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The Power of Surviving Joint Property and Account Holders May Not Be so Strong

For far too long, away to make sure that we have an easy way to pass our assets to our children or spouse is the use of joint accounts or putting the name of a younger family member with an older family member.

In the event that one of the family members passes away, the assets are automatically transferred to the other joint account holder. The joint assets are not part of the deceased’s estate and are not subject to the probate process.

But it seems this is getting less and less ironclad.

Joint Property Holder Does Not Inherit Property

Sunday Times yesterday highlight a landmark case that may mean the joint owner of a property does not automatically pass the property to the other joint owner.

Lawyers usually advise those making legacy plans for their properties that thisrule of “survivorship” will apply even if the owners make other arrangements in their wills.

Sunday Times

What happens was that a man and his daughter were joint owners of an HDB flat. When the man died, the daughter would automatically become the sole owner of the flat.

However, the man left in his will stating that the flat would go to his only son. The other siblings of the daughter decide to dispute the ruling but the High court ruled that the daughter could inherit the flat as a joint owner, noting that the document was transferred to the daughter “by gift”.

However, the Court of Appeal overturned the decision because there was sufficient evidence to show that the man did not intend his flat to go to that daughter:

  1. The man may not understand what the term “by gift” on the document meant because he could not read English.
  2. The daughter was included as a joint owner then for “administrative convenience” because she was the only child suitable to be an owner under HDB rules at that time.
  3. Despite being joint owners of the flat, the man actually asked that his daughter pay rent, which showed that he behaved as if he was the sole owner.
  4. There was no evidence to show that the man was close to this daughter.

What families should do to avoid legal battles?

The thing about this stuff is that it just needs a few landmark cases and it will change what was previously a norm to something less sure. I always thought that if an HDB is under the joint-tenant scheme, the property will automatically go to the surviving joint owner.

In this case, the lawyer who won the case said we may not be able to depend on the rule of survivorship so much in the future.

He has some tips:

  1. Use power of attorney. If elderly parents only want their kids to manage their properties but not own them, assign them the rights to manage the properties in their stead instead of including them as joint owners.
  2. Giving shares in properties. Parents can add a child as a “tenant-in-common” by giving him or her only a share in the property. Changing the ownership structure to “tenant-in-common” will prevent the child from inheriting the whole property, as the other shares will be distributed according to the parents’ will.
  3. Take extra steps for joint owners. If the parent wishes for the child to be a joint owner but not solely inherit the property upon their death, they could create a document that explains the purpose of the transfer. The new joint owner will see that his or her role will be purely administrative and the parents do not have the intention to give 100% of the property to him or her.

Joint Accounts Might Not Be Entirely Excluded From Probate

Not too long ago, I realize that having a joint account does not mean that the joint account holder that has survived has the rights of survivorship over the monies in the joint account.

The joint account may not be a watertight way to gift assets to your loved ones.

The surviving joint account holder may have access to all the money and he or she could technically get all the money out but he or she does not own all the money.

And the way to solve this is to emphasize in our will that ownership of the joint account will go to the joint account holders. It feels to me that more and more we have to state our real wishes explicitly in our will.

As with everything, it seems that if everyone is amicable, these things are okay.

But when one child or the children starts disputing the intention of the surviving joint account holder that is when shit happens.

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