Introduction

To many individuals, it is understood that the right of survivorship should apply to joint bank accounts. The seamless transfer of assets from one account holder to another upon death has long been a cornerstone of financial planning, providing a sense of security and continuity. Yet, beneath the surface of this seemingly straightforward principle lies a legal landscape rife with complexities and nuances, with the presumptions of resulting trusts and advancement emerging as formidable players in this unfolding drama. In this month’s FLP article, we explore the applicable legal principles towards the “ownership of monies” in joint accounts (more accurately, the right to the chose in action to instruct the bank to make payments from the accounts) with reference to the most recent case of [2023] SGHC 314 and with that, seek to understand the court’s position on this matter such that we can take the necessary steps to ensure certainty and clarity in our legacy planning journey.

What is the Right of Survivorship in a Joint Account and can it be challenged?

The Right of Survivorship in a joint account refers to the right granted to the survivor(s) of a joint account that ensures that in an event of the demise of any joint account holder, his/her stake in the joint account is transferred to the remaining surviving joint account holder(s).

Indeed, this was confirmed by the Court in [2008] SGHC 110 where it was recognised that “in… a joint bank account, there is a presumption that the survivor(s) takes the whole of the benefit of the account in the absence of a contrary intention.”

The judge then went on to say that “The onus would be on the person challenging the right of survivorship to demonstrate a contrary intention…(and) where such a contrary intention can be shown, the rule of survivorship may be displaced by a resulting trust or a presumed resulting trust” which clearly states that even though the right of survivorship exists in joint accounts, it can be challenged and defeated by establishing the existence of a resulting trust or a presumed resulting trust.

What is a Resulting Trust and Presumed Resulting Trust?

A resulting trust in a joint account is triggered when there is proof of a distinct intention from the deceased to maintain ownership of the beneficial interest in the joint account.

This effectively means that even though the default position is for the Right of Survivorship to apply to joint account holders, it should be noted that if the deceased had made it extremely clear in his/her lifetime that it was his/her intent to retain the beneficial interest of his/her assets in the joint account upon his/her demise, then such right of survivorship could be defeated.

In the case of [2019] 5 SLR 593, it was also stated by the Court that “the presumption of a resulting trust will operate where there has been a transfer of property to the survivor(s) for which the survivor(s) has not provided the whole of the consideration and there is no evidence before the court which adequately reveals the true intention of the transferor”. Thus, if it can be shown that a joint account had been substantially/ fully funded by the deceased and there was no clear reason for the deceased to do so, then it would be presumed that he/she retains the beneficial interest of such funds and the survivors of that joint account hold such beneficial interests on a resulting trust for the beneficiaries of that deceased account holder.

The right of survivorship would thus be defeated if the above can be established. However, it would be the party seeking to challenge the right of survivorship that would have the onus of establishing the evidence to show that a resulting trust or a presumption of resulting trust exists and it should also be noted that “the strength of the presumption must be accorded carrying weight, depending on the particular circumstances of each case.”([2019] 5 SLR 593).

Presumption of Advancement: A Counter to the Presumption of Resulting Trust

The presumption of resulting trust is a rebuttable assumption that can be challenged under specific circumstances, particularly when the transferor is considered to have made a gift to the recipient without any intention of retaining an interest in the property. This counter-assumption is known as the presumption of advancement and becomes relevant only when a presumed resulting trust has been established based on the facts, as stated in by the Court in [2008] 2 SLR(R) 108.

The Court, in [2019] 5 SLR 593, also stated that the strength of the presumption of advancement varies depending on the unique circumstances of each case  and this approach is to allow the court to better discern the parties’ intentions through a fact-sensitive inquiry, guided by two key elements: (a) the nature of the relationship between the parties, including any obligations one party has to the other, and (b) the state of the relationship, such as whether the parties were closely or distantly related. The Court, then went on to give examples of recognized situations that would give rise to the presumption of advancement which include transfers from husband to wife and vice versa, and from parent to child.

It will be the party seeking to set aside the transfer to the survivor that has the onus of rebutting such Presumption of Advancement and if successfully disputed, the original presumption of resulting trust will prevail. Conversely, if the challenging party fails, the presumption of advancement displaces the presumption of resulting trust, and the right of survivorship takes effect.

The Most Recent Case of [2023] SGHC 314

The case involved an action taken against the eldest daughter and wife of the deceased, by the other daughters of the deceased. The court had to decide if it would recognise the right of survivorship of the eldest daughter and wife of the deceased in regard to the joint accounts that the deceased had with them respectively, or whether such right of survivorship is displaced by any existence of a resulting trust or a presumption thereof.

The Court, in this case, ultimately decided that the eldest daughter and wife of the Deceased were holding such sums of monies on a resulting trust for the named beneficiaries in the Deceased’s will stating the following reasons:

• Even though the bank documents for the opening of a joint account stating that a right of survivorship would apply to the survivors of the bank account would, to some extent, show a party’s intention for such rights to apply; it cannot be conclusive as to determining a party’s full intent and that surrounding circumstances needed to be taken into account;
• The deceased had made amendments (via a codicil) to his will after he added his wife and eldest daughters as joint account holders to the respective accounts and whilst making new provisions on how other gifts were to be distributed, he had left the original clauses to distribute the monies in the said bank accounts to the named beneficiaries unchanged;
• The facts of the case indicate that the decease handled his affairs in an organised and meticulous manner, making the amendments to his will only after having several discussions with his family members and providing for the relevant amendments to his will. The Court found that it is highly unlikely that decease would forget about amending the provision pertaining to the said accounts if that was indeed his intent.

Our Concluding Thoughts

From the plethora of cases that deal with the distribution of assets in joint accounts, it seems that the Courts will usually give effect to the Right of Survivorship to survivor joint account holders.

If, however, a party can show, based on evidence, that the deceased’s intention was not to leave the amounts in the joint accounts to the survivors, then such Right of Survivorship could potentially be defeated. In making the relevant decisions, the Courts would also take into account, who contributed how much into the accounts, the relationships of the parties, et cetera.

It therefore appears that to ensure certainty with regard to the distribution of funds in joint accounts upon one’s demise, one should be make it unequivocally clear in his/her will of such an intent and to also have such intent  communicated and recorded down with potential beneficiaries such that there is no doubt as to the way that such funds are to be distributed.

How Can SMTP Assist you

Having an experienced hand guiding you through the intricacies of the law is always helpful regarding matters of legacy planning. Tapping on our combined decades of experience and very own Wealth Legacy Screening process, our lawyers will be able to assist you in a very systematic and detailed manner on your Family Legacy Planning journey, ensuring certainty and clarity in the management and distribution of your estate.

We also believe in close engagement with our clients, paying close attention to their individual facts and circumstances, and tailoring our advice and courses of action to cater to their specific needs and requirements. SMTP’s core philosophy is to provide bespoke legal advice based on our private clients’ specific needs and requirements, as cases always differ on their fine details. Our team of dedicated staff are ever eager and prepared to assist interested parties. Should you or your clients require any assistance in trust or real estate matters, please feel free to contact our Business Development Team to schedule a consultation. We look forward to working with you.