Joint Account Documents and Disputed Joint Accounts

A father contributes the funds into a joint bank account with his daughter. They sign a joint account agreement with the bank that says that on the death of one joint account owner, the survivor is entitled to withdraw the balance. The father dies. The daughter claims the funds, but either the father’s executor, or the beneficiary of his will claim the daughter holds the funds in trust for the father’s estate. Should the court consider the joint account agreement when deciding who gets the funds?

This is one of the questions the Supreme Court of Canada considered in two recent decisions, and this question is my topic in my fifth in a series of posts on the decisions in Pecore v. Pecore, 2007 SCC 17, and Madsen Estate v. Saylor, 2007 SCC 18.

As I have previously written, in earlier decisions the Supreme Court of Canada has held that the joint account agreement with a bank sets out the rights and obligations between the account holders on the one hand, and the bank on the other. The joint account agreement does not set out the rights and obligations to funds as between the estate of a deceased joint account owner, and the surviving joint account owner.

In Pecore, Mr. Justice Rothstein said that in some circumstances the joint account agreement may provide evidence of whether the person who made the contribution intended for the joint account owner to keep the balance in the account on the contributor’s death. He wrote at paragraph 61,

While I agree that bank documents do not necessarily set out equitable interests in joint accounts, banking documents in modern times may be detailed enough that they provide strong evidence of the intentions of the transferor regarding how the balance in the account should be treated on his or her death: see B. Ziff, Principles of Property Law (4th ed. 2006), at p. 332. Therefore, if there is anything in the bank documents that specifically suggests the transferor’s intent regarding the beneficial interest in the account, I do not think that courts should be barred from considering it. Indeed, the clearer the evidence in the bank documents in question, the more weight that evidence should carry.

It would be difficult to quarrel with the point that the court may consider documents the parties signed when the court tries to find out whether the person contributing the funds intended to make a gift.

On the other hand, in practice, I question how helpful the banking documents will be, or whether the courts should give the joint account agreement much weight. I don’t think I have seen joint account agreements that make a distinction between title to the accounts, and the beneficial interest (the right to the use and enjoyment) in the accounts. I think in practice the bank documents generally say that the survivor is entitled to deal with the account, and withdraw the funds. This does not shed any light on whether the now deceased person who contributed the funds intended the survivor to keep the funds, or for the funds to be distributed according to the deceased’s will.

If the joint account agreement did provide more detail to address this issue, I question whether many people would read and understand the detail. Lawyers are not usually involved in setting up joint accounts, even when the joint accounts involve substantial amounts. I have never been asked to review a joint account agreement before it was signed. In most cases, the contributor is setting up a joint account with a close relative, whom he or she completely trusts. The joint account owners don’t take a great deal of time to read the fine print.

In my next post in this series, I will write about the Supreme Court of Canada’s discussion of the relevance of whether the contributor continued to control the joint account during his lifetime.

If you are interested in reading my previous posts on these two cases, I summarized the facts of these cases in my first post. I discussed the presumption of advancement in my second 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 third post. 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.