Canada's Top Court Considers Effect Of Joint Ownership Of Assets

The Supreme Court of Canada has, in two noteworthy estate cases out of Ontario, held that judges should no longer presume that a parent who sets up a joint bank account or joint investment with an adult child intends to gift that joint property to the child on the death of the parent.

These cases abolish the traditional “presumption of advancement” that used to apply when parents transferred assets, without payment in return, to their adult children. Both cases involved elderly men who died after opening joint bank accounts, with a right of survivorship, with their adult daughters.

Writing for the majority of the Court, Mr. Justice Rothstein said:

“It is common nowadays for ageing parents to transfer their assets into joint accounts with their adult children in order to have that child assist them in managing their financial affairs. There should therefore be a rebuttable presumption that the adult child is holding the property in trust for the ageing parent to facilitate the free and efficient management of that parent’s affairs.”

Although the cases before the Court dealt with joint bank accounts and investments, it is expected that this case law will change the way the courts also deal with joint ownership of land between a parent and adult child.

Lawyers are already changing the way they practice in the wake of these cases –in most cases preparing deeds of gift and taking careful notes to document the parent’s intention that the adult child receive the benefit of the gift on the parent’s death.

The presumption of a gift still applies to gratuitous transfers between a parent and child under the age of 19.

For more information on this topic, contact Pushor Mitchell Partner, Joni Metherell at:
metherell@pushormitchell.com or (250) 869-1200