Money is Held In Trust

A common flash point in estate litigation are assets held in joint occupancy in between the departed and a child. The other children say that their parent only developed the joint tenancy to be helped with their financial resources & the money belongs to the estate.

Law matches frequently begin when brother or sisters discover that one child was made a joint account holder by a moms and dad. When the moms and dad dies the kid, as the staying joint renter, declares the cash by right of survivorship. The Law might vary depending upon a specific jurisdiction. Let’s examine the Probate law in California.

Envision that Papa had 3 kids. At a later stage in life, often really close to the time Dad was going to pass away, he takes a journey to the regional bank and makes his child a joint account holder. They claim the loan belongs to the estate.

The courts initially seek to the proof. When there is a clear documented intent of the deceased that the joint holder of the accounts should get the cash upon his death then the choice is an easy one. However exactly what happens when the evidence is not so clear?

The court’s have actually generally relied on particular anticipations and use them as guides when inadequate proof exists to definitively ascertain the deceased’s objectives. Historically, the Anticipation of a Resulting Trust and the Anticipation of Improvement are two competing anticipations that enter play when cash kept in a joint account is being contested.

The Presumption of a Resulting Trust comes from the idea that people make bargains, they do not make presents. Based upon this anticipation, unless the proof proves otherwise, the court’s beginning point is that if “A” deposits all the cash into a checking account held jointly with “B” then the court assumes that “B” would not keep the cash when “A” dies. The Court presumes that “A” planned that loan to be kept in trust for “A’s” estate.

That when “A” deposits loan into a joint account with “A’s” kid the court presumes it was with the intent that A’s kid should receive that money when “A” passes away. Based on this anticipation some courts have actually held that, unless the evidence proves otherwise, if Papa deposits all the money into a bank account held collectively with his child then the court would presume that he planned that loan to belong to that child when the daddy passed away.

In the McLear Estate case (1) an Ontario judge rejected the Anticipation of Advancement and accepted the Presumption of Resulting Trust when an adult kid and an elderly moms and dad hold possessions together in joint occupancy. Justice Heeney specified, “The anticipation that accords with this social truth is that the child is holding the residential or commercial property in trust for the aging moms and dad, to assist in the totally free and effective management of that parent’s affairs. The presumption that accords with this social reality is, to puts it simply, the anticipation of resulting trust.” In contrast, there is a line of case law prior to the McLear Estate choice that recommends the presumption of advancement uses to adult children also due to the fact that moms and dads provide gifts to their children out of affection. (2).

Pecore v. Pecore (3) and Madsen Estate v. Saylor (4) reviewed and elucidated the law concerning these presumptions. Both cases involved bank accounts which an elderly parent made joint with one of their kids.

1. Objective of the Departed is the determining factor – Anticipations are only guides. Then the courts will give result to that intent, if the departed really wanted his/her child to receive the cash in the bank account after his/her demise. When the proof is uncertain as to the deceased’s objective then the courts use presumptions as working guides as to that intent. If evidence can show them to be wrong, the anticipations are rebuttable.

2. Presumption Of Development Just Applies to Minor Kid. The court opined that the Anticipation of Development (i.e. that moms and dads provide presents to their kids) was based upon the idea that minor children required support from their moms and dads. Appropriately, adult kids who typically do not need assistance can not depend on the Presumption of Advancement. The Supreme Court of California embraced the reasoning of the McLear Case and specified that “… I am for that reason of the opinion that the rebuttable anticipation of improvement with concerns to unjustified transfers from moms and dad to kid should be maintained but be restricted in application to transfers by daddies and mothers to small kids.”.

3. Presumption of Resulting Trust was accepted in the Estate Context. The Supreme Court embraced Justice Heeney’s view in the McLear Case and stated.” it is typical nowadays for aging parents to transfer their assets into joint accounts with their adult children in order to have that child help them in managing their monetary affairs. There should therefore be a rebuttable presumption that the adult kid is holding the residential or commercial property in trust for the aging parent to help with the efficient and free management of that moms and dad’s affairs.


The obvious concern is exactly what will the courts accept as adequate proof of the Deceased’s intention to have the joint account asset pass to the survivor? The Supreme Court of California expressed the view that bank files, power of lawyer paperwork, control and use of the accounts and tax treatment of the account would all matter proof. In my view, absolutely nothing can replace mindful paperwork of the Deceased’s objective by the legal representative helping in the client’s monetary planning.

(5) If everyone used this Set would it deal with all estate disagreements concerning assets held in Joint Occupancy? Says Jordan Atin, “The set might end conflicts over joint assets but, but sadly there are always other things for brother or sisters to combat over.

One thing is really clear – obscurity and failure to definitively record the testator’s intent opens the door to estate litigation. Too typically the disputes can not be dealt with and end up in court. This is particularly so when household members are at chances with one another and receive mixed signals from moms and dads about their intentions concerning the estate.

Footnotes:.

OJ No. 2570 (Ont. (back).
( 2) In Pecore v Pecore the court referred to these cases that support the view that the presumption of advancement uses to grownups. 21; Dagle; Christmas Estate v. Tuck (1995), 10 E.T.R. (2d) 47 (Ont.; and Cho Ki Yau Trust (Trustees of) v. Yau Estate (1999), 29 E.T.R. (2d) 204 (Ont.
( 3) 2007 SCC 17, J.E. 2007-874, [2007] W.D.F.L. 1902, 361 N.R. 1, 32 E.T.R. (3d) 1, 37 R.F.L. (Sixth) 237, 279 D.L.R. (Fourth) 513, 224 O.A.C. 330 (back).
( 4) 2007 SCC 18, J.E. 2007-873, [2007] W.D.F.L. 1839, 360 N.R. 327, 32 E.T.R. (3d) 61, 279 D.L.R. (4th) 547, 224 O.A.C. 382, 42 C.P.C. (Sixth) 1 (back).