The Problem With Joint Accounts

When you are happily married to someone or have children, joint accounts and joint debts may seem like a practical idea. But what happens when one of you passes away? In all provinces except for Quebec where the rules are very different, a joint ownership in bank accounts, real estate, credit cards, stocks & mutual funds is a very common way to hold investment assets. Most of the times this is for convenience-you can avoid paying taxes and other fees when you are joint owners. But what kind of consequences do joint account holders undertake?

When a joint account is held by two individuals they are both equally responsible. When both individuals are alive there are rarely problems with joint assets, but when one of them passes away the lines get a little fuzzy. For example, say that you have a joint account with your mother. If she passes away and there is $20,000 in the account, who does the money go to? Would you assume that since you held a joint account this money was to go to you as a gift? Most times because joint accounts are set up for convenience it is not fair to assume that the deceased meant the money to go to the other named individual on the account. Previously it was the assumption that any money in the account was to go to the joint owner but this has now changed due to numerous court cases. Currently if a parent and child hold a joint account the child will have to prove that they are entitled to the money in the account if the parent dies.

Unfortunately, the current procedures can pose other problems. For example if the money in the account was actually meant to go to the surviving child and there is no way to prove this, the child may end up in a position of not receiving the money which was intended to be theirs. The best way to avoid complicated situations when it comes to joint ownership of accounts is to talk to a lawyer. They can complete a series of documents which records written record of both joint account holder intentions with their investments. You may be able to keep written documentation yourself but it often does not hold up in a court of law.