As a general rule when people own assets or property on joint account or joint tenancy there is a right of survivorship. So for example, if Frank and Peter have a joint bank account and Frank dies, then Peter is entitled to all that money by right of survivorship. Two recent Supreme Court of Canada decisions have underscored the need to carefully document a person’s intentions with respect to jointly held assets.
As a result of these recent decisions two lawyers, Barry Fish and Les Kotzer, created a Joint Asset Planning Kit, which purports to “… eliminate any ambiguities involving joint accounts.” These are the same two lawyers who authored the book The Family War – Winning The Inheritance Battle, which describes legal battles that happen to families squabbling over inheritances. Information about the Joint Asset Planning Kit can be found at www.jointasset.com.
If everyone used this kit would it resolve all estate disputes regarding assets held in Joint Tenancy?
Jordan Atin, an estate litigator with Hull & Hull LLP, chair of the Ontario Bar Association Estates Section, and a member of the B’nai Brith Estates and Trusts Group – Lawyers Division, reviewed the kit.
Atin said: “The kit may end disputes over joint assets, but, sadly, there are always other things for siblings to fight over.”
Kotzer said: “Court cases often occur when siblings discover that one child was made a joint account holder by a parent. When the parent dies, the child, as the remaining joint tenant, claims the money by right of survivorship. When there is enough evidence for the court to clearly show what the parent wanted to occur with the money in the joint account, the judge’s decision is easy. It gets complicated when the evidence is not so clear. Historically, there have been two presumptions upon which the courts relied in these circumstances.”
A presumption is a theory used as a starting point to analyze the evidence. It is up to the litigant who disagrees with the presumption to provide enough evidence to disprove it. Some courts relied on the Presumption of Advancement, which is based on the idea that people give gifts to their children. So if Dad put money into a joint account with his son Fred, then the court presumes that Dad intended Fred to keep the money after Dad died. Other courts relied on the Presumption of Resulting Trust, which stems from the idea that people make bargains – they do not give things away for free. These judges ruled that if Dad put money into a joint account with his son Fred, then Dad really intended for Fred to hold that money in trust for Dad’s estate.
In Pecore v. Pecore and Madsen Estate v. Saylor the Supreme Court of Canada clarified the law. The court explained that the intention of the deceased is the determining factor – Presumptions are only guides. The court also explained that the Presumption Of Advancement only applies to minor children because this presumption was based on the idea that minor children needed support from their parents. Accordingly, adult children who normally do not need support cannot rely on the Presumption of Advancement. The Supreme Court adopted Justice Heeney’s view in the McLear case and stated, “It is common nowadays for aging parents to transfer their assets into joint accounts with their adult children in order to have that child assist them in managing their financial affairs. There should, therefore, be a rebuttable presumption that the adult child is holding the property in trust for the aging parent to facilitate the free and efficient management of that parent’s affairs.”
One thing is very clear – ambiguity and failure to definitively document the testator’s intention opens the door to estate litigation.
Nothing can replace careful documentation of the deceased’s intention by the lawyer assisting in the client’s financial planning.
We live in a very litigious world where people of good faith often disagree. Too often the disputes cannot be resolved and end up in court. This is especially so when family members are at odds with one another and receive mixed signals from parents about their intentions regarding the estate.