When relatives couldn’t inherit $4m in their joint bank accounts with family patriarch

When it comes to joint bank accounts, you should not assume that you will inherit all the money there when the other joint owners die, especially when they had made other plans in their wills.

This was what happened to a woman and her eldest daughter who could not stake claims over $4 million that was kept in joint accounts with the family’s patriarch, because his will stated that the money would be shared among all his four children.

The patriarch had added the names of his wife and the daughter as joint account owners after he was diagnosed with cancer.

He then made some changes to his will regarding his house but did not alter the clause that stated that his other assets, which included his savings, would be shared equally among the daughter and three other children.

As the man was so meticulous that he would even ensure that he stated the name of the bank branches correctly, Singapore’s highest court found that he had not intended to give his money to his joint account holders and that he had added their names for administrative purposes.

Since he did not change the beneficiaries in his will when he rewrote a part of it soon after the banking transactions, the Court of Appeal ruled that each of his four children would share the bank savings equally – $1 million each.

In resolving this dispute, the court also took the opportunity to correct a long-held misconception that joint account owners had automatic “right of survivorship” to inherit money in such accounts when the other joint owners died.

Many people make this assumption because bank documents for such accounts often refer to the surviving account owners as the “beneficial owners”.

But the court clarified that the survivorship clause in bank documents was merely a contractual arrangement between the bank and the joint account holders on how to deal with the money in the joint account.

Banks are only responsible for the obligations and liabilities to their customers, in that the death of a joint account owner would not affect the right of other joint account owners in carrying out any transaction.

As banks would not be concerned with who actually owns the money, the court ruled that the term “beneficial ownership” referred to the right to deal with the money, and not the ultimate ownership of the funds, which would depend on the intention of the owners.

Purpose of banking clauses

To ensure that joint accounts do not get suspended after the death of a joint owner, bank documents contain clauses to state that the surviving account holder could give instructions for that account.

The clauses can also state that if one joint account holder dies, the banks will hold any credit balance for the surviving account holders.

Justice Belinda Ang, who sits on the Court of Appeal, noted that it would be sensible to read such terms from the banks’ perspective and what banks would be concerned with.

“We found it significant that the provisions did not make any express reference to equitable ownership of the joint accounts but rather were focused on the issue of who the banks were entitled to act on the instructions of, in the event of the death of one of the account holders,” she added.

What this means is that bank documents for joint accounts do not address the account holders’ beneficial entitlements to the funds and, in a dispute, it is up to the opposing parties to prove their claims.

Importance of wills in disputes

Without wills, family disputes involving joint assets can become more difficult to resolve.

This is because the joint owners can always claim that by including their names, the deceased had intended to give the properties or money to them.

Such presumption of gifting often works in favour of spouses who are named as joint owners, and it is hard to refute this without good documentary proof of the deceased’s intention, such as a will listing all his beneficiaries.

In this case, the patriarch knew that his wife had substantial assets in her name and so he carved out only $80,000 from his joint accounts as the inheritance for her when he amended his will after setting up the joint accounts.

The court noted this would prove that he had no intention of letting his widow inherit all the money in the joint accounts, because it would be “irrational” to make this relatively small gift from the same pool of money that ultimately would go to her.

Similarly, the court also dismissed the daughter’s contention that her father had gifted the money to her as she was his favourite child.

The court found that the terms of the will showed the relationship that the patriarch shared with each of his children was not a factor that weighed much because he included his son as an equal beneficiary even though they had an estranged relationship.

The parties’ conduct

The courts often look at events and the behaviour of family members long before the disputes because these facts can often provide good insights for judges to resolve cases fairly.

In this case, the court noted that the patriarch was meticulous in his affairs, and that it was unlikely that he would have forgotten to state in his will that he had given away the money in his bank accounts to his joint account holders if this was true.

For instance, when the branch of his bank in Siglap moved to Marine Parade, he instructed his lawyer to change the address in his will, even though his account could be assessed from all other branches in Singapore.

Justice Ang said: “This was a testament to the sheer degree of care that he exercised… to the extent that he did not merely make substantive changes on the manner of distribution of his property, but also corrected administrative details even if there was unlikely going to be any doubt as to which (bank) account he was referring to notwithstanding the change of branch.”

She added that if the patriarch had the “presence of mind” to even correct the reference to the bank branches, it would be inconceivable that he would fail to make clear in his will that all his money in the bank accounts would go to his widow and the eldest daughter.

The court noted that the patriarch retained control over his accounts even after he converted his own accounts into joint accounts.

Although the widow and her daughter claimed that the money was gifted to them after their names were added to the accounts, it was telling that they did not touch the money for over a year until the patriarch’s death.

This fact “exposed their belief” that the money in the joint accounts belonged to the patriarch solely even after the conversion.

The court’s finding was supported by the daughter’s e-mail to her father’s lawyer as she referred to the fund in the joint fixed deposits as “his FD money”.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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