Most joint bank account holders assume that upon death of a joint account holder, the surviving joint account holder will be the owner of the monies in the joint account. Is this true?
Most of the banks in Malaysia contain joint account mandate termed as ‘survivorship clause’ in the joint account agreement. Often this clause takes a standard form and it reads as follows from the FC case of Public Bank vs Digital Print Sdn Bhd.
“Where this application is for a Joint Account, I, being one of the joint holders of this account hereby agree that in the event of my demise, the Bank is authorised to pay (subject always to the provisions of the Estate Duty Enactments, Faraid Laws and the Laws of Malaysia or any future legislation) the balance standing to the credit of this account to the survivor(s) and such payment shall constitute a valid discharge of the Bank of the amount due on the account …”.
The Federal Court stated that the payment of the balance of the account made by the Bank after the demise of joint account holder to the surviving joint account holder would constitute a discharge of the Bank’s legal and contractual obligation to the account holders. It should be noted that a ‘survivorship clause’ does not confer legal ownership rights to the surviving joint account holder.
In the case of Latifah bte Mat Zin, the Court of Appeal held that the survivorship clause merely entitles the survivor to receive the money. The survivorship clause does not confer beneficial ownership. Whether the survivor is beneficially entitled to the money is another question entirely and that is not the concern of the bank or the banking law. It is for any beneficiary therefore to lodge any claim over that money against the one who received the money from the bank.
In view of the above, it is advisable that the testator will away the moneys in his joint bank accounts to the respective joint account holders to avoid the dispute between the surviving joint account holder and the estate and/or the beneficiaries of the estate. If the joint bank account holders have specific purpose for the moneys, they may want to consider setting up a private trust for that purpose.
Disclaimer: This article is given purely for information drawn from other sources and Rockwills2u make no representations, express or implied, thereon and shall not be responsible for the accuracy of such information.
Reference: Latifah Mat Zin v Rosmawati Sharibun & Anor, PBB v New Ace Digital https://www.cljlaw.com/others/clj_bulletin/Bulletin_26_2006.htm