Misusing a joint bank account or jointly owned property

“I’ve been on my own since my husband died five years ago. My son lives in the basement suite. He’s in his thirties, doesn’t pay rent, and doesn’t have steady work. Now he’s pressuring me to put him on the house title. He says he’ll do more to look after me as I get older. He doesn’t do much now, and I’m not convinced anything will change.”  

– Olga, New Westminster, BC

The adult child pressuring their parent to put them on title to their home is one of many scenarios that can shade into financial abuse of older adults — where their assets are misused by someone they know. 

Here are some others:

• An adult child pressures their parent to add the child to a bank account, saying it will make it easier for them to help the parent out. The child then uses the joint account as if it was their own money.

• An older adult puts their adult child on title of their home, and (contrary to the agreement they made) the child doesn’t pitch in on other costs of home ownership such as mortgage payments, property taxes, and maintenance.

• The child pressures the parent to sign over full title to the home, calling it an early inheritance and saying it will help them out financially. 

• The child, as their family expands, pressures the parent to move out of the home and into a care facility. 

For an older adult struggling to manage their affairs, setting up a joint bank account with someone can feel like part of the solution. They might understandably see it as a way to get help with banking and paying bills. 

But beware

Joint account holders share equal access to the account. Each of you can withdraw money at any time. The other account holder doesn’t need permission from you to do so, even if you deposited most or all the funds in the account. In the wrong hands, a joint bank account can be a “licence to steal.”

As well, how the joint bank account is structured affects what happens to the money when one of the account holders dies. Most joint accounts are set up with a “right of survivorship.” This means that when one account holder dies, the money goes automatically to the surviving joint owner. 

And that's not all

That said, there is a legal presumption that comes into play when an adult child is added to a joint bank account of an older adult. The law assumes the adult child has been put on for convenience; they’re considered to be a trustee for the older adult’s funds, not entitled to the money themselves. Therefore, when the older adult dies, the money typically goes into their estate, not automatically to the adult child. 

The net effect of all this: a joint bank account can create tensions among those left behind after an older adult dies. There can be competing views about whether the older adult intended the funds to be a gift to the joint account holder.

As with joint bank accounts, it’s common for an older adult to add one or more adult children to the title of their property. This can help with estate planning. Generally, when a joint owner dies, the property passes automatically to the other joint owners. It doesn’t become part of the deceased’s estate. So there are no probate fees or potential wills variation claims. (Though as explained here, not all jointly owned property passes directly to the joint owner.)

For many older adults, the fringe benefits of extra care are part of the appeal. An older adult might add their adult child to the title of their home in exchange for a promise of support as they age. The adult child might agree, for instance, to live in the home and look after them. To an older adult wanting to stay in their home but struggling with the day-to-day, this can feel like a godsend.

There are downsides, however 

Before adding an adult child to the title of your home, there are drawbacks to be aware of.

For one, you lose control: you no longer call all the shots. 

For another, you’re taking on more risk. Here’s an example: if a joint owner falls into debt, their creditors can make a claim against the property. Here’s a case where this happened. After an older adult added her son as a joint tenant to her home, the son’s creditor (who the son owed $800,000) went after the home.  

Here’s another example of risk you’re taking on: if a joint owner’s marriage fails, their spouse can make a claim against the property. 

There can also be tax implications. Depending on how the joint ownership is structured, Canada Revenue Agency may take the position that upon your death your estate owes more taxes. (There’s a capital gains tax exemption for a principal residence; you may lose a portion of that exemption.)

If you’re helping an older adult take steps to address financial abuse, these guiding principles provide some best practices. 

Ask them to tell you about their experience. Listen carefully. Honour their independence as much as possible. Work with them to identify steps and support networks that suit their values. 

If there is financial abuse involving a joint bank account or jointly owned property, the older adult can try to end the arrangement. 

Joint bank account

In the case of the joint bank account, ending co-ownership is not easy. Many banks require both people named in the joint account to approve the removal of one of you from the account. 

Some banks will let you remove yourself from a joint account if you’re willing to give up your rights to the funds. They’ll expect you to sign a form saying so.

Some banks won’t remove a joint account holder: they’ll insist the account be closed. You can then ask to open a new individual account. 

Jointly owned property

Where property is owned in joint tenancy, the co-owners have a few options to end the arrangement. 

One way is to sever the joint tenancy and convert it to a tenancy-in-common. With a tenancy-in-common, your interests in the property are separate. When one of you dies, their share of the property goes into their estate. If one of you owes money, their creditors can’t claim against your interest.

If the other co-owner is willing, you can register a new deed with the land title office that gifts an interest in the property as tenant-in-common to the other joint owner. 

If the co-owner is not willing, you can still sever the joint tenancy by deeding your portion to yourself. Under this law, doing so breaks the joint tenancy and converts it to a tenancy-in-common. 

Another way is to agree to sell the property and divide the proceeds between the co-owners.

As a last resort, you can take legal action to extract yourself from a joint bank account or jointly owned property. 

Joint bank account

Where an older adult added an adult child to a joint bank account and now wants out of the arrangement, there are two options in bringing a legal action.

One is to argue you didn’t intend to gift the joint bank account to the child. This can be a heavy lift. According to the Canada Revenue Agency, a gift is a voluntary transfer of property with nothing expected in return. Once a gift is given, it becomes the property of the recipient and the giver loses all rights to it. 

A second option is to make an unjust enrichment claim. You can argue the adult child has been enriched at your expense, and so should pay you back. To succeed, you need show three elements:

1. the adult child received an enrichment,

2. to your detriment, and

3. there is no good reason in law for the child to keep the money.

When these three elements are shown, the right to “restitution” (that is, to be paid back) arises from this unjust enrichment. (That said, be aware that if the adult child was originally added onto the bank account as a gift, there is a good reason in law for them to stay on the account.)

Jointly owned property

Where property is owned in joint tenancy, a joint tenant can apply under this BC law to sell the property and divide the proceeds, or to divide the property up between the co-owners.

An older adult who added an adult child as a joint tenant can pair this partition of property claim with an unjust enrichment claim. That is, you can argue the child has been enriched at your expense, and should now put things right.