The testator did not intend to give the money as gift
The BC Supreme Court has ordered an heir to return the funds he took from a joint account with his deceased mother.
When Thelma Campbell died in 2017, she was survived by her three children, Karen, Arnold, and Ivan. Karen was named as the executor and trustee of her mother’s estate. Six months before her death, Thelma added Ivan’s name to three bank accounts she previously held in her sole name and Arnold’s to another. Those bank accounts are the center of the dispute in Campbell Estate (Re), 2022 BCSC 2184.
On the day that Thelma died, Ivan withdrew nearly all the funds from one of the accounts he held jointly with his mother. Karen feared Arnold would do the same and had the funds in the account Arnold held jointly with his mother frozen.
On behalf of the estate, Karen sought declarations that the funds withdrawn by Ivan were held in trust for the estate and an order that he return those funds to the estate. She also sought an order that the bank release the frozen funds in the joint account to the estate.
Ivan and Arnold argued that their mother intended to gift them the funds in the accounts and that they were not held in trust for the estate.
Funds were held in trust
The case reached the BC Supreme Court, which ruled that Thelma did not intend to gift the funds in the joint account to Ivan during her lifetime or after her death. The court further declared that the funds were held in trust by Ivan for the estate.
The court said that the law concerning the presumption of resulting trust requires Ivan and Arnold to rebut the presumption that they held the joint accounts in trust for their mother and must do so on the civil standard of a balance of probabilities.
The court found that in the months leading up to Thelma’s death, she was a vulnerable person, in cognitive decline, and at risk of being financially exploited. She expressed the desire to give significant sums of money away and carried large sums on her person.
The court concluded that it was reasonable to add her adult children to her bank accounts to protect her from financial exploitation and mismanagement. The legitimate concerns about her ability to manage her finances would have been a good reason to ensure that one of her children was a secondary holder of each account.
The court further found that starting in 2014, Ivan took steps to persuade his mother that Karen had taken advantage of her and that the provisions of her will and the distribution of her properties were unfair to him and Arnold. The court said he wanted to remedy the unfairness he saw in these arrangements. To this end, Ivan took steps to have his name on one of his mother’s accounts worth approximately $200 and Arnold’s on another.
A psychiatric consultation revealed in 2016 revealed that Thelma had dementia syndrome. Ivan had attended that consultation and knew the doctor’s diagnosis, the court had observed.
Shortly after the consultation, Ivan claimed that Thelma planned to equalize the disparity in her assets that had been given to, or was to be given, her children. However, the court found that Thelma was unlikely to have had the cognitive ability to develop the plan, given her dementia.
The court said, “It is remarkable that Ivan attended the psychiatric consultation with Dr. Magee and, therefore, had at least some first-hand knowledge of Mrs. Campbell’s cognitive decline, and yet still attempted to have her change her financial affairs to his and Arnold’s benefit a month later.”
Testator did not intend to give the funds as gift
The court found no credible evidence that Thelma intended to gift the funds in the joint accounts to Ivan or Arnold.
Case authorities said that concerning joint accounts, a transferor could intend to transfer only the right of survivorship without transferring the benefit of the account during their lifetime.
Further, the authorities said that it is the actual intent of the transferor at the time of the transfer that determines whether the account is to be treated as joint during the lifetime of the transferor, whether the right of survivorship in a joint account applies, or whether a resulting trust arises for the benefit of the estate in the entire amount.
In this case, the court observed, “There is simply no evidence, other than Ivan’s, that Mrs. Campbell intended a gift. I have found Ivan’s evidence to lack credibility and be unbelievable.”
The court concluded that Thelma Campbell did not intend to gift the funds in the joint accounts to Ivan or Arnold during her lifetime, nor did she intend to gift them with the right of survivorship after death. The court reached this conclusion on all the evidence without reliance on the presumption of a resulting trust. In any case, the court further said that Ivan and Arnold still failed to rebut the presumption of a resulting trust over those funds.
The court also found that Ivan withdrew the funds from the joint account before his mother died, believing that if he did so, the funds would be his. He knew his mother was dying, and he decided to do what he could to secure the funds before she passed away. The court observed that Ivan had concerns that if he waited until after his mother died, he might not be able to withdraw the funds.
“This draws into very serious question his stated belief that she intended to gift the funds to him,” the court commented. The court ultimately declared that the funds in the joint account were held in trust by Ivan for the estate and ordered him to pay the estate the amount he withdrew.