Monday, May 14, 2007

Joint Account Disputes: The Relevance of Use and Control

On May 3, 2007, the Supreme Court of Canada released reasons for judgment in two disputed cases about joint accounts. The issue the court addressed in each case was whether a surviving joint account owner was entitled to keep the funds in the account on the death of the other joint account owner. In each case the deceased had contributed all of the funds to the accounts. In one case, the court held that the surviving joint account owner was entitled to keep the funds. In the other, the survivor had to return the funds to the deceased’s estate.

This is my sixth post in my series on Pecore v. Pecore, 2007 SCC 17, and Madsen Estate v. Saylor, 2007 SCC 18. In this post, I will summarize Mr. Justice Rothstein’s discussion in Pecore of the relevance of the fact that the deceased’s joint account owner had used and exercised control over the account during his lifetime. In each of these cases, a father transferred funds into joint accounts with his daughter. For convenience, I will refer to the contributor as the father, and the surviving joint account owner as the daughter, but the same principles apply to other relationships.

Mr. Justice Rothstein said that the court may consider whether the father used and controlled the joint account. But, he wrote, such evidence may be of marginal assistance.

He gave three reasons. First, the fact that the father continued to exercise control may reflect the dynamics of the relationship, rather than whether the father intended to make a gift to the daughter. On the other hand, an aging father might transfer funds into a joint account to allow the daughter to manage the funds for him without intending to make a gift.

Secondly, the daughter may leave funds in the account so that the father’s needs are met even if she is entitled to withdraw funds.

Thirdly, the father may intend to give the daughter the right-of-survivorship at the time of the transfer, and still use and control the funds during his lifetime.

In my seventh post in this series, I will discuss the relevance of how the parties have treated the joint accounts for tax purposes.

You can link to one of my previous posts in this series as follows:

In my first post, I summarized the facts of these cases.
In my second post, I wrote about the presumptions of resulting trusts and of advancement.
In my third post, I wrote about how the Court dealt with the issue of whether a gift of a right-of-survivorship is testamentary, requiring compliance with wills legislation.
In my fourth post, I wrote about the Supreme Court of Canada has relaxed the rule against evidence of statement and acts after a transfer has occurred.
In my fifth post, I wrote about the joint account documents.

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