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Joint Bank Accounts: Intention is Everything

The idea of a joint bank account seems simple enough. Two people own assets in a joint account. When one of them dies, the survivor automatically gets ownership of the assets. Straightforward, right?

Unfortunately, not in every case. For example, in a very common situation – where an aging parent creates a joint account with an adult child – courts have looked closely at the intention of the parent in creating the joint account. Was it for convenience primarily, or was it intended as a gift to the surviving adult child? Did the parent understand the consequences of setting up a joint account?

Such arrangements have been the source of much litigation in Canada, and the Supreme Court of Canada has been quite clear: unless the survivorship intention in setting up the accounts is clear, courts will presume that joint account assets are held by an adult child on a resulting trust for the parent’s estate, and distributed according to the parent’s will.

For parents who are considering a joint account arrangement with an adult child – and intend the adult child to inherit the assets through survivorship – they may want to take some steps to ensure that this intention is clear. This includes:

Here is a good summary of court rulings on this matter: http://www.lerners.ca/lernx/joint-accounts-is-the-surviving-owner-really-entitled-to-the-money/. And for an overview of some of the risks associated with joint accounts, this article outlines some factors to consider: https://nelligan.ca/article/joint-bank-accounts-are-they-a-good-idea/.

While joint accounts can serve many useful purposes, they should be created carefully, with advance thought and sound legal advice.

Thank you for reading … Have a great day.
Suzana Popovic-Montag