GETTING PERSONAL CANADA:
Using A Joint Account? Plan Ahead
By Stuart Weinberg
DOW JONES NEWSWIRES
TORONTO (Dow Jones)--A widow with six children - three sons and three daughters - opened a joint bank account with her three sons, with whom she was closer. When she died, she left the money in the account to the sons. The sons made an overture to the sisters, offering them a significant, but not equal, amount of the money. Instead of accepting, the sisters retained a lawyer.
"As soon as the lawyer posed the first question, the instructions I got from the boys were, 'The deal's off, the sisters get nothing,' " said Barry Fish, a wills and estates lawyer who acted for the sons.
The sons and daughters haven't spoken to each other since, Fish said. That was in 2002. If the same scenario played itself out today, the brothers would have been on shaky legal ground, he said. That's because two recent Canadian Supreme Court decisions found that the assets in a joint parent-child account are presumed to be held in trust for the parent's estate.
In other words, unless the sons could prove their mother's true intention, the joint account belongs to the mother's estate and its assets are divided according to the mother's will, Fish said. And often a sole surviving parent hasn't updated his will to reflect his intentions, or he assumes the assets transfer automatically to the joint owner, he said. This isn't the case and verbal instructions from a parent don't ensure that wishes will be followed. The result can be a costly legal battle, fractured relationships and asset allocation that goes contrary to a parent's wishes.
"The problem is that, on the other side of the grave, no matter what (a parent's) intention was, you're never going to know it," Fish said.
To eliminate ambiguities, Fish has created a joint asset-planning kit. The 15-page document allows a parent to clearly express his or her intentions regarding joint parent-child accounts. If a parent wants the assets in a joint account to go to the joint owner, then this is spelled out clearly in the document, Fish said.
If the account was merely an account of convenience and not meant to be a gift to the joint owner, then the parent can indicate this in the kit. This is important because the surviving joint owner may insist that the parent wanted the assets to go to him even if this wasn't the case, Fish said.
In addition to protecting a surviving joint owner from his siblings, the joint asset planning is useful if a sole-surviving parent has remarried. In this instance, the parent can use the kit to indicate that he wants the assets in the account to go to his child rather than his spouse, Fish said. The kit contains language that is consistent with the recent Supreme Court rulings and will protect the joint owner in the event of a court challenge, he said.
In drawing up the kit, which sells for C$45, Fish said he took pains to ensure that it can't override a will. "We've been very, very careful to ensure that, under no circumstances, do we ever want this document to be construed as a revocation of a prior will or testamentary disposition," he said.
While the kit can help a sole-surviving parent ensure that his wishes are carried out, Fish advises people to talk to each other about their intentions. By communicating one's intentions, and the reasons behind them, resentments, anger and future conflicts may be avoided, he said.