WHAT YOU SHOULD KNOW ABOUT JOINT BANK ACCOUNTS IN MALAYSIA
Lately, I received some updates circulated via the net about
the dilemma of a Malaysian who could not access to the money kept in a joint
bank account after demise of the other joint account holder who was her
spouse. The widow, of course, expressed
her disgust over the seemingly unfair restriction to her rights as the survivor
who should automatically be entitled to the savings in the joint account which had
been set up for their mutual convenience. Apparently, the bank immediately froze
the account upon being notified that her husband had passed away.
A friend of mine, like many others who shared their comments,
contended that the case sounded illogical. He argued that if the said episode
was true, then it would be more practical for married couples or family members
to open separate personal accounts instead of a joint account. It was not for
me to comment immediately whether the cited episode was actually related to the
prevailing practice applicable across the board to the banking industry or only
to some banks. Being inquisitive, I was curious to find out more about the
subject.
But I do recall clearly a relative of mine who had no
problems of drawing money and giving instructions to the bank in which he and
his parents had held joint accounts (one with his father and another with his
mother) without their expressed consent or presence at each time. He could
continue to operate the joint accounts even after their demise without
questions (about his parents) from the bank.
So, what is the actual banking practice and treatment with
regard to status of a joint account in event of death of one of the joint
holders in Malaysia?
I searched through various sources for more information. My
search tells me that different banks may have different arrangements for joint
accounts. It boils down to the joint account agreement drawn with a bank –
whether all transactions pertaining to the account require the signatures of
both holders or whether either party can act on behalf of the other. A couple
of sources say some foreign-owned banks allow joint tenancy accounts or option for incorporating a survivorship clause which automatically
grants the surviving holder full rights to the account, however such kind of
arrangement may not be available in local banks. Another source says many banks
have the “either-or” arrangement; by this, either party of the joint account
can withdraw money. Yet another source says that In event of demise of one
party, the surviving counterpart should “silently” withdraw from the account
until the minimum balance of RM10. He cautions that if the bank knows about the
death of one joint holder, it will freeze the account. The source adds that some banks assign certain
staff to look at obituaries to check against any deaths of account holders. On
this, I checked it out with a contact of mine who was in the banking industry,
and he responded affirmatively that some banks do assign staff for this
purpose.
Interestingly, the website of a foreign-based bank with
established operations in Malaysia declares the following relevant information
regarding its services for joint account holders (I wish to paraphrase the statements):
Upon notice of demise of a joint account holder, the bank
shall be entitled to pay the deposit, credit balance or investment, as the case
may be, to the survivor; if more than one survivor, then in their joint names.
The bank is authorised to set off the indebtedness of any of the joint account
holders under any account with the bank. The bank may allow the surviving
account holder(s) to continue to operate the account according to the terms and
conditions. (Obviously this foreign bank practises joint tenancy or
survivorship clause for joint accounts.)
What about local banks? What are their usual terms and
conditions pertaining to a joint account? One local bank spells out in its
website two types of joint accounts with different terms and conditions. Let’s directly
look at the declarations (again in my paraphrased
format).
ACCOUNT OPERATED BY BOTH
ACCOUNT HOLDERS:
If one of the joint account holders dies, the balance in the
joint account shall be frozen until a letter of administration or grant of
probate or land officer order or order from any of the relevant authorities is
received by the bank to reactivate the joint account.
If upon death of a joint account holder, and the surviving
joint account holder is a minor, then the account shall be frozen. The bank
shall make payment of balance in the joint account to the executor or
administrator of the deceased account holder and payment by the bank in
relation to the balance amount in the joint account to the said executor or
administrator shall be a complete discharge by the bank.
ACCOUNT OPERATED BY
EITHER ONE OF THE JOINT ACCOUNT HOLDERS:
If one of the joint account holders dies, the balance in the
joint account shall be held by the surviving joint account holder and payment
by the bank in relation to the balance amount to the surviving account holder
shall be complete discharge by the bank.
If upon death of a joint account holder, and the surviving
joint account holder is a minor, then the account shall be frozen. The bank
shall make payment of balance in the joint account to the executor or
administrator of the deceased account holder and payment by the bank in
relation to the balance amount in the joint account to the said executor or
administrator shall be complete discharge by the bank.
It is evident that the second type of joint account (above)
accords mutual flexible convenience to adult joint holders.
Yet another local bank is specific regarding joint account
arrangements for priority customers, depending on their selected choice. Its
website declares (please note again it is in my own paraphrased format) that where the bank is instructed and
authorised to act on the instructions of any one joint holder of the joint
account, the account(s) may be operated and/or closed by any one of such joint
account holders. But where the Bank is authorised to act on the instructions of
both or all of the joint account holders, the account(s) may be only be
operated and/or closed by both or all the joint account holders as the case may
be.
With more Malaysians using debit cards for purchase
transactions, how do banks treat joint accounts with regard to availability of
this facility? The question-and-answer (Q&A) segment of a local bank expresses
that all joint savings or current account holders are eligible subject to the
mandate either one to sign. Each joint account holder will be issued with a
separate debit card.
Based on my findings, I conclude that family members who
want to opt for joint accounts should first be definite of their mutual
intent and also be detailed enough to
seek confirmation that the bank they choose to place their deposits in do offer
the terms and conditions suiting what
they have in mind.
One pertinent caution in respect of joint account relates to
unresolved debt of one of the joint holders. There is nothing preventing a
creditor to file a garnishee order in court (freeze and seize a relevant asset)
on the joint account in order to recover the debt. If the order is successfully
served by the creditor, the other joint holder may also lose money as both
holders share equal ownership of the account. So, joint bank account holders –
beware! If your joint counterpart has been silently accumulating debts outside
without your knowledge, you may stand to lose all your share of savings in the
account.
The end.
