Many would prefer to set up joint accounts as a way to guard against the contingency event where one family member passes away, and the other family members cannot get access to his or her money.
If we had setup up a joint account with our spouse or one of our children, in the event we passed away, the surviving joint account holder will own 100% of the monies in the joint account. The money will not be subjected to the probate process of the deceased joint account holder. The probate process is a legal process of distributing an estate according to a will.
The joint account has also become a critical method for holders of stocks incorporated in countries with high death/inheritance taxes to bypass those taxes.
The Sunday Times has a good summary of 4 things we should take note of about joint accounts:
Ms Sim, head of a specialist and private client disputes practice, explains that a joint account is less ironclad when disputes are brought up.
Here are the essential points I picked up:
- Joint owners have unity of interest over the entirety of the account and the right of survivorship. On the death of one joint owner, his rights to the joint account are extinguished, and the surviving joint owner takes an entire interest. – High court judge Choo Han Teck
- Whoever contributes more money will matter in cases of dispute. Beneficiaries can prove the main contributor had not intended his money to go to the survivor. The joint owner may not claim rights of survivorship.
- Relationship matters. If the joint owners are a couple, they are deemed to own the money jointly. In the event of death, the surviving spouse will become the sole owner.
- Suppose you are in a less legal relationship, such as a boyfriend and girlfriend relationship. In that case, it is better to make a will to state explicitly your intention for the surviving holder the right of survivorship of the money if that is the intention.
- Ms Sim makes two suggestions:
- Suppose there is no legal relationship between the two, you should create or put in the will explicitly to make clear the intention to give the money to whoever if that is the wish.
- If you open a joint account out of convenience and do not wish the relative to benefit, you should clearly state in a will.
The idea is not to leave it to chance for dispute and clarify your intention.
If most relationships are amicable, then usually there are no problems, but it often gets messy when a lot of money and deep-seated family relationship problems clash.
A good estate lawyer would ask you to explicitly state your intention for your joint accounts in the will, even if it feels weird. The lawyer is doing what Ms Sim suggested.
You should know your family relationship well. If relationships are hard to fix, make sure you do up a will and state your intention clearly.
I invested in a diversified portfolio of exchange-traded funds (ETF) and stocks listed in the US, Hong Kong and London.
My preferred broker to trade and custodize my investments is Interactive Brokers. Interactive Brokers allow you to trade in the US, UK, Europe, Singapore, Hong Kong and many other markets. Options as well. There are no minimum monthly charges, very low forex fees for currency exchange, very low commissions for various markets.
To find out more visit Interactive Brokers today.
Join the Investment Moats Telegram channel here. I will share the materials, research, investment data, deals that I come across that enable me to run Investment Moats.
Do Like Me on Facebook. I share some tidbits that are not on the blog post there often. You can also choose to subscribe to my content via the email below.
I break down my resources according to these topics:
- Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
- Active Investing – For active stock investors. My deeper thoughts from my stock investing experience
- Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
- Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
- Free Stock Portfolio Tracking Google Sheets that many love
- Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
- Providend – Where I currently work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works
- Singapore Savings Bonds SSB November 2023 Yield Bashes Higher to 3.32% (SBNOV23 GX23110V) - October 2, 2023
- How to Inflation-Adjust Your CPF LIFE Basic or Standard Plans - October 2, 2023
- Historic Bond Move Has Killed This Crazy Portfolio Strategy (for now…) - September 30, 2023