Estate Law – Joint Tenancy and Resulting Trusts
It is usual for spouses to hold the matrimonial home and some of their bank accounts in joint tenancy. When spouses hold accounts or property in joint tenancy, there is a presumption at law that they intend the survivor to have title to the property. The presumption is called a presumption of advancement which presumes that the spouses intended the survivor to take title to the property and strong evidence would be necessary to rebut the presumption and show a contrary intention.
It is often in the case that an elderly parent will place a bank account or property in which the parent resides in joint tenancy with an adult child. This is to permit the adult child to assist the parent in writing cheques and also to avoid probate fees that would be payable on death. Based on the holding of the bank account or a property in joint tenancy, at law there is a right of survivorship which exists from the time of creation of the joint tenancy. The joint tenancy is usually created by the elderly parent who is the owner of the funds placed into the joint account or the owner of the property placed in the joint tenancy.
Problems often arise when a bank account or a piece of property is held by an elderly parent and one child in trust where there are other children in the family and where the Will provides for a gift to each of the children. Often the Will is silent as to the joint tenancy and a question arises as to whether it was the intention of the parent to make a gift of the bank account and/or property held in joint tenancy to the surviving child, or whether the real intent was to have the child hold the bank account or property in joint tenancy merely as a convenience or to avoid probate fees, with the real intent being that the child inheriting by joint tenancy was to hold the property in trust for the estate of the deceased parent and thereby distribute the estate according to the wishes of the parent as expressed in his or her Will.
In the Pecore and Madsen Estate cases decided by the Supreme Court of Canada in 2007, the Court held that a judge is to look at the relationship between the parties holding in joint tenancy and then apply either a presumption of resulting trust or a presumption of the advancement after weighing all of the evidence and the circumstances. The standard of proof on the evidence is on the balance of probabilities, that is, more than 50%.
The Courts have held that in looking behind the joint tenancy, the Court will endeavour to determine what was the true intent of the parties in creating the joint tenancy. The Court will look at not only documents which created the joint tenancy, but also a statement made by the transferor (usually the parent) or anyone else after the creation of the joint tenancy or joint account, and the relationship of the transferor parent and the transferee (adult child) both before and after the transfer.
In most circumstances where property or an account are left in joint tenancy with one child, where there are other children of the parent, the Court will presume that the surviving child into whose name title would go at law holds the property on a resulting trust unless that child can rebut the presumption and show that parent intended that child to take the property by right of survivorship to the exclusion of other children.
In Fuller v. Harper (2010), the B.C. Court of Appeal has stated that clear evidence of intent at the time of transfer will meet the burden of rebutting the presumption of resulting trust when there are issues of joint tenancy and survivor rights, in the absence of clear monetary consideration for the transfer.
A parent who wishes to use the creation of a joint tenancy with a bank account or with property to facilitate the writing of cheques or to avoid probate fees should document their true intention in creating the joint tenancy, that is, be specific about whether they intend the joint tenant to take title to the joint account or the jointly held property solely in the name of the survivor, or whether the joint tenancy is being created for other purposes with the intent that it would be held in trust for other children of the parent.