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Friday, March 8, 2013

When parents open joint accounts with adult kids, others may pay the price

I'm always disappointed when I see that parents continue to put money into joint accounts with their children, when they don't intend for that child to own the money. It causes so many problems, lawsuits, delays, expense and family upset that it's simply a terrible idea.

The parents create these legally impossible situations for the children left behind. The children consult lawyers, battle lines are drawn and the family is often completely destroyed. All because it seemed "easier and cheaper" to use a joint bank account rather than a trust or a power of attorney.

This reader sent me in a question that arises out of a parent doing exactly the wrong thing, which was leaving money in a joint account with one person when she actually intended for someone else to have the money, followed by a daughter who apparently also did the wrong thing. Here is the question:

"My mom's will reads that she left money for her two grandaughters of her deceased son via two joint accounts set up between mom and her daughter. The daughter worked at that bank, stole the money and then closed the accounts. Not sure when the accounts were closed. What can be done?"
This area of law should be so clear, but it is currently very muddy. In your situation, it seems that everyone involved has made errors in judgment, including your mother, the daughter and the bank. The grandchildren pay for the mistakes.

In the old days, a joint account was always a joint account, and the surviving owner of the account always owned the money in the account when one owner died.

The law regarding joint accounts between generations - as in this case, a parent and child - changed in 2007 as a result of a couple of cases from the Supreme Court of Canada. The new law says that when there is an inter-generational joint account and the parent dies, the money is to be held in trust for the parent's estate and does NOT belong to the surviving child. If the parent did actually want that child to inherit the account, there are ways of documenting that intention that will stand up.

For some reason, many banks in Canada have simply decided not to follow the new law.

Many banks in Canada are still treating inter-generational accounts as regular joint accounts and still pay the funds to the child. This is probably what happened in your case; likely nobody batted an eye when the daughter cleaned out the account. Ironically, the court cases were intended to stop exactly this kind of financial abuse by children. Having said that, it's possible that the daughter had some kind of written document from your mother that confirmed she wanted the daughter to own the account. It would be in direct conflict with the will, but theoretically it could exist.

It looks as if the daughter is taking advantage of the mother's trust in her, the bank's failure to follow up-to-date legal policy, and the grandchildren. Many people in her situation do exactly the same as she has done. However, it's always possible that she had a different understanding about whether she was supposed to do with the account. Does she know what's in the will regarding this account? Has she ever come up with any written intention by her mother that would lead her to believe she could have the account for herself?

If communication has broken down or the daughter has dug in her heels, it's probably going to take a lawsuit against both the daughter and the bank to retrieve the money that was in the account. I'm not sure what your relationship is to all of this, but if you are the executor, then it's up to you to launch any lawsuit. Please see a lawyer with extensive experience in estate litigation to have a frank discussion. Present all of the facts and hold nothing back. Estate litigation is unpleasant, lengthy and expensive but sometimes it's the only solution. Think carefully before going ahead.

I and many other lawyers keep warning parents over and over again not to open joint accounts with their children, but until they start heeding the warning, this unfortunate situation is going to keep repeating itself and the children are going to keep paying for the parents' choices.


  1. My Grandmother & Father had joint bank accounts together. All money was my Grandmother's and she trusted my Father. My Father was also in her Will to be the sole beneficiary upon her passing. But was also stated in her Will that if my Father passed first, the my sister and I were to be the beneficiaries of her estate. My Father passed this March 4/14 and my Grandmother is still alive. I have now taking my Grandmother to do her banking and we have found that my Father has taken her life savings from 2 banks, even withdrawing term deposits before their date. My Grandmother and myself included are devastated. My mother is now holding all this money as it was transferred into joint accounts with my Father & Mother. Is there anything we can do? If he wasn't dead, I would go after him for elder abuse but I obviously don't have that option. My Grandmother has asked that I see what kind of information I can get about whether we can go after my Mother or not. My Grandmother is of sound mind but she will be 100 in August. Any help/direction, would be greatly appreciated. Worst my Grandmother ever did was to trust him, her son!

  2. Where do I find the actual canadian law article concerning this? I have this situation present.

    1. The law is found in two cases of the Supreme Court of Canada. One is called Pecore v. Pecore, [2007] 1 SCR 795, 2007 SCC 17. The other is called Madsen Estate v. Saylor, [2007] 1 SCR 838, 2007 SCC 18. You can look them up for free at an excellent legal research site called


  3. Hello Lynne,
    My father was palliative for several months and he passed away 6 months ago. 2 of my siblings were named as co administrators for his estate. In the past 6 months the only information that has been provided to me has been,1) a copy of the application for probate, 2) emails stating the following...the application for probate has been filed has been filed (end of Jan), 3) that if any of the residual beneficiaries have any questions regarding anything pertaining to the estate they can send them in an email, 3) repeated lists of all the work involved in being administrators
    In the latter part of January I learnt on my own that the administrators were having select beneficiaries go in and pack up my fathers home and possessions (no inventory list had been taken. At which time I expressed my discomfort about this, to which I was told my father had to many possessions and taking an inventory would be to difficult, and my concern of individuals, some beneficiaries, going in and packing up his home was essentially ignored.

    This causing unsettling feeling for me, on my own I obtained a copy of Probate. In doing so, my discomfort grew.

    It is my understanding from conversations with my father & others that had communicated with him on the topic, that prior to his passing he wrote a check to one of the administrators for $100,000.00 that was not listed in his will, but was instructed on the family member it was to go to and is not in probate and the administrators deny its existence when I inquired.
    I have also inquired what other accounts, investments or monies, may or may not have been put in an administrators name, either solely or as co owner, prior to my fathers passing and the response I received was as though I was an email that read as angry & annoyed that I would ask, and the statement that any account that had a co owner would not be in probate and is now the property of the co owner. It is my understanding that this is not true, as if they were put in someone else's name it would have been shortly before my father's passing and it would be in an adult child (administrators) name.

    I have not been informed of anything that is being or has been done with my father's belongings. if they have been given out to other residual beneficiaries ect...

    In 6 months this is all I have been informed of and when I asked questions, initially the responses were evasive and when I pushed for more direct answers, the response read as anger.

    What should I expect to be told and informed of by this point and in general. I am feeling very uncomfortable about the situation

    Thank you for any information you can give.


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