Joint bank accounts with a right of survivorship are frequently used for convenience and estate planning. However, they can become contentious in estate disputes, particularly when the intentions behind the account setup are unclear. This article explores the legal principles governing such accounts, focusing on the presumption of resulting trust and how courts determine the intent of the account holder, with a particular emphasis on Canadian law as clarified in the case Pecore v. Pecore.
When funds are transferred into a joint account with a right of survivorship, without contribution from the joint holder, equity presumes that the transferor intended to retain beneficial ownership, thereby creating a resulting trust. This principle was affirmed in Pecore v. Pecore (2005 CanLII 31576 (ON CA), para 5). An exception to this presumption, known as the presumption of advancement, applies in certain relationships, such as between a parent and child, where a gift is presumed (para 6).
The presumptions of resulting trust and advancement are only applied when the court cannot ascertain the transferor’s actual intention from the evidence presented (para 9). In Pecore, the deceased, Hughes, added his daughter, Paula, as a joint holder on his investment accounts. Despite letters suggesting the transfers were for probate purposes, the trial judge found that Hughes intended to gift the investments to Paula. The Court of Appeal upheld this finding, noting that agreements about control and use of investments are not inconsistent with gifting (paras 38, 40).
To determine intent, courts consider various factors, including the amount and timing of the transfer, the transferor’s statements and conduct, the relationship between the parties, patterns of conduct, exclusion of obvious recipients, the prudence of the transfer, and other relevant circumstances (para 26). Joint ownership can be an immediate gift rather than a testamentary disposition (para 41). For instance, in Sawdon Estate, the court found a valid inter vivos gift where Arthur Sawdon added his sons to joint accounts, intending to bypass probate and provide access upon his death (*Sawdon Estate, 2012 ONSC 4042 (CanLII), paras 59, 61-66). Arthur’s lawyer advised him about joint accounts with survivorship rights, and he chose not to execute a declaration of trust (para 62).
Conversely, in Leclerc v. Rocheleau, the court found no gift where Louis Rocheleau added his daughter to a joint account funded by the sale of his home (*Leclerc v. Rocheleau, 2016 ONSC 6396 (CanLII), paras 24-50). Louis maintained control, declared the interest for taxes, and there was no documentation of donative intent. Nicole, the daughter, testified she didn’t accept a gift during Louis’ lifetime, and there was no evidence of Louis’ capacity to gift his wife’s share (paras 24-50).
These cases illustrate the importance of clear evidence of intent when establishing joint accounts with survivorship rights. Understanding the presumptions of resulting trust and how courts assess intent is crucial for anyone involved in estate planning or disputes. Legal advice should be sought to navigate these complex issues effectively.