September 22, 2019

Are Joint Accounts part of an Estate?

ARE BANK ACCOUNTS PART OF THE ESTATE ASSETS?

It is not uncommon for parents to make their bank accounts joint with one or more of their children. This is particularly so when the parents are quite elderly.

When an account is owned jointly, it typically passes to the surviving account holders on the death of another account holder. In that case are the surviving joint account holders entitled to keep that money themselves or does it form part of the deceased account holder’s estate?

The answer to this question depends on the intention of the person who owned the account in the first place. If it was intended that the other account holders should be the beneficiaries of the account, that is what typically happens. If it was intended that the funds actually form part of the deceased account holder’s estate, things can become a bit more complicated and confusing.

Parents often want there to be funds available to cover funeral and other expenses. In some cases parents want to avoid probate tax on the amount in the account.

It is rare that the parent actually puts in writing what their intention was. If a parent does put in writing that it was intended that the account remain an estate asset, the beneficiaries of the estate are entitled to their proportionate share.

If there is nothing in writing confirming the intention, it is necessary to look at the history of the account to assist in determining beneficial ownership. The following are factors that are considered:

  • Who deposited funds to the account;
  • Who withdrew funds from the account;
  • Who declared the interest income on their tax returns.

There are many family squabbles (some of them significant) over accounts or investments placed in joint names by a parent. If you are considering doing this, make sure there is a written agreement confirming your intention and place a copy of that agreement with your Will.

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Feel free to contact us at any point for assistance or advice with respect to Estate Law, Estate Planning, Estate Administration or Estate Litigation. We may be reached at 705-435-4339 / 1-877-85LEGAL (1-877-855-3425) or contact us via email.