Written by Krystin Kempton, Associate

Joint tenancy is a form of ownership by two or more parties. In general, full ownership of assets held jointly passes to the surviving joint owner by operation of the right of survivorship when one owner dies. For example, if married couple Bob and Mary have a joint bank account and Bob dies, Mary is now the sole owner of that bank account. However, the right of survivorship does not always apply and there may instead be a presumption of resulting trust. The determination of true joint tenancy is dependent on the relationship of the parties and the circumstances in which joint ownership is created. In Pecore v. Pecore, 2007 SCC 17, the Supreme Court of Canada confirmed that the presumption of resulting trust applies to a gratuitous transfer from a parent to an adult child, such as adding a child to a bank account without the child providing money or other consideration to the parent for that asset. It is presumed that the bank account was not intended to be gifted to the child – although legal title passes to the child, the beneficial owner is the parent alone. After the parent’s passing, the child is presumed to hold that asset in trust for the parent’s estate.  
The presumption of resulting trust places the onus on the adult child added as a joint owner to that asset to prove that it was in fact intended to be a gift. There are a number of factors courts will consider when determining the actual intention of the transferor and deciding whether the presumption of resulting trust has been rebutted. A non-exhaustive list of factors courts consider include evidence of the deceased’s intention at the time of the transfer, bank documents, control and use of the funds in the account, whether a power of attorney was granted and the tax treatment of joint accounts. Unless the child provides sufficient evidence to rebut the presumption on a balance of probabilities, the asset is treated as an estate asset and is distributed in accordance with the terms of the deceased’s Will or, when there is no Will, in accordance with sections 20-24 of the Wills, Estates and Succession Act, SBC 2009, c. 13 (“WESA”). If you wish to rebut a presumption of resulting trust, we recommend you seek legal advice.
Often an elderly parent will add a child to his or her bank account to help manage day to day finances. If the parent intends for that account to pass to that child on death and not in accordance with the terms of his or her Will or in accordance with sections 20-24 of WESA, it is important that the parent execute a deed of gift or provide clear intentions in writing that the account is intended to be a gift to ensure that the presumption of resulting trust does not affect that gift. If the child has been added for convenience only and the elderly parent wishes for the account to be shared with all of his or her children on death, this should also be clearly expressed.
If you are the personal representative of an estate of a person who added a child as a joint owner to an asset, you will need to make inquiries as to whether the deceased intended the asset to be a gift to the surviving joint tenant(s) and not for the benefit of the estate (i.e., were bank accounts intended to be gifted solely to one child or to be distributed equally among all of the deceased’s children pursuant to their last Will or in accordance with sections 20-24 of WESA?). The personal representative ought to review any documentation which would demonstrate the deceased’s intent. If the presumption of resulting trust applies, the accounts will need to be listed as assets in the application for a Grant of Probate for the estate of a deceased.
While the presumption of resulting trust applies to gratuitous transfers from a parent to an adult child, there is a presumption at law that the right of survivorship applies to joint assets between spouses and between a parent and minor children.

Written by Andrew Powell, Partner

What happens when a will promises that a specific asset goes to a beneficiary– but after the will-maker has died, it is discovered that the asset doesn’t exist? 

For items of personal property, this is a common occurrence.  For instance, a father may leave his watch to his son, but it is later discovered that he actually gave the watch to somebody else several years prior to his passing.  In those circumstances, the gift is said to have “adeemed”, and is simply void, presumably much to the irritation of the son.  The fact that the father, the will-maker, had made a decision to dispose of the property during his lifetime is deemed to be a revocation of the gift set out in his will. 

The doctrine of ademption applies when any specific gift, at the time of the death of a will-maker, no longer exists, has ceased to conform to the description of it in the will, or has been wholly or partially destroyed or otherwise disposed of. The doctrine applies regardless of the testator’s intentions in this matter: Wood Estate v. Arlotti-Wood [2004] BCCA 556.  Ademption has two potential outcomes, neither of which amount to pleasant news for a beneficiary.  First, as in the case with the father’s watch, if money or property has been spent or given away, then obviously there is nothing left to give to the beneficiary and the gift fails completely.  Second, even if the money or property has only been altered – provided it has been altered so much that it no longer meets its description in the will – then the gift may also have adeemed.  In the latter case whatever is left of the gift, in whatever form it is in, will form part of the residue of the deceased’s estate.  The beneficiary it was intended for may get nothing, other than the warm feeling that they were mentioned in a will.

Trouble, and disputes, can arise when a gift identified in the will has not been completely altered or destroyed, but has only changed somewhat.  For instance, a particular investment account may have been willed to a beneficiary, but in the time that passes between the will being written and the estate being administered, that investment account may have been diminished, added to, moved, or combined with other accounts. 

The Courts have found that, if funds can be traced, then the gift will not necessarily fail just because it no longer exists in the precise form it had when the will was written.  For instance, if a bank account has been closed, and the funds moved to another institution, the Court may overlook the fact that the particular asset described in the will (ie, the original bank account) no longer exists, because the intention of the testator was clearly to make a gift of the contents of that bank account, and those contents are still ascertainable and are substantially the same as the thing described. The same type of analysis can apply if a deceased person had described a certain asset which was later liquidated by the deceased – provided that the proceeds of that liquidation were kept distinct and separate from the rest of the deceased’s assets while the deceased was still alive. 

But, in cases where money has been mingled with other money, and those combined monies are drawn down by the Deceased during his or her lifetime, then there has been an “appropriation” of the whole amount without differentiation, and the co-mingled monies are all subject to ademption: Wood Estate  (supra); Re Stevens [1946] 4 D.L.R. 322 (NSSC). 

When disputes of this nature arise, it can be important to determine whether the gift in the will was “specific” (in which case, if the specific description no longer applies, the gift would fail), or “general” (for example, a gift of money regardless of its source, which would never fail provided there is enough money to cover it from somewhere in the estate).

Under section 59 of the Wills, Estates and Succession Act, in British Columbia it is possible to apply to rectify wills in some circumstances, including when the will fails to carry out the will-maker’s intentions.  Where there is the threat of ademption, it may be that this section can provide the will’s beneficiary with a remedy, providing it can be proven that the will-maker’s genuine intention to provide a gift to a beneficiary is being frustrated by an overly restrictive, technical, or outdated description of the asset.