Mississauga, Canada

Joint Accounts: What Financial Advisors Should Know

By Krystyne Rusek and Lisa Sticht-Maksymec, Pallett Valo LLP

Joint accounts are created for many reasons: to have shared access to funds, to have a shared place to save funds, to avoid payment of probate tax, or, in some cases, to intentionally make a gift of the funds on death. Financial advisors can play an important role in helping maintain their clients’ objectives and reducing litigation over jointly held funds when an account holder dies.

Access to jointly held accounts following the death of one of the account holders will depend on the terms of the account agreement at the time it was set up. Whether the co-owner(s) have the right to keep the money will depend on the intention of the original owner. In Ontario, the right of survivorship is not automatic. Litigation may arise when the estate trustee or family of a deceased do not agree on whether a true right of survivorship of the jointly held funds was intended. The financial institution holding the funds might find itself caught in litigation in several ways: in a motion to preserve the funds, to give testimony about discussions with clients, and to produce evidence in the litigation.

Banks and advisors will often be pulled into estate and capacity litigation. A bank’s records will inevitably be collected and scrutinised. Detailed notes are invaluable in assisting a judge in determining the client’s intentions with respect to jointly held accounts.

In legal disputes, where advisors had thoroughly discussed matters with their clients, taken supporting notes of the appointment, and recommended that the client obtain legal advice, their evidence was often given significant weight in the courts’ determinations.

Financial institutions have a duty to exercise reasonable care and skill. To protect a client’s objectives, advisors should consider when the account was made joint, what the relationship is between the joint holders, and why the account was made joint. The intentions of the original account holder, and/or both owners should be documented in writing. Bank documents that are suffciently detailed can be evidence of the transferor’s intent.

It is essential that financial advisors understand the applicable legal principles, take the time to understand their client’s intentions, and document those discussions.


Krystyne Rusek

Krystyne Rusek

GGI member firm
Pallett Valo LLP
Law Firm Services
Mississauga (ON), Canada
T: +1 905 273 33 22
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Pallett Valo LLP is one of Ontario’s Top 10 Regional Law Firms. The firm practices in the areas of business law, commercial litigation, commercial real estate, construction, insolvency and corporate restructuring, employment and labour, and wills, estates, and trusts.

Krystyne Rusek is a member of the Estate Litigation Group and Wills, Estates & Trusts Practice. She specialises in estate litigation, acting for both individuals and trust companies in disputes involving estates, trusts, and powers of attorney.
Lisa Sticht-Maksymec

Lisa Sticht-Maksymec

GGI member firm
Pallett Valo LLP
Law Firm Services
Mississauga (ON), Canada
T: +1 905 273 33 22
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W: palletvalo.com

Lisa Sticht-Maksymec is a member of the Wills, Estates & Trusts Practice and Estate Litigation Group. Her practice encompasses all aspects of estate planning, estate administration, power of attorney/guardianship administration, estate litigation, and applications for guardianship for incapable adults.
 


Published: Trust & Estate Planning Newsletter, No. 07, Spring 2021 l Photo: Brandon - stock.adobe.com  

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