Should you consider using joint accounts to avoid probate?
Q. My mother is a widow and I am an only child (single, never married, with one child of my own). Now that she is 83, she thinks she should put my name on all her bank accounts and investments so if she becomes unable, I would have control as joint account holder to pay any bills that come up. My name is already on her condo. Would this avoid probate? We live in Alberta.
A. Joint ownership is a common strategy used by aging parents and their children. It is sometimes recommended by banks, financial advisors and others.
The most common reason parents add a child as a joint account holder is to help with day-to-day administration of an account. However, the same authorization can be provided to banks and financial institutions using an enduring power of attorney in the province of Alberta. This document appoints someone, like you in your mother’s case, to make financial decisions if she is unable or unwilling to make them on her own.
In other provinces, these documents have different names, such as personal directives or mandates. Regardless, the intention is generally the same.
For what it is worth, Laurel, when my own mother became unable to manage her financial affairs, my siblings and I did not add our names to her bank and investment accounts as joint account holders. We presented her Ontario power of attorney for property to the bank and were granted the authority to manage her financial affairs.
Even when my mother still had the capacity to make her own decisions, she suffered from a rare condition that caused her to lose the ability to speak. She appointed me with trading authority over her investments prior to us officially enacting her power of attorney. I used it to manage the investments in her RRIF and TFSA accounts.
Registered accounts like RRIFs and TFSAs can have named beneficiaries. They cannot be held jointly. These accounts can pass directly from a parent to a child upon presentation of a death certificate to the financial institution if the children are named as beneficiaries. The assets would not be subject to probate. That said, for reasons that go beyond the scope of this article, there may be motives to name your estate rather than specific individuals.