Legal Issues Surrounding the Creation of Joint Accounts – PART III
For our last blog before the Holiday Season, Ian and I wanted to mention the final four legal considerations to keep in mind when dealing with joint accounts.
Firstly, and in particular, mental capacity issues always need to be considered at the time that the joint account is established.
In addition, Powers of Attorney are often the source document behind the establishment of a joint account and the use and abuse of that document at the time that the joint account is established needs to always be considered. Another high-level abuse comes through the use of Internet banking, where one of the family members obtains the password of the parent and then simply proceeds to do his or her banking at will.
Thirdly, there is always the difficulty of probate fees in Ontario in that, if the joint account is to flow into the hands of an individual or an estate, probate fees may or may not be payable. Typically, the joint account will be established and then it flows into the hands of the survivor who then distributes it in accordance with the Will. Technically, it could be argued that the joint account proceeds would necessarily attract probate fees.
And finally, there is the whole issue as to how the assets flow at death. The question always arises in respect of this issue and in regard to whether or not the asset flows to the joint account holder personally and without any sharing, or is it to be distributed in accordance with the Will. Therefore the Will document itself can be particularly relevant.
We hope that mention of some of the legal issues that attach to the creation of a joint account has been helpful. We wish you and your families a wonderful Holiday Season!