Focus on Joint Bank Accounts: The Re Wilson Decision

The battle in the recent case of Re Wilson [1999] O.J. No. 1274 is one more example of the painful, costly consequences of poor, haphazard estate planning involving jointly held assets. In dispute in Re Wilson, which came before Fedak J. of the Ontario Court of Justice, was the ownership of certain assets held on joint account between Lenore Wilson and her son, Colin.

At the time of the dispute, Lenore had sufferred a debilitating stroke and Colin was managing his mother’s assets in his capacity as her attorney via a Power of Attorney. However, Ms. Wilson’s other son, Dennis, had grave concerns. Dennis asked questions about his mother’s affairs and was not satisfied with Colin’s answers.

Dennis ultimately compelled Colin to pass accounts (i.e. submit a detailed accounting of his management to a Judge). Colin’s accounting indicated that his mother had transferred many of her bank accounts and G.I.C.’s from her name alone into the joint names of Colin and herself. The accounting also demonstrated that Colin freely accessed the monies held on joint account with his mother for his own personal use. Was Colin entitled to treat the jointly held assets as his own and use the funds as he wished? This was the issue before Fedak J.

It is generally understood that an asset owned on joint account is accessible to both “co-owners.” and, that upon the death of one of the “co-owners,” the surviving “co-owner” owns the funds alone. But, is this always the case? According to Fedak J., the answer is no.

Following authority of the Supreme Court of Canada, Fedak J. concluded that the law presumed that Lenore had intended to gift Colin the assets that she transferred into both of their names, but that it was open to Dennis to demonstrate, on a balance of probabilities, that his mother did not intend to make such gifts. Additionally, Fedak J. concluded that the evidence necessary to rebut the presumption must concern Lenore’s intention at the time she transferred the assets into the name of her son, Colin, and herself.

After considering the evidence, Fedak J. concluded that Lenore did not intend to gift the assets held on joint account to Colin and Fedak J. ordered Colin to pay back the money he spent on himself, with interest!

Fedak J. concluded that Lenore transferred assets to joint accounts so that Colin could assist her in payment of bills and management of her financial affairs. Justice Fedak noted that the creation of a joint account does not in itself provide sufficient evidence Lenore intended to gift her assets and allow Colin to access the assets for his personal use.

Without better evidence, we would take issue with the decision of Fedak J. Lenore executed a Power of Attorney for Property thereby allowing Colin to assist her. She did not need therefore to transfer any assets to joint accounts.

However, Fedak J. found Colin’s evidence untrustworthy and unreliable. Colin damaged his own case by failing to keep proper receipts and statements. As well, Colin could not overcome the fact that he accessed his mother’s accounts only after she suffered her stroke.

Re Wilson is remarkable. It demonstrates that exceptions to certain rules exist as well as the pitfalls of not seeking expert advice. It also demonstrates that executing a Will and Powers of Attorney does not ensure that everything is in order. Had Lenore documented her intentions at the time of the transfers, the likelihood of litigation would have been reduced.

Re Wilson also highlights the need for attorneys to keep detailed accounts of their actions (i.e. receipts and bank statements). Finally, the case is remarkable because the issue is certain to be raised time and again in Estate litigation.

Accordingly, remember to document your Estate plan, and confirm or revise your plan from time to time.