Pecore v Pecore Explained: Joint Accounts With Adult Children

After a parent dies, siblings sometimes discover that one child was on the parent's bank account as a joint owner. One side says the money belongs to that child by survivorship. The other says it was only there for convenience and belongs in the estate to be shared.

Pecore v. Pecore is the Supreme Court of Canada decision Ontario courts use to sort this out. This article explains, in plain words, how the court's approach has been described by the Court of Appeal for Ontario. It is general information only, and the outcome in any real case depends on the evidence.

Why joint accounts cause family conflict

Ontario lists money and property jointly owned with another person, including a joint bank account, as examples of assets whose distribution depends on how they are owned. Generally, a joint tenancy means the interest automatically passes to the surviving owner. Assets that do not pass by survivorship go to the deceased's personal representative.

That is why the label on the account matters so much to a family. If the money passed to the surviving joint owner, it is outside the estate. If the account holder never meant to give it, the money may be treated as belonging to the estate and shared under the will. The court has to work out which of those is true.

The framework from Pecore, in plain words

The Court of Appeal's summary of Pecore explains the steps. On a gratuitous transfer, meaning one where the person received the interest without paying for it, the transferee has the onus to show a gift was intended. The trial judge starts with the applicable presumption and decides the transferor's actual intention on a balance of probabilities.

• Step one: identify the transfer and whether it was gratuitous.
• Step two: start from the applicable presumption. In Holtby v. Draper, the Court of Appeal said that for jointly registered property the starting point is the presumption of resulting trust, not putting the onus on the transferee.
• Step three: weigh all the evidence to decide what the transferor actually intended when the transfer was made.
• Step four: decide on a balance of probabilities, meaning more likely than not.

In Holtby v. Draper, the Court of Appeal held that the trial judge erred by putting the onus on the transferee when property was jointly registered, instead of starting with the presumption of resulting trust. Which presumption applies to a particular parent and adult child, and how it works for a bank account compared with a house, is something a lawyer should confirm against the Pecore decision itself.

What evidence can rebut the presumption

The central question is the account holder's intention at the time the account was made joint. Later evidence has to relate to that intention, and courts must guard against evidence that is self-serving or reflects a change in intention.

How much weight any one item carries depends on the facts of the case, so it is worth confirming with a lawyer how your evidence is likely to be viewed.

Money, taxes and paperwork

The answer changes what has to be reported and paid. Estate Administration Tax excludes assets where there is joint ownership that automatically becomes an asset of the other owner, as well as insurance and registered plans such as RRSPs, RRIFs, TFSAs and RPPs that have a beneficiary designation. For estate certificates applied for on or after January 1, 2020, the tax is $15 for every $1,000 (or part thereof) of estate value over $50,000, and estates of $50,000 or less pay no tax but must still file the return.

If the money is an estate asset, the estate trustee will need authority to deal with it. Ontario says probate is normally required if the deceased held assets at a financial institution, and an institution demanding proof of authority is one of the triggers. The tax is due the day the estate certificate is issued, and an Estate Information Return must be filed within 180 calendar days after issue, even if the estate is worth $0.

What to do next

• Ask the bank for the account opening documents and statements, and keep copies. The estate trustee may need to make the request.
• Do not withdraw or move money from the account until the ownership question is clear.
• List each person's recollection of what the parent said, with the dates, and keep it separate from records.
• Collect the parent's will, any lawyer notes and tax slips for the account.
• Speak with an Ontario estates lawyer who can read the Pecore decision against your facts and explain the options, including negotiation.

Disputes are one of the situations in which Ontario says probate is likely needed. The sooner the paperwork is gathered, the easier it is to see how strong each side's position is.

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