Joint Bank Accounts
As a parent grows older, particularly if they are in poor health, a bank account may be opened by the parent with an adult child. The purpose is generally for convenience so that the child can look after the parent’s bills and banking. Before such an account is opened it is important that the parent and child be clear about the purpose of the account, who the money belongs to and what the money is to be used for.
For instance is the adult child a full owner of the account or is he or she merely a signatory? Are both people going to put money into the account or will all the money be deposited by the parent? Upon the death of the parent, does the money belong to his or her estate or does it belong to the adult child?
A recent case from British Columbia, illustrates the problems that can arise if these issues are not addressed when the account is being opened.
Rita had two children, Lois and Ron. Rita held a number of bank accounts jointly with Lois. Both women were in fairly poor health. Rita passed away and the following year Lois passed away. Lois’s only child, Jason, applied to have the money in the Rita/Lois bank accounts transferred to him, arguing that his mother had received the money by right of survivorship. Ron disagreed, arguing that the joint accounts were opened purely as a matter of banking convenience in order that his sister could assist their mother in her day-to-day financial dealings.
The Court reviewed the circumstances surrounding the opening of the accounts as well as the actions of the two women. For instance, there was no actual evidence that Lois assisted her mother with her banking. The boxes indicating joint ownership and survivorship were both checked yes on the documents used to open the accounts.
Because the accounts were jointly held there was a presumption that the survivor, Lois, was entitled to the funds. Although it was possible to rebut the presumption, Ron failed to present evidence to support his theory that the accounts were a convenience only. The Court agreed with Jason, and ordered that the money be advanced to him.
The moral of the story is that if you are considering opening a bank account with your parent or your adult child, be sure you agree on the purpose of the account. Bank employees are not always clear on the difference between a joint account and signing authority so be sure to convey what you want to do and why. Otherwise somebody may be going to court.Share