Adult Child on a Parent's Account in Ontario: Gift or Trust?

A parent adds a child to a bank account to help pay bills. Years later the parent dies, and the family disagrees. The child says the balance is theirs by survivorship, and siblings say it belongs to the estate.

Ontario courts use a legal presumption to begin the analysis. This article explains how it works, what evidence matters, and what to do if you are on either side of the dispute.

The starting point: a presumption of resulting trust

The Supreme Court of Canada has held that, for gratuitous transfers, the presumption of resulting trust is the general rule, and the person receiving the transfer must show that a gift was intended. An adult child added to a parent's account or asset without payment is presumed to hold it in trust for the parent, and on death for the estate.

A presumption is only a starting point. It can be rebutted with evidence, and the question is what the parent actually intended when the account was opened or the child was added.

Minor children and dependent adult children

The presumption of advancement, which treats a transfer as a gift, is confined to minor children. Financial dependency of an adult child does not trigger it, although dependency can be strong evidence to rebut the resulting trust.

Between spouses, the resulting-trust presumption applies as if they were not married, with two exceptions. Property held in both spouses' names as joint tenants is proof, without evidence to the contrary, that they intended to own it as joint tenants, and money on deposit in both spouses' names is deemed held as joint tenants. So the parent and adult child situation is analysed differently from a married couple's joint account.

What evidence a court may consider

• The wording of the bank documents.
• Who controlled and used the funds.
• Whether the parent granted a power of attorney.
• How the account was treated for tax.
• Later evidence, if it is relevant to what the parent intended at the time of the transfer.

Survivorship rights in a joint account vest when the account is opened, so the gift is made during the parent's life. What is gifted is the survivor's interest in the balance at the time of death. That is why the parent's intention at the opening of the account matters so much.

Risks of joint accounts, and the effect on an estate

Federal guidance notes that many joint accounts carry a right of survivorship, so the surviving holder becomes the account owner. Any named holder can withdraw at any time, and if one holder has financial problems or goes bankrupt, creditors could make claims on the money. Heirs may challenge the survivor, who may need to show the deceased intended the funds as a gift.

The label matters for tax and support claims too. A joint asset the survivor holds on a resulting trust for the estate does not escape estate administration tax. For a dependant support claim, money deposited in an account in the deceased's name and another person's can be deemed part of the net estate. Only the portion that belonged to the deceased immediately before the deposit is counted, the claimant must prove the funds were the deceased's, and a dependant who was the other party must prove their own contribution.

A bank can still pay out unless a certified copy of a suspensory order has been personally served on it. If you think funds should be preserved, speak to a lawyer promptly.

What to do next

• Ask the bank for the account opening documents and the signature card.
• Collect statements showing who deposited and withdrew money, and for what.
• Find any power of attorney, and any note or letter from the parent about the account.
• Gather information on how interest was reported for tax.
• Do not move or spend the balance until you know whether it belongs to the estate.
• Speak with a lawyer early, especially if a dependant may bring a support claim.

If you are the child, keep records showing what you did with the money. If you are an estate trustee or beneficiary, the evidence of the parent's intention, such as the bank documents, how the funds were used and any power of attorney, is what to gather and review.

Frequently asked questions