Joint accounts between parents and children in British Columbia provide lots of work for estate litigation lawyers, and lots of fodder for my blog. A recent case in point is the British Columbia Court of Appeal decision in Doucette v. McInnes, 2009 BCCA 393.
When she died in Victoria, B.C. on April 29, 2004, Mildred Lucy Doucette left surviving her four adult children: Diane McInnes, Louie Doucette, Joslin Clarke and Wayne Doucette. She owned her own home, which was worth about $240,000 at her death, but later increased in value to about $420,000, and a bank account of about $21,000. She also held joint accounts with her daughter Diane McInnes with about $230,000; a joint account with Louie Doucette, worth about $44,000; and a joint account with Joslin Clarke with $150,000.
When Mildred Doucette had made her will in October, 2000, she was estranged from Wayne Doucette and Joslin Clarke. She appointed Diane McInnes and Louie Doucette as executors. She left $5,000 to each of Wayne Doucette and Joslin Clarke. She left her house to Louie Doucette, and the residue to Diane McInnes. She later reconciled with Joslin Clarke, but not with Wayne Doucette.
Mildred Doucette also had a Registered Retirement Income Fund with $55,000. She designated Diane McInnes as the beneficiary.
Wayne Doucette brought a claim under the Wills Variation Act to vary his mother’s will on the grounds that she had not made adequate provision for him. There were two main issues at trial. First, were the surviving joint account holders entitled to the funds, or did they hold them as trustees for their mother’s estate? Second, did Mildred Doucette make adequate provision for Wayne Doucette, or should the will be varied?
When a parent contributes the funds to a joint account with an adult child in British Columbia, the law presumes that the parent did not intend a gift, but that the child holds his or her interest in trust for the parent or the parent’s estate. But this presumption may be rebutted by evidence that the parent intended a gift, in which case on the parent’s death, the child may keep the funds in the account.
An interesting fact in this case is that for most of these accounts Mildred Doucette did not tell her children that she opened the joint accounts with them. She got them to sign account cards without telling them what they were signing. She did not provide the bank with the children’s addresses for the accounts, and all statements went only to her.
Mildred Doucette treated one joint account differently. Diane McInnes knew she was on a joint chequing account with her mother to assist her, and she acknowledged that she held the chequing account for her mother’s estate.
Diane McInnes also found out about the joint account with her sister Joslin Clarke, when she went with her mother to the bank when her mother was sick with cancer, a few weeks before she died. Mildred Doucette wanted to take $50,000 out of the joint investment with Joslin Clarke, and put it into an account for Louie Doucette. Mildred Doucette said that she wanted to transfer the funds to assist Louie Doucette for the time he took off from his business to be with her. Because the investment with Joslin Clarke was not redeemable, she was unable to move the funds.
At trial Mr. Justice Metzger applied the presumption of resulting trust, and held that all of the joint accounts belonged to the estate. He found that there was insufficient evidence that Mildred Doucette intended to make gifts of the funds in the joint account. His decision is reported at 2007 BCSC 1021.
The trial judge varied the will to provide 35% of the estate (including the joint accounts) to Louie Doucette, 25% to each of Diane McInnes and Joslin Clarke, and 15% to Wayne Doucette. In varying the will in favour of Wayne Doucette and Joslin Clarke, he found that Mildred Doucette had not met her moral obligations to them. The estrangement was to a large extent her fault.
On appeal, the British Columbia Court of Appeal changed the decision to allow each child to keep the funds held jointly with that child. A key factor in the decision was the fact that Mildred Doucette kept the joint accounts secret from the children. That being the case, Madam Justice Ryan in the Court of Appeal reasoned, Mildred Doucette did not open the joint accounts (other than the chequing account) for the purpose of allowing her children to assist her with her investments. If they did not know about them, they could not assist her. This contrasts with other cases, where parents open joint accounts with children for convenience so that the children can do the banking, rather than for the purpose of making gifts to their children.
Madam Justice Ryan also considered the evidence that Mildred Doucette tried to take $50,000 out of one account for Louie Doucette, in order to make a gift to him. This was an indication that when Mildred put funds into a joint account with a child, she intended to benefit the child.
After deciding that the joint accounts (other than the chequing account) were not estate assets, the Court of Appeal varied the will to provide Louie Doucette with 70% of the estate (consisting primarily of the house and $23,000) and Wayne Doucette with 30%. In arriving at these amounts, the Court of Appeal took into consideration the amounts each child received from the joint accounts and from the Registered Retirement Income Fund. Although Diane McInnes and Joslin Clarke will not benefit from the assets in the estate, they will keep the funds in the joint accounts each held with her mother.