Safety Deposit Boxes In Estates

Trevor Todd

While a review of the law relating to safety deposit boxes (SDB) shows that about 90 per cent of the case law relates to the police search warrants or spouses alleging hidden assets, two important issues relating to estate litigation occasionally arise.

1) The issue of who is legally entitled to the contents of a joint safety deposit box: The surviving joint owner, or the estate of the deceased; and 2) does delivery of the safety deposit box key to a person in contemplation of death by the donor (donatio mortis causa) sufficiently legally transfer the contents of the

SDB to the donee.

JOINT SAFETY DEPOSIT BOXES

When I was recently an executor, while listing the contents of the safety deposit box I was told by the banker that since it was a jointly owned box, the contents could be distributed only to both the executor and the joint survivor in the presence of each other.

I tried to explain to the banker that that was not my understanding of the law. Clarke v. Hambly 2002 BCSC 1074 followed MacInnis Estate v. MacDonald (1994) that considered the issue of whether money deposited in joint accounts by a father in favour of himself and his daughter was an absolute gift to the daughter or held under a resulting trust for the benefit of the father’s estate. The Court in Clarke v. Hambly concluded that the jointly held assets in the contents of the safety deposit box vested in the estate as a resulting trust. MacInnis Estate v. MacDonald summarized the principles of law as follows. a) The general rule with regard to joint bank accounts is that on the death of one customer, the survivor is not entitled, as against the estate of the deceased customer, to hold the funds as her own property, if the funds were provided entirely by the deceased customer, unless there is a presumption of gift or an b) intention, on the part of the deceased customer, that the survivor shall have the right to retain the funds as her own: Re.

Fenton Estate (1977), 26

N.S.R. (2d) 662 at 673. 1. The question, in the absence of fraud or undue influence, is the intention of the donor creating the joint account. The

“ordinary rule” is that where the funds are provided entirely by the deceased, the funds revert to the donor upon a resulting trust: Edwards v. Bradley, [1957] S.C.R. 599. 2. The “ordinary rule” may be modified when the transfer involves a parent and child, in which case the presumption of advancement may arise:

Shephard v. Cartwright, [1955]

A.C. 431 at 445. 3. The presumption of advancement may be rebutted, but should not give way to slight circumstances:

Shephard v. Cartwright. 4. Because advancement is a question of intention, facts antecedent or contemporaneous with the transaction may be put in evidence to rebut the presumption or to support it.

W.J. Mowbray, B.A., Lewin on

Trusts, 16th ed. (London: Sweet & Maxwell, 1964) at 135. 5. The subsequent acts and declarations of the parties cannot be used to support their positions but may be used against them: Shephard v.

Cartwright.

The leading case in British Columbia is Mawdsley v. Meshen 2010 BCSC 1099 where the Court found the defendant failed to rebut the presumption of a resulting trust on the balance of probabilities relative to the contents of the SDB and held they belonged to the estate.

Mawdsley followed the leading authority on presumptions relating to jointly held assets in Pecore v. Pecore 2007 SCC 17.

Generally speaking, where an individual gratuitously transfers assets into joint names with another or into another’s name alone, it is presumed that the recipient, who is given no value for the asset, holds the property in trust for the transferor. In such a scenario, the property is said to result or go back to the transferor, hence the term resulting trust.

The presumption of resulting trust finds its roots in the principle that equity assumes that parties make bargains rather than gifts.

Thus if all of the contents of a safety deposit box were deposited by one of the joint owners, a presumption of resulting trust will arise that is rebuttable by sufficient evidence of an intention to gift, based on the balance of probabilities.

DELIVERY OF THE SDB KEY IN CONTEMPLATION OF DEATH

Case authorities relating to delivery of the SDB key in contemplation of death, involves the law of donatio mortis causa, which requires three elements: 1) The gift must have been made in contemplation, though not necessarily an expectation of death; 2) there must have been delivery to the donee of the subject matter of the gift; 3) the gift must be made under such circumstances, a show that the thing is to convert to the donor in case he should recover. Donatio mortis causa may be defined as a gift made by a person in his or her lifetime with the intention that it should take effect only on his or her death. The gift is therefore conditional upon death, but once the condition is satisfied it takes effect retrospectively from the date the gift was made.

Brown v. Rotenburg (1946) O.R. 363 (ONT C.A.) held that delivery of a key for an SDB box constituted a valid and effectual gift in contemplation of the contents of the safety deposit box.

The donor had parted with the only means that he possessed of getting at the contents, and thus control over the contents, therefore the donee was in a position to demand that the donor’s personal representative complete the title by furnishing whatever authority was necessary to take possession of the contents of the box.

In Bayoff Estate (2000) 3 WWR 455, the deceased gave the donee the key to a safety deposit box, and told her everything in it was hers. He, however, failed to sign the necessary bank papers to permit the donee to access the box.

That imperfect inter vivos gift was perfected when the donee became the deceased’s executrix and she was able to take delivery of the contents of the box.

The leading case in British Columbia is Costiniuk v. Official Administrator of British Columbia 2002 BCCA 125.

In Costiniuk the deceased had no family, but had a close relationship with the plaintiff and had given her a key to her home many years before so she could check on her.

The deceased also gave the plaintiff the keys to her safety deposit boxes 1 month before her death, and during her final illness told the plaintiff from her hospital bedside that she wanted her to have everything. The deceased died before she could execute a Will that named the plaintiff her sole beneficiary.

The trial judge held, and the Court of Appeal upheld, that the plaintiff was entitled to the contents of the safety deposit boxes as a result of donatio mortis causa because there had been delivery of the keys by the deceased to the donee in contemplation of death.

CONCLUSION

It is probably safe to say that many people are using a safety deposit box to hold valuables for fear of home robberies or break-ins. That stored wealth is often considerable.

The executor has authority under section 183 WESA to open the SDB, and in the presence of a person in control of the premises, list an inventory of the box and then take the original Will with him or her.

If the contents of the box are valuable, they then must be listed as assets of the estate, and remain such subject to a successful challenge of a joint owner of the box or someone with a key asserting ownership by reason of donatio mortis causa. s Trevor Todd restricts his practice to estate litigation. He has practised law in Vancouver for 48 years.

The deceased died before she could execute a Will that named the plaintiff her sole beneficiary.