followed in the Supreme Court of British Columbia in Plecas v Plecas 2015 BCSC 464 , which stated that the form A transfers were effective as against her, upon execution, and were intended to do so, and the transfers carried with them the right to apply for registration even after death.

In Plecas the plaintiff sought to set aside various transfers from the deceased to her son, that were registered after the death of the deceased.

The court allowed the validity of those transfers.

The Supreme Court of Canada had considered the effect of section 20 of the Land Title act RSBC in the decision Davidson V. Davidson 1946 SCR 115.

In the Davidson case, the defendant was the registered owner of the lands.

He executed and delivered a transfer of the lands. The transfer was neither registered no was an application made to register.

The plaintiff registered judgments against the registered title of the defendant.

The majority of the Supreme Court of Canada held that the instrument was bona fide and validly executed, and was entitled to priority over the judgment creditor under the circumstances.

The court followed the common law rule with respect to the rights of judgment creditors, that stated the execution creditor can only attach that interest which exists in the execution debtor. In Davidson the respondent had disposed of his entire interest before the registration of the judgment, and the judgment could not attached to the lands and questions even though the transfer was registered after death.

In Feinstein fee. Ashford 2005 BC SC 1379, the court considered section 20 of the Land Title act in the context of a joint tenancy.

A joint tenant executed, but did not register a form a transfer, which purported to sever the joint tenancy at Institute instead a tenancy in common.

The petitioner argued that the severance of the joint tenancy was not binding, as it failed to meet the common-law requirement of delivery.

The court rejected that argument, ruling instead that ”the application for reregistration that was executed by the respondent was effective as against himself on the date that it was signed”.

In other words, the application did indeed sever the joint tenancy on the date it was signed, even though it was not registered until after the respondent’s death .

In the decision Mordo v. Nitting 2006 BCSC 1761 the court found that the grantor had done everything necessary to create a valid trust by completing a form a transfer and declaration of trust.

The declaration of trust confirmed that although the executed for me was not registered, the grantor thereafter held legal title as trustee only. The documents were then left with the grantor’s solicitor.
The court found that section 20 of the Land Title act was engaged, rendering the transfer effective against the person making it, even before it was registered.

Watch Out For Phony Joint Tenancies

Watch Out For Phony Joint Tenancies

One of the problems with joint tenancy ownership is that while the registered title might reflect joint ownership, the true beneficial owner might be one of the registered owners are in fact another unregistered owner in trust– as such, watch out for phony joint tenancies.

For many years estate planners have advised their clients to transfer their assets into joint tenancy ownership with loved ones so they may inherit by right of survivorship and avoid paying legal and probate fees.

The rationale has been that the surviving joint owner, by right of survivorship automatically becomes sole owner of the entire property including the deceased’s share. Thus the asset does not fall into the deceased’s estate but instead passes to the surviving joint owner. As a result, legal costs and probate fees are avoided.

The thinking has been: No muss, no fuss and, what is more, no delays!

Better yet- no lawyers. (Wrong)

Indeed for many years, joint tenancy arrangements have been used by families and very close friends. Most often they are used for home ownership or for financial assets such as bank accounts and investment accounts. Indeed, other than a will, this type of arrangement is probably the commonest form of estate planning.

It is very important to understand, however, that such ownership can lead to hotly contested legal disputes. This is particularly the case where only one of the joint owners has contributed most or all of the funds to the investment account or to the purchase of the property.

Fortunately such disputes rarely arise in cases where both of the joint owners have made substantial contributions to the acquisition of the assets –for example in the case of joint ownership by spouses who have been long married.

A relatively common fact pattern, however, involves an elderly parent, let us suppose a mother, who transfers her home into joint tenancy with only one of her children. She may well think that she is being prudent in avoiding the payment of probate fees upon her death and believe that the one “favoured” child will do the right thing and share the home with the other siblings.

By the time this mother dies, however, the favoured child has convinced himself or herself that the other siblings have no claim to the home because mother intended to leave it for him or her alone- after all, “mom always loved him best”.

The legal remedy is called Resulting Trusts and there are several blogs about iit on this website.