In our previous article “What Really Happens to a Joint Account When One Holder Passes Away?” , we explained how banks in Malaysia handle joint accounts when one of the account holders dies. Most banks will release the remaining balance to the surviving joint holder, provided the survivor signs an indemnity form. Once payment is made, the bank’s liability is considered discharged.
However that is only the bank’s internal procedure. Even if the bank allows you to withdraw the money it does not automatically mean you legally own it. A more important question must be asked: “Do you truly have the right to take the money and keep it as yours?”
Let’s look at several Malaysian court decisions that have addressed this important question.
Public Bank Bhd v New Ace Digital Print Sdn Bhd & Anor
A joint account holder passed away and the bank released the funds to the surviving holder based on a right of survivorship clause. The Federal Court held that the clause protects the bank but does not determine ownership. Ownership depends on intention gifting and contribution.
Chin Yuei Khen and Others v Chin Kon Shu
A mother held a joint account with her son. After her death, her other children claimed the balance belonged to the estate. The Court found that the funds transferred into the account during her lifetime belonged to the son. However, for the remaining balance after her death, the Court clarified that a survivorship clause does not automatically confer beneficial ownership and only allows the bank to release the funds to the surviving holder.
Wan Badaruddin v CIMB Bank and Others
A joint fixed deposit holder passed away. The survivor claimed the money was a sincere gift. The Court held that ownership for Muslims depends on whether the funds constitute a valid Hibah (gift) under Islamic law, which must be determined by the Shariah Court.
Why Disputes Happen?
Joint accounts are commonly created for convenience whether to assist aging parents to allow couples to manage family finances together or to facilitate business operations. However, the intention is rarely documented in writing. After a death family members may question whether the surviving holder was meant to inherit the money or merely help operate the account. When emotions run high and large sums are involved disputes can quickly escalate into legal action. Without evidence of intention courts may need to decide who the rightful owner is and this process may take years.
How to Avoid These Problems?
The most effective way to protect your wishes is by ensuring your intentions are properly documented. A Will can clearly state who should ultimately own the funds in your joint account and this prevents future conflict among beneficiaries. A Trust can be used to allow the surviving holder to access necessary funds while still preserving the money for the intended beneficiaries.
Clear instructions provide peace of mind for you and protection for your loved ones.
What We Recommend?
If you have a joint account or plan to open one you should review whether the structure reflects your true wishes. You can also take proactive steps including recording your contribution maintaining supporting documents and updating your Will or Trust so that there is no room for misunderstanding after you pass away.
So is the money automatically yours if the other joint holder passes away?
The answer is not automatically yes.
The bank may release the funds to you but only the law can decide whether the money truly belongs to you.
Proper estate planning prevents uncertainty and protects your family from stress and legal battles.
You may make an appointment with our legal advisor here: https://calendly.com/finex-and-co-legacy-advisory/tea-talk-with-legal-expert
