To disclose or not to disclose: Jointly-held assets and the personal representative’s obligations

Only assets that fall within an estate are subject to probate fees. It follows then, that assets held in joint tenancy that pass outside of the estate due to the operation of the right of survivorship do not require disclosure during the probate process, correct? Not necessarily.

If an asset passes in joint tenancy, the personal representative of the estate must consider whether it is truly held in joint tenancy or whether it is subject to a resulting trust in favour of the estate. To exclude an asset that ought to properly be included in the accounting of the estate may result in a breach of the personal representative’s fiduciary duty.

In Kyle v Kyle Estate, 2016 BCSC 855, the deceased father held a joint bank account with one of his sons at the time of his death. The father left surviving him his wife, four sons, and eight grandchildren. The disposition of the bank account by right of survivorship to the one son diminished the father’s estate. That son had held a power of attorney for his father prior to his father’s death and was the executor of the father’s estate. Another son (and alternate executor) brought an action claiming the bank account was held in resulting trust for the estate of the father.

The Court agreed that the bank account was held in resulting trust. It held there was no evidence of an intention of the father that, on his death, the funds would only be available to the one son.

In Kyle, the son took active steps to conceal the joint account from the other beneficiaries under the Will while acting as executor of the Will of the deceased father. The Court held the son had breached his fiduciary duty as trustee of the joint account, or alternatively, had breached his fiduciary duty as executor of the Will of the deceased father by not including the joint account as an estate asset.

In the subsequent costs decision, Kyle Estate v. Kyle, 2017 BCSC 752, the Court held the son’s conduct was “reprehensible”, enumerating his inappropriate actions and breaches of obligations owed to the estate of the deceased father as follows:

  • breach of his fiduciary duty as trustee of the funds held in trust by him for the deceased by not distributing the funds to the beneficiaries;
  • breach of his fiduciary duty as executor by not including the joint account as an estate asset;
  • comingling of trust assets with his personal assets;
  • inability to continue to perform his duties neutrally and in the best interest of all beneficiaries under the Will and the Trust;
  • failing to provide information regarding the estate assets to the beneficiaries; and
  • failing to distribute funds to the cash legatees pursuant to the Will.

The Court awarded the son who had brought the claim full costs as well as special costs.

If you are looking for assistance with your role as the personal representative of an estate, or if you are concerned with how someone else is handling the administration of an estate you have an interest in, please do not hesitate to contact one of our lawyers in our Wills, Estates + Trusts Practice Group.