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What happens to Joint Accounts upon Separation?

By Wills & Estates Team (posts)

Where a married or common law couple separates and enters into a separation agreement with respect to division of their assets, the terms of that agreement can trump the rights of survivorship pertaining to a joint owner.

In Dayton v. Dayton Estate 2015 BCSC 1304, the BC Supreme Court held that the funds in a joint bank account, which had remained in joint names of a husband and wife after their separation, belonged to the husband’s estate on his death and not to the surviving former-spouse (ex-wife).

The joint account in question had been used in the husband’s business. Before his death, the husband and wife entered into a separation agreement in which they agreed that the husband was entitled to retain all assets of his business. The agreement did not list this bank account in particular and the husband never took steps to remove his wife’s name from the account after their separation. Nevertheless, the Court found that it would be “unconscionable” and effectively permit a breach of the separation agreement to allow the wife to retain the account funds, as surviving joint holder of the account, on the husband’s death. The funds belonged to the husband’s estate.

On the other hand, a separate joint account, that had been used as a family account but about which the separation agreement was also silent, would go to the surviving former spouse by right of survivorship. The wife was not in breach of any legal or moral obligation in retaining those account funds. The difference was that the husband was fully aware his former spouse remained an owner of the account and could have made the account his own at any time, thereby severing the right of survivorship, but he did not do so.

Always update the ownership of financial and other assets in the event of a separation to clearly and accurately reflect each owner’s intentions.

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