The risks of joint investment accounts with your adult child

Adding an adult child as a joint owner on an investment account is a common estate planning shortcut. The logic is simple: avoid probate, speed up asset transfer, reduce costs. But the legal reality is considerably more complicated — and the risks are frequently underestimated.

The Probate Fee Calculation Is Often Wrong

The concern about probate fees is often overstated. In Ontario, estate administration tax runs approximately 0.5% for the first $50,000 of estate value and 1.5% for anything above that. Compare that to capital gains taxes, which apply to 50% of gains up to $250,000, and approximately 66.67% above that threshold. For most estates, the tax cost of transferring appreciated assets far exceeds the probate savings.

The Law Presumes a Trust, Not a Gift

When a parent adds a child as a joint account owner, Ontario courts typically presume this is a "resulting trust" arrangement — meaning the child holds the assets in trust for the parent, not as an outright gift. This means the account may still be included in the estate for probate purposes, defeating the original goal entirely.

The Risks Are Real

Joint accounts create several practical vulnerabilities: co-owners can withdraw funds without the other's consent; creditor claims against the child can attach to the account; divorce proceedings involving the child can complicate ownership; and courts may return assets to the estate if the trust presumption holds.

How to Protect Yourself

If you do choose to add a joint owner, create clear documented evidence of your intent — whether through a gift acknowledgment letter, a formal trust agreement, or other legal documentation that explicitly states how ownership and management are intended to work. Better still, speak with an estate lawyer first to explore whether a joint account is actually the right vehicle for your goals.

We Can Help

At Beeksma Law, we help Ontario families structure their estates thoughtfully — balancing simplicity with protection. Contact us to discuss your estate planning options.