Resources & Insights

New Spin on the Effect of Joint Owner Survivorship.

It is not uncommon for a parent to place a child as a joint owner on the parent’s bank accounts in order for that child to be able to operate the account for the benefit of the parent.

However, various issues can arise when the parent dies. The main problem that we encounter is who becomes the owner of the account – the parent’s estate or the child who was added as joint owner?

The general legal principles surrounding joint ownership is that the last living joint owner becomes the sole owner of the asset held in joint ownership.

The Supreme Court has held that where a parent designates an asset in joint ownership with an adult child and later on the parent passes away, there is a presumption that the surviving joint owner child holds the asset in trust for the benefit of the deceased parent’s estate.

In the recent case of Calmusky  v Calmusky, the father had designated one of his sons as a joint owner on his bank account and as a beneficiary on his RIF (registered income fund) .

In settling the dispute as to whether the father’s estate or the joint owner’s son owned the bank account, the court considered the Supreme Court joint ownership principles and determined that the father’s estate was the owner of the joint account.

The court then went one step further and determined that the estate also owned the RIF despite the beneficiary designation in favour of the son.

The court’s decision in relation to the RIF is a new extension on the Supreme Court’s principles regarding joint ownership.

The decision may be appealed, but at present the decision poses potential difficulties with many parents’ investments which designate a child as a beneficiary.

It may be prudent, at present, for parents to seek legal advice to ensure that their intention regarding the ownership of the investments on their death is documented, to ensure that the investment is paid out in accordance with their wishes and is not the subject of litigation following their death.

Barrie Hayes, Partner