Joint Bank Accounts and the Presumption of Resulting Trust in Estates

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.