Legal Issues Surrounding the Creation of Joint Accounts – PART II
Carrying on from our blog yesterday, joint accounts raise a number of legal considerations. The following are four more to keep in mind.
When dealing with joint accounts, there is also a presumption of resulting trust that relates to statute law that needs to be considered. In Ontario, pursuant to the provisions of the Family Law Act, it is presumed that a joint account established by husband and wife is jointly and beneficially held essentially on a 50/50 basis.
Furthermore, there is a presumption of advancement that needs to be considered in the context of joint account because as between husband and wife, it is presumed that the account is jointly held. As between parent and child, it is presumed that the account was established on the basis that, on death, the funds would essentially advance to the child. Again, depending on the facts, this can be argued at law.
Constructive trust claims need to be considered as well, in that if the money held in a joint account was established by virtue of the joint efforts of the account holders, then it could be argued that it is equally split. However, if a person who is not a joint account holder actually created the wealth (i.e. another family member who worked on the farm for many years and essentially created the wealth that went into the account), a constructive trust claim could be made.
Lastly for today, the concept of secret trusts should also be considered in the context of a joint accounts, in that secret arrangements may have been established with regard to how those funds are to pass on death. There is also a legal concept of semi-secret trusts that needs to be considered, as this is often referred to, in part, in Wills.
We’ll discuss the last four legal issues to consider in creating joint accounts tomorrow.
All the best, Suzana and Ian.