The right of survivorship in a joint bank account is a crucial aspect of estate planning for many individuals. It allows for the automatic transfer of ownership of the account balance to the surviving account holder upon the death of the other.
The question of whether this right can be challenged arises in certain circ*mstances, particularly when there is evidence of undue influence, fraud, or misrepresentation in the creation of the account. Understanding the circ*mstances under which the right of survivorship in a bank account can be challenged is vital for anyone who has or is considering opening a joint bank account.
Contesting a joint bank account
According to British Columbia law, the right of survivorship in a bank account can be challenged under certain circ*mstances. The right of survivorship is a provision in a joint bank account that allows the surviving account holder to automatically inherit the account balance upon the death of the other account holder.
However, the right of survivorship in a joint bank account can be challenged if there is evidence of undue influence, fraud, or misrepresentation by one of the account holders in the creation of the account. Additionally, if the deceased account holder had a valid will that disposes of their interest in the joint bank account differently, the right of survivorship may be challenged.
In such cases, the court may require the surviving account holder to provide proof that the joint account was created voluntarily and without coercion, and that the account was intended to be held on a right of survivorship basis. If the court finds that the right of survivorship was established improperly, it may order that the account be distributed according to the deceased account holder’s will or in accordance with the laws of intestacy.
It is important to note that each case of a challenged right of survivorship in a joint bank account will be evaluated on its own facts and circ*mstances, and the outcome may vary depending on the specific facts and evidence presented to the court.
Joint Bank Accounts and the Presumption of Resulting Trust
Where a parent makes a gratuitous transfer to an adult child by placing funds in a jointly-held bank account, there is no presumption of advancement and in fact, in modern social conditions the reverse is true: there is a presumption of a resulting trust where a parent makes a gratuitous transfer to an adult child. The presumption of a resulting trustmeans that it falls to the surviving joint account holder to prove that the deceased transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Otherwise, the assets will be treated as part of the deceased transferor’s estate to be distributed according to the will.
How to analyze disputed transfers or deposits
In situations involving a jointly-held bank account of a parent and an adult child, the burden of proof rests on the surviving joint account holder (i.e., the adult child) to rebut the presumption of resulting trust. The BC Court of Appeal in Winstanley v. Winstanley, 2017 BCCA 265 emphasized that the correct legal analysis requires the judge to separately consider the circ*mstances of each gratuitous deposit and transfer to determine whether it was authorized by the deceased and what the deceased intended at the time each transfer or deposit was made.
Circ*mstances under which joint account was opened
The dispute in Winstanley arose between two brothers over the division of their mother’s estate, and in particular, involved disputed transfers to a joint bank account held by the mother and the younger brother. The older brother, Andrew, was 53 by the time of the trial and the younger brother, Carl, was 51. Andrew and Carl were the only children of Jessie and Harold Winstanley. Jessie and Harold married in 1961 and separated in 1996. Andrew became a chartered accountant, moved to the US, and was not close with his parents. Carl left university without completing his degree and returned home suffering from depression.In 1994, he moved into a basem*nt suite in his mother’s home. When Jessie and Harold separated in 1996, they agreed that the matrimonial home would be transferred to Jessie and Carl in joint tenancy.Also in 1996, Jessie and Carl opened a joint bank account (“the Joint Account”) from which they paid household bills and to which they both made regular deposits.
Death of one of the account holders
Harold died on June 7, 2011.Under the terms of his will, Harold left his entire estate to Jessie. His estate totalled $244,087. All the proceeds of his estate were deposited to the Joint Account.Two months after Harold’s death, Jessie suffered a stroke and was hospitalized. She died on October 4, 2011. By the terms of her will, Jessie left the whole residue of her estate to Andrew.Jessie’s will also contained aprovisoacknowledging that she held assets jointly with Carl and that those assets wouldnotform part of her estate. It was reasonably clear that the jointly-held assets Jessie referred to in her will were the home she held in joint tenancy with Carl (to which there is no challenge at trial or on appeal) and the Joint Account. The problem, however, was that after Jessie became ill and following her death,Carl made a number of deposits of Jessie’s money into the Joint Account, and he made several transfers from the Joint Account to his own personal account. Carl said that Jessie authorized him to do so. Andrew disputed Carl’s authority to benefit himself in this manner. After Jessie’s death, andby agreement, Carl paid Andrew $204,200 from the Joint Account as “an advance on his inheritance”.
Are assets in the joint account impressed with a resulting trust?
Andrew sued on his own behalf as the residual beneficiary and also as co-executor of Jessie’s estate. Andrew’s position was quite simple — he asserted that both parents’ estates should rightfully pass to him under the provisions of their wills. He pled that he ought to have received the whole of Harold’s estate because it properly formed part of the residue of Jessie’s estate and should not have been deposited into the Joint Account. He also claimed all of Jessie’sliquid assets which were improperly depleted by wrongful transfers.Andrew claimed that Carl admitted he had improperly taken about $40,000 and promised to pay Andrew $40,000 as recompense. In addition to that amount, Andrew claimed that he was entitled to approximately $75,000 from his mother’s estate. The trial judge dismissed Andrew’s action, with the exception of his claim to $40,000.
Court of Appeal disagrees with trial judge’s analysis
Andrew appealed, arguing that the trial judge failed to properly apply the presumptions of resulting trust and undue influence to the transfers in dispute. The Court of Appeal allowed Andrew’s appeal and reluctantly ordered a new trial. There was some evidence from which the judge could have concluded Carl had authority to deposit to, and withdraw from, the Joint Account, but the Court of Appealwas not in a position to make the credibility and factual findings necessary to determine whether Carl had rebutted the presumptions of resulting trust and/or undue influence. Carl’s cross appeal regarding the $40,000 payment was dismissed, there being no basis upon which the appellate court would interfere with that aspect of the trial judge’s order.
Resulting trust and jointly-held accounts: The correct legal analysis
The Court of Appeal held that per the authority of Pecore v. Pecore, 2007 SCC 17, the correct legal analysis in the present case required the judge to first instruct himself that there is no presumption of advancement as between a parent and an adult child and to apply a presumption of resulting trust in regard to any gratuitous transfers of the mother’s property to her adult son. The burden of proof would then rest on the son to rebut the presumption with respect to each transfer.
The seven impugned transfers were sufficiently distinct that the judge was required to do more than characterize them in a group type manner. The correct legal analysis required the judge to separately consider the circ*mstances of each transaction to determine whether Carl had Jessie’s authority todeposither funds into the Joint Account and/or transfer her funds to his own personal account. This inquiry was necessary because any funds transferred into the Joint Account without Jessie’s authority would be impressed with a resulting trust. The only evidence adduced at trial regarding Jessie’s authority for these transactions was given by Carl. The trial judge did not make any express findings on Carl’s credibility or whether Carl’s evidence regarding Jessie’s statements was admissible for the truth of its contents.
Further, the trial judge did not consider Jessie’s intention regarding Harold’s estate. Jessie was certainly entitled to use or gift the money from Harold’s estate in any way she saw fit. However, the trial judge made no findings as to what Jessie’s true intentions were and whether she authorized Carl to deposit the funds from Harold’s estate into the Joint Account so that they could be divided equally between Andrew and Carl.Also problematic was that the trial judge did not determine whether the presumption of undue influenceset out inGeffen v. Goodman Estate, [1991] 2 S.C.R. 353, was applicable to the relationship between Jessie and Carl or make any finding that Carl had rebutted it.
Bottom line on the presumption of resulting trust and joint bank accounts
An adult child who receives a gratuitous transfer from a parent is presumed to hold the transferred property on “resulting trust” for the parent. Where the property is a joint bank account, the onus is on the surviving joint account holder rebut the presumption of resulting trust by proving that the deceased transferor intended to gift the right of survivorship to whatever assets are left in the account to the survivor. Where multiple transactions are questioned, the correct legal analysis requires separate consideration of the circ*mstances of each transaction to determine authority todepositor withdraw funds and the deceased’s true intentions.
