Putting an Adult Child on a Parent's Bank Account: Resulting Trust Risk

Many older parents add an adult child to their bank account so that bills can be paid or the account can be reached in an emergency. Years later, when the parent dies, the surviving child may believe the money is theirs, while brothers and sisters believe it belongs to the estate and should be shared under the will.

This article explains the legal presumption courts apply in these disputes, who has to prove what, and what practical steps help. It is general information, not advice on your own family's dispute.

What a resulting trust presumption means

A gratuitous transfer is one made without payment, such as a parent putting money or an account into an adult child's name. A resulting trust is the idea that, when you give property away for nothing, the law may presume you did not mean to give it away. Instead, the recipient is presumed to hold it for you.

In Ontario, the presumption of resulting trust applies to gratuitous transfers from a parent to an adult child. It has been applied to a parent's bank accounts put into joint names with a right of survivorship.

If the presumption holds, the child is presumed to hold the money for the parent. The estate trustee's job includes collecting the estate's assets and distributing them under the will and the law. How this applies to a particular account depends on the facts, so it is worth confirming with a lawyer.

Who has to prove what

The adult child who received the benefit bears the onus. That means the child has to show the presumption does not apply.

The presumption is rebutted by evidence of the parent's contrary intention, meaning an intention to make a gift, on a balance of probabilities. Balance of probabilities means it is more likely than not.

For joint accounts, the court asks who owns the right of survivorship. It looks at the parent's actual intention at the time the account was made joint.

Two competing stories

Most of these disputes come down to two accounts of why the child was added. The table sets out the usual positions.

The kind of evidence that tends to matter

Because the question is the parent's intention at the time, people usually look for anything that sheds light on it. The rules above do not list specific kinds of evidence, so what is persuasive depends on the facts, and a lawyer can help you judge it.

• Bank forms or account opening documents signed by the parent.
• Notes, letters, emails or messages in which the parent explained what they wanted.
• What the parent told the bank, a lawyer, an accountant or a financial adviser.
• How the account was actually managed, who paid the bills and who reported the interest.
• How the account fits with the parent's will and overall plans.
• Statements from people who heard the parent's wishes.

How much weight any of this evidence carries depends on your situation, so it is worth confirming with a lawyer.

What to do next

If you are in the middle of a dispute, avoid moving or spending the money until you understand the position. If you are a parent thinking of adding a child, put your intention in writing.

• Gather the account opening documents, statements and any bank forms.
• Write down what you remember about why the child was added, and when.
• Collect any messages, notes or letters showing the parent's wishes.
• Keep copies of the account statements, including those closest to the date of death.
• Do not withdraw or redistribute the funds until you have legal advice.
• Speak to an Ontario estates lawyer early, since the outcome turns on the evidence.

Frequently asked questions