Joint accountI always take risk management quite seriously and sometimes I probably overdo it. However, I would rather over-manage a bit than be caught on the wrong foot completely unaware, like what happened to some of the people we know. I always try to think how I can make things smooth for my family when I am not there. To avoid any complications, my wife and I had earlier decided to have all our personal bank accounts as joint-accounts. We were recently made aware of the risk in doing that.

Frozen joint-account

I recently found out that in case of a joint-account, the bank treats it as a joint ownership. So if suddenly one of the account holder passes away, the account is immediately frozen (once the bank is made aware of the death). The account remains frozen till it is established through a will and the associated legal process that the surviving account holder is legally the full beneficiary of the account. This process can take up to 6 months, even in Singapore, where everything happens very efficiently. Also be aware that operating the joint-account without informing the bank about the joint-holder’s death, cannot be legal in the strict sense. I am not a lawyer but this is just common sense. If your co-account holder has named beneficiaries other than yourself in his/her will, then you have just gone and acted against his/her wishes.

Now, we confirmed ourselves after checking with multiple banks that this account-freezing is the case in Singapore. I would encourage our readers to check in their respective countries, what happens in a similar situation. I would really appreciate if readers can post their findings so that everyone benefits.

We have heard of 4 cases among friends, where suddenly after one of the partner passed away the joint account got frozen. Our close friend was left in a very difficult situation. Even though she had enough money in the bank, she could not access it. And what made matters even worse is that though she had enough friends who came forward to help her with money, she did not have a single bank account in her personal name where she could receive the funds. Imagine going through this hassle at such an emotionally difficult time.

Our work around

For us, the simplest thing to do was to start one individual bank account in each person’s name with some funds in it. We have just done that and each of us have a blank a/c payee signed check payable to the other person, kept in the a safe place. The surviving partner can date and bank it immediate when the situation warrants. Internet transfers also typically have daily limits and in a situation like this, one would ideally like to transfer the entire account balance. We also have our respective wills to back up the wishes of each partner. This was our work around. You need to think through yours based on your situation and preference.

Read the earlier blog post of this series at Safeguarding your money for loved ones – Part 1

Thanks to our friends Daisy Huber and Swee Wei for giving us this valuable insight.