Gifted money placed in a joint account was excluded from net family property in recent Ontario Court of Appeal decision
Philip Epstein
Net Family Property – Exclusions – Gifted Monies Being Placed in a Joint Account
Cortina v. Cortina, 2015 CarswellOnt 16938 (Ont. C.A.) - R.A. Blair J.A., C.W. Hourigan J.A., David Brown J.A. Not unlike one of the problems canvassed in Shih v. Shih, above, in British Columbia, this case in the Ontario Court of Appeal also deals with what happens if gifted assets to one party are then placed into a joint account.
The trial judge ordered that funds in the amount of $122,000 held in the husband’s investment account were excluded from the calculation of his net family property on the basis that they were inter vivos gifts from his mother and a bequest received from his mother’s estate together with income earned on those amounts.
There was no dispute that the monies were deposited first into a joint account in the names of the husband and wife and then transferred to the husband’s investment account where they continued to grow for a period of about five years before the separation and valuation date. There was also no dispute that the monies in the account can be traced back to inter vivos gifts and the bequests from the mother’s estate. There is no discussion in this case as to whether the income earned on these amounts was excluded property in accordance with the provisions of the Family Law Act. It is entirely possible that that issue was overlooked below. In any event, it was not canvassed in the Court of Appeal.
The wife argued that the monies, once deposited into the joint account, lost their character as gifts and an inheritance, and therefore, were not subject to exclusion from net family property. The wife specifically did not argue that by depositing the monies into the joint account the husband had gifted her one-half of the monies.
The Court of Appeal conclusively determined that it was not an error in fact or law by the trial judge in finding that the monies did not lose their character as gifts or inheritance by virtue of their having been deposited first into the parties joint bank account. Section 14 of the Family Law Act provides that property held in the name of spouses as joint tenants is proof, in the absence of evidence to the contrary, that the spouses are intended to own the property as joint tenants. However, that presumption can be rebutted and the trial judge accepted the evidence that the respondent had rebutted the presumption that the inter vivos gift monies and the inheritance monies were intended to be owned jointly by the parties simply because the husband had “parked them” in the joint account.
It seems relatively clear on the facts of this case that had the wife argued that the placing of the money into the joint account was a gift of half of the funds to her, she still would not have prevailed and the husband would have rebutted the presumption in that regard as well. This might have been a very different story if the parked monies in the joint bank account had been used over the years and then the husband had attempted to take them out and put them in a separate bank account prior to separation. These kinds of cases turn particularly on their facts. Of course, the issue would not have arisen had the husband not parked the money in the joint bank account in the first place. Why is it that we don’t make some effort to educate people before they are married as to the financial implications of marriage and separation so at least parties have some idea of the potential consequences of their financial conduct?