Jointly Owned Property Challenged in Court
Do you expect to inherit a joint bank account? Then you’ll want to know what happened to Wendy.
Wendy needed to a lawyer to fight for a joint account she held with Larry. When Larry died, Wendy thought she would inherit the $64,000 in their joint account. She was shocked to learn a court can decide “who keeps all the money.”
Larry had a will which left everything to his brother, Steven. Steven was desperate for the money in the joint bank account. He hired a lawyer to sue Wendy, claiming the account belonged to the estate.
Steven also asked the court to compel Wendy to provide an accounting. Steven claimed Larry got a severance cheque of over $200,000 from his job which he put into the joint account. Now there was much less left. Steven demanded Wendy repay what she had taken.
Did Steven have any right to the money?
Steven told his lawyer, “My brother, Larry, was cheap. He would never have given Wendy a gift of a bank account.”
Wendy said the bank records specified she had survivorship rights. She claimed Larry wanted her to inherit the bank account. Larry told her, “My brother will make sure you never get a penny. That’s why I am making you joint on the bank account. The bank account will not be part of my estate.”
Why surviving joint owners may not inherit
Steven claimed Wendy did not inherit the account. She may be the legal surviving joint owner but not the real beneficial owner. This is because of the 2007 Supreme Court of Canada’s decision in Pecore.
Wendy claimed she had received a gift of the account. She had to prove Larry wanted to make a gift to her. Otherwise, the law presumes she was holding the account for the beneficial owner. Wendy would then have to return the money to Larry’s estate. Steven claimed the account based on this legal presumption.
Courts look at various factors and evidence to decide who gets a joint account. Bank documents do not determine this automatically.
Factors the court considers:
1. Evidence of Larry’s intention – What had Larry told the bank at the time he made the account joint with Wendy?
2. Bank documents – Did Larry know the legal consequences of making the account joint with Wendy? Did he know the account could be joint without survivorship rights? This would allow Wendy access to the money but the account would pass to Steven by Larry’s will, and not to Wendy.
3. Control and use of the account – Was Wendy using the account only as a convenience to pay Larry’s bills? Did Wendy put any of her own money into the account? Did Larry want the joint account so he could avoid probate taxes?
5. Tax treatment of the joint account – Who reported the interest income from the joint account?
6. Did Larry reserve control for his estate – Did Wendy sign anything saying she was to hold the account for Larry’s estate? Had Larry told this to anyone?
One benefit of joint ownership is the last surviving joint owner has survivorship rights. If you are married, you want your spouse to inherit jointly owned property without a will.
Are you a surviving joint owner?
You may need a lawyer to protect your survivorship rights.
If you own real estate jointly, beware. Joint ownership can be severed without your consent. Read my related post: Joint Property Owners: Secret Severances Can Steal Your Inheritance
About Ed Olkovich
I am Toronto estate lawyer, author and editor of Carswell’s legal guide Compensation and Duties of Estate Trustees, Guardians and Attorneys. I am a Certified Specialist in Estates and Trusts law. I have handled estate disputes and probate problems since 1978. © 2014Posted In: Contesting a Will, Estates, Inheritance On: August 7th, 2014