Nowadays, many parents add their adult children to their bank accounts to help manage their finances. While these arrangements are often made out of love, trust, and practicality, they can sometimes lead to misunderstandings about who owns the funds. Understanding the legal implications of joint accounts is important to ensure that both parents and their children are protected.
In this article, the civil litigation lawyers at Walker Law explain what the law says about joint accounts between parents and their children, how ownership is determined, and how to handle misunderstandings or potential misuse of funds.
Joint Accounts Between Parents and Adult Children
Parents typically make these arrangements for the sake of convenience, allowing their child to help pay bills, handle deposits, or assist with banking if the parent becomes ill or less mobile. Parents usually see it as a practical way to ensure their financial affairs are looked after, especially as they get older.
These arrangements can work well but, in some cases, disagreements arise if funds are withdrawn or used in a way the parent didn’t intend. This can happen when an adult child assumes that being named on the account automatically gives them an equal right to the money. As we will explore next, having joint access to an account does not necessarily mean joint ownership of the funds within it.
Who Owns the Funds in a Parent–Child Joint Account?
When a parent adds their adult child as a joint holder to a bank account, the law in Ontario (and across Canada) presumes that the funds in the account still belong to the parent. The situation is called a “resulting trust” because the adult child accesses and transacts with the funds in trust for their parent. Courts make this presumption because the adult child typically does not contribute to the joint account.[i] The adult child has the burden of proving that the parent intended to make a gift when they were added to the account. Unless there is clear evidence of such intent, the presumption of resulting trust stands.
In some relationships (such as between spouses or between parents and minor children) there is a presumption of advancement.[ii] In other words, the access to the account is presumed to be a gift. The presumption of advancement does not extend to joint-account arrangements with adult children, even if they are dependent on the parent.[iii] Therefore, when a parent adds an adult child to their bank account merely to help pay bills or manage finances, the starting point in law is that the parent remains the true owner of the funds.
In summary, when a parent adds an adult child to a joint bank account for convenience, the parent remains the beneficial owner of the funds unless the child can prove that the parent intended to gift them ownership in the funds. While an adult child may have legal access to the account, that access is meant to help manage the funds and not to use them for personal purposes, unless that was clearly intended. Without clear evidence that a gift was intended, using funds from the account for personal purposes may be considered a misappropriation of the parent’s money.
What to Do if You Suspect Misuse of Funds
Whether you have already given your adult child access to a joint-account, or if you are merely considering doing so and are curious about protecting yourself, there are several steps you can take.
Keep a Strong Record
If you notice any withdrawals you don’t recognize or didn’t authorize, it’s a good idea to document what happened and keep a clear record. Gather any records (such as texts, emails, notes, or conversations) that indicate why you made the joint-account.
Carefully and diligently review your bank statements to mark any unusual or unexplained transactions. You can contact your bank to provide you with records that may go back further than what is visible to you on your bank’s online customer platform.
Seek Legal Advice
Consider speaking with a litigation lawyer who can help you understand your rights, explore your options, and guide you through potential steps to recover any funds or prevent further issues.
Understanding Your Legal Options
Disputes over joint bank accounts between parents and their adult children can be challenging, both emotionally and financially. Understanding your legal rights early can help prevent misuse. The civil litigation lawyers at Walker Law are experienced in handling these exact issues and assisting parents with debt recovery when funds have been withdrawn without consent. If you suspect misuse of a joint account or need guidance on protecting your finances, contact Walker Law.
[i] Pecore v. Pecore, 2007 SCC 17 at para 24.
[iii] Ibid at paras 36 – 40.