Toronto Estate Lawyer : Hull & Hull Law Firm : Trust Mediation and Succession Planning : Serving Ontario, Ottawa, Mississauga, Hamilton

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Carrying on from our blog yesterday, joint accounts raise a number of legal considerations. The following are four more to keep in mind.

When dealing with joint accounts, there is also a presumption of resulting trust that relates to statute law that needs to be considered. In Ontario, pursuant to the provisions of the Family Law Act, it is presumed that a joint account established by husband and wife is jointly and beneficially held essentially on a 50/50 basis.

Furthermore, there is a presumption of advancement that needs to be considered in the context of joint account because as between husband and wife, it is presumed that the account is jointly held. As between parent and child, it is presumed that the account was established on the basis that, on death, the funds would essentially advance to the child. Again, depending on the facts, this can be argued at law.

Constructive trust claims need to be considered as well, in that if the money held in a joint account was established by virtue of the joint efforts of the account holders, then it could be argued that it is equally split. However, if a person who is not a joint account holder actually created the wealth (i.e. another family member who worked on the farm for many years and essentially created the wealth that went into the account), a constructive trust claim could be made.

Lastly for today, the concept of secret trusts should also be considered in the context of a joint accounts, in that secret arrangements may have been established with regard to how those funds are to pass on death. There is also a legal concept of semi-secret trusts that needs to be considered, as this is often referred to, in part, in Wills.

We’ll discuss the last four legal issues to consider in creating joint accounts tomorrow.

All the best, Suzana and Ian.

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Joint accounts tend to be a common estate planning technique used by and recommended to clients by many allied professionals. Recently, in dealing with a litigious joint accounts matter, Ian and I considered some of the legal issues surrounding the creation of such accounts. We came up with a preliminary list of twelve things that we think should be kept in mind in establishing joint accounts.

Firstly, a joint account can be viewed as a gift as between the parties and this is a legal determination that needs to be made. The onus with respect to proving a gift is on the recipient of the gift after death to show that it was legitimate. There is a presumption at law that the gift is not valid and this must be overcome after death.

Secondly, the onus with regard to gifting needs to be considered in the context of a joint account as a gift given during one’s lifetime needs to be proven by the recipient of the gift and a gift after lifetime, given through a testamentary gifting process such as a Will, needs to be proven by the person that received the gift. There is no presumption that it was obtained by virtue of undue influence.

Thirdly, the presumption of undue influence is a legal concept that applies to joint accounts in particular, as it is presumed that when someone receives a joint account, at law, it can strongly be argued that the recipient of the gift must overcome any factual hurdles that indicate that the gift was received as a result of undue influence as between the two joint account holders.

Fourthly, and lastly for today, there is a presumption of resulting trust and the case law generally states that where someone holds a joint account, at law, the person who put the money into the account is the legal and beneficial owner of all of the money. Again, this presumption of law can be overcome by virtue of the facts and circumstances of the matter, and it may be that it was decided at the time of the account being established that it was to be split jointly.

We’ll discuss the next four legal issues to consider in creating joint accounts tomorrow.

All the best, Suzana and Ian.