One topic that increasingly arises in both estate planning and estate administration is the nature of a joint bank account.
When two married spouses share a joint bank account, family law legislation presumes that the account was intended to pass to that surviving spouse. Where a parent and adult child have a joint bank account, the law presumes that the adult child is holding the money in trust for their parent’s estate. On the parent’s death, the adult child has to prove that their parent intended the account to pass to them by right of survivorship. If the adult child is not able to prove this intention, the account forms part of the estate. Practically speaking, this means the account is included in the deceased’s assets for probate purposes and that the account falls into the residue of the parent’s estate, to be distributed in accordance with the terms of the Will.
Parents may add their adult child to an account for a variety of reasons. We most often hear it is done as a matter of convenience. An adult child who is joint on the account can pay bills, can take cash out for their parent and can do a variety of other tasks as they assist with the finances. However, this does not come without risk. Adding one’s adult child as a joint accountholder could also expose the account to claims if the child has a matrimonial breakdown or has creditors seeking repayment. Of note, a parent can achieve similar benefits of convenience by granting Power of Attorney to their adult child.
Regardless of one’s circumstance, making your intentions clear is very important. If the circumstances are such that a parent intends to have their adult child receive the joint bank account on death, by the right of survivorship, that should be properly evidenced through their Will, a statutory declaration or a Gift Agreement.
Lerners lawyers can advise you on the best way to clearly state your intentions and give you comfort in knowing that the administration of your estate will reflect those intentions.