Can a sibling contest money left in a joint bank account to another sibling?

This post arises from a reader question, and covers a very important issue. Despite all of the news coverage and warnings about joint bank accounts being abused by the children of seniors, thousands of elderly parents continue to add their children's names to their bank accounts. And as a result, many of them lose not only their money but their relationship with their children as well.

So I'm happy to answer this question about whether a sibling can contest money left in the joint account to the other sibling. I'm even happier to say that yes, a sibling can contest it, in certain circumstances.

The first circumstance must be that the money in the account was contributed by the parent, not the child. Most of the time, this means adding a child's name to an existing account owned by the parent. Sometimes it means putting the parent and child's name on an account that was opened to hold, for example, the funds from the sale of the parent's house. In other words, it's the parent's money.

The second circumstance is that there is no written confirmation by the parent that he or she intended the child to own the money when the parent passes away. The account was opened either for the convenience of the child helping the parent, or to avoid probate fees.

To explain this second circumstance further, I point out that a couple of years ago, Canada's highest court said that when there is a joint account (or investments or other assets) between a parent and a child, the law will presume that the child was only put on the account for convenience, and not so that the child would inherit the money. This is true UNLESS the parent left some written indication to the contrary.

This means that the child who now has the joint account doesn't own it unless the parent said so in writing at the time the name was added. Timing is important. It must be at the time the asset became joint, not months or years later. Also, telling the joint owner child verbally isn't good enough.

The parent's confirmation can be in many forms. It could be a clause in the will that confirms the joint account is supposed to belong to the child. It could be a note added to the bank form that set it up. I always encourage the staff at the Scotiabank branches to specifically ask the parent about his or her intentions, and document the answer in case the parent doesn't document it himself.

Something that holds individuals back from contesting a situation like this is that they don't want to appear greedy. I encourage anyone who questions a joint bank account between a parent and child to think of your involvement not as greed but as ensuring that your parent's plans are properly carried out.