Joint Tenancy and Estate planning in British Columbia can be quite complicated, but the qualified lawyers at MacLean Law are available to outline some of the most important principles that apply and provide the advice you need to ensure that your assets are divided in the manner you intend.
WHO GETS THE ASSETS IN A JOINT BANK ACCOUNT?
Joint tenancy is a type of ownership in property that involves two or more persons. The individuals have joint ownership, or equal rights to the property; if one of the joint tenants dies, the remainder of the property automatically transfers to the surviving joint tenant(s), and not to the estate of the deceased. This is referred to as the right of survivorship.
Another type of joint ownership arrangement is tenancy in common, in which the deceased’s share of the property becomes part of that person’s estate. During the estate planning process, it is crucial that all parties involved understand the differences between joint tenancy and tenancy in common.
Joint tenancy in Canada is a common dispute and has been litigated in courts all the way up to the Supreme Court of Canada. When a parent places his or her assets in a joint bank account with his or her adult child, the question becomes whether the parent intended to have the funds in the joint account go to that child upon his or her death, or to have the adult child hold the funds in trust for the benefit of the parent’s estate to be distributed according to the terms of his or her Will.
JOINT TENANCY REBUTTABLE PRESUMPTIONS
Generally, there are two types of rebuttable presumptions (an assumption made by a court that is taken to be a fact unless it is contested and proven otherwise) that apply to these cases:
- Presumption of resulting trust – where the holder of legal title does not hold the property personally but, rather, holds the property as a trustee for the benefit of the entire Estate.
- Presumption of advancement – suggests that the property transferred from parent to child, or spouse-to-spouse, is a gift to that person in its entirety.
These principals came from the 2007 companion decisions of the Supreme Court of Canada in Pecore v. Pecore, 2007 SCC 17 and Madsen Estate v. Saylor, 2007 SCC 18:
The presumption of advancement:
- applies equally to fathers and mothers;
is limited only to transfers between mother and fathers and to their children that are minors; and therefore
does not apply to adult children or even to dependent adult children;
The presumption of resulting trust:
- is the general rule for gratuitous transfers;
- the onus is placed on the transferee (adult child) to demonstrate that a gift was intended.
The civil standard of proof (the balance of probabilities) is the standard that will be used to rebut the two presumptions.
The types of evidence that should be considered in ascertaining a transferor’s intent will depend on the facts of each case. This evidence needs to be relevant to the transferor’s intention at the time of transfer.
Such evidence may include:
- wording of bank account documents;
- control and use of funds in the account;
- granting of a power of attorney;
- tax treatment of the interest from a joint bank account.
ENSURE INTENTIONS OF JOINT TENANCY
If you are an adult child who holds a joint bank account with your parent, it does not mean that you will automatically be entitled to the funds in the account upon his or her death (the right of survivorship). In most cases, the presumption of resulting trust will apply, and you will have to prove that it was your parent’s intent that the property be a gift.
If you are a parent that is considering placing assets in joint tenancy with adult children, please consider the following:
- Is your intent to gift the property to your child or do you wish that the child take the interest in the property in trust for the benefit of your estate?
- If it is a gift, ensure that your intent is clear, i.e. a deed of gift signed by the parent.
- If it is a trust, contemplate the terms of the trust and have your adult child acknowledge the terms in writing.
We recommend that you obtain legal advice from an Estate lawyer to determine your position with respect to entitlement to the assets involving joint ownership.
Turning your mind to the issues of joint tenancy in Canada in advance will ensure your intentions are understood, and your assets are disposed of in precisely the manner in which you intended. Contact us for more information today.