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Q MY FATHER bought a private landed property in his name a few years ago and subsequently added my name as a co-owner with a 30 per cent share.

I have since been contributing to the loan repayments through my Central Provident Fund (CPF) account.

My father is now 76 and he has a wife and five children, including myself.

What will happen to the property if my father dies before I do or I die before he does, assuming that there is no will?

Will the house be force-sold after one of us dies and if so, who will get the money? Will there be a 70:30 split of the sale proceeds according to the percentage of the property ownership?

If my father wrote a will to distribute the money equally to his wife and five children, what will happen to the CPF money that I used to help pay for the loan?

A A PROPERTY can be held either under a joint tenancy or tenancy-in-common. Under a joint tenancy, when an owner dies, the surviving joint owner(s) takes ownership of the property completely.

A joint owner cannot will away his ’share’ of the property because there are no distinct shares to begin with.

In the case of tenants-in-common, each owner holds a distinct share. When one owner dies, his share goes to the beneficiaries named in his will.

If he did not make a will, it would be distributed according to the Intestate Succession Act (for non-Muslims) or the Administration of Muslim Law Act (for Muslims).

As you hold a specific share of 30 per cent, I shall assume that you and your father are tenants-in-common.

If your dad passes away before you and there is no will: Your mother will receive half of his 70 per cent share and the balance will be distributed equally among his five children. Your share would thus be more than your original 30 per cent.

If you die before your dad and you do not leave a will: Your 30 per cent share of the property will also be distributed according to the Intestate Succession Act.

The eventual distribution will depend on whether you are married and/or have children.

If you are not married and have no children, your parents will be entitled to your share in equal proportions.

Will the house be force-sold upon the death of you or your father? No - unless you or the owners are unable to continue to pay the outstanding mortgage.

If the house is sold, let’s assume that after the outstanding loan is paid and all monies are refunded to the respective CPF accounts, there are surplus proceeds. Then, as a general rule, the proceeds would be distributed according to each party’s, or each beneficiary’s, share.

I note that although you did not provide any consideration for your father to add you as a co-owner, you have been making financial contributions towards its acquisition through your CPF payments. This would entitle you to a share of the property.

If your dad had made a will, he would only be able to state in the will the names of the beneficiaries of his estate.

He would not be able to dictate how the sale proceeds are to be distributed simply because he cannot compel you to sell your share of the property.

Generally, the property can be sold only with your consent.

Assuming you agree to sell, the CPF Board would require all monies used from your CPF account to be returned to that account (provided you are under 55 years of age) before it gives its consent to the sale of the property.

The only exception is where the charge by the bank ranks ahead of the CPF charge (which is common nowadays but was not 10 years ago), and the sale proceeds are insufficient to repay all the CPF monies spent.

You can then seek consent from the CPF Board for you to sell your property with the sale proceeds going to pay off the bank loan first and the balance returning to your CPF account.

In this case, there will not be any monies left for distribution after that.

Vijai ParwaniParwani & Co

Source : Sunday Times - 9 Apr 2006

A FAMILY of three were yesterday ordered to vacate their three landed properties in Bukit Timah after OCBC Bank won its case to get them to repay a multi-million-dollar loan.

Mr Moey Keng Weng, former chief financial officer of Malaysia-Singapore Airlines, the forerunner of SIA; his wife, Madam Chang Chi Lan; and daughter Meng Yee, had tried a novel defence to avoid repaying the loan, which now stands at more than $23 million.

Instead, the family lost its case, and was given a week to vacate two of its three houses at Jalan Ampang.

They were given three weeks to get out of the third house, because they currently live in it.

The saga began in 1996, when Mr Moey developed the plot of land to build four bungalows. The daughter took a $15 million overdraft.

In 1998, when they exceeded the overdraft limit, they refinanced one of the houses.

That year, Tat Lee merged with Keppel Bank. The new entity, Keppel TatLee Bank, started legal action against them in April 1999 to recover the money but did not follow through.

In 2001, Keppel TatLee merged with OCBC Bank. OCBC sued the family to recover the money in 2002.

When the trial started last week, the family’s lawyer, Mr Andre Arul, relied on a novel defence. He argued that OCBC had no right to recover the loan because it was not a party to the original transaction.

The Banking Act states that the undertakings of the original banks shall be ‘transferred to and vest’ in the new bank.

But Mr Arul argued that a debt written off before a merger cannot be transferred to a successor bank since it has been cancelled. The family claimed the debt had been written off by Tat Lee.

However, OCBC maintained that the debt had not been written off. It said Mr Moey had ‘fabricated’ a story about being told by Tat Lee representatives that the debt was written off.

Mr Moey claimed that former Tat Lee chairman, Mr Goh Eng Chew, a golfing buddy, told him that it had been written off.

Mr Moey said that when he met two Tat Lee bank officers, they nodded when he told them what Mr Goh said. But one of the officers has given evidence to the contrary.

OCBC argued that even if the debt had been written off, the bank could still sue to recover the money. A write-off is merely an ‘internal accounting entry’ - not the same as ‘forgiving’ a debt which means a mutual agreement where the bank waives the debt, on some condition.

Yesterday, Justice Tay Yong Kwang agreed with OCBC’s lawyers that the family had to pay up. He also ordered the family to pay the legal costs.

Source : Straits Times - 5 Apr 2006

Q MY HOME is currently under joint tenancy between me and my mother.

I am planning to get married next year and my wife-to-be will be helping me repay the mortgage loan, which I am now repaying alone.

My bank has advised it is not possible to include my fiancee’s name in the mortgage documents without her being a tenant/owner of the property. I was told she would be required to purchase a portion of the estate and pay stamp duty on it. How will this affect the joint tenancy arrangement?

Since we are not selling the property but merely putting an additional owner’s name on the land title, why must she pay stamp duty?

What is the cheapest way to achieve our objective of giving her part ownership and allowing her to help with the repayment?

A Your mother and you can transfer a specified share in the property to your fiancee and continue to hold the balance untransferred share as joint tenants. For example, if 1 per cent is transferred to your fiancee, the end result is that your mother and you own 99 per cent of the property as joint tenants while your fiancee holds 1 per cent as a tenant-in-common.

Hence your joint tenancy arrangement with your mother need not be affected except that you become joint tenants of a reduced share in the property. A joint tenancy is a form of ownership where all co-owners have an equal interest in the property regardless of how much each co-owner contributed to the purchase of the property.

A tenancy-in-common is a form of ownership whereby each co-owner holds a separate and definite share in the property.

On the question of stamp duty, according to the Stamp Duties Act, a transfer of any interest (part or whole) in an immovable property is chargeable with stamp duty. Stamp duty is calculated based on the greater of the purchase price or the market value of the share transferred.

The transfer of a nominal share in the property (say, 1 per cent) to your fiancee will attract less stamp duty and enable you to achieve your objective with the lowest cost.

Lie Chin ChinPartner Lie Kee Pong Partnership

Changing hands

Types of home ownership

A joint tenancy is a form of ownership where all co-owners have an equal interest in the property regardless of how much each one paid.

A tenancy-in-common is a form of ownership whereby each co-owner holds a separate and definite share. Stamp duty A transfer of any interest in an immovable property is chargeable with stamp duty. It is calculated based on the greater of the purchase price or the market value of the share transferred. The transfer of a nominal share in the property will attract less stamp duty.

Q I AM currently living with my mum. After my dad died, my elder brother became the joint owner of the flat with my mum. He has since gotten married and moved out and I am now the joint owner of this flat with my mum. All my elder siblings are married and have bought their own houses.

My mum is in her 80s. When she dies, will I become the sole owner of the flat? Can HDB allow a flat to be owned by only one person? Do my siblings have legal rights to force me to sell the flat since I became the joint owner by way of a ‘gift’ (as stated in the house deed) from my dad?

A Co-ownership of property can be either as a joint tenancy or as a tenancy-in-common. In the latter case, each co-owner’s share in the property is predetermined and known from the very start.

The most significant and important difference between these two types of co-ownership is that in a joint tenancy, after the death of a co-owner, the remaining survivors take the dead person’s share and eventually the last and sole survivor takes all.

For a tenant-in-common, he can pass on his share by way of a will or according to the rules of intestacy. A co-owner who wants to pass on his interest in the property and not let the surviving co-owner take all, should therefore sever the joint tenancy, converting it into a tenancy-in-common.

You will first of all have to ascertain from the HDB lease whether you are a joint tenant or a tenant-in-common with your mother. I take it that when you use the word ‘joint owner’, you actually mean co-owner. If you are a joint tenant, you will become the sole owner upon her death.

If you are a tenant-in-common and it is your mother’s wish that you should be the sole owner upon her death, then your mother should make a will to that effect, so that there is no room for future ambiguity or dispute.

As you became an owner by way of a gift, that does not weaken your ownership. So long as there is an outright intention to make a gift together with delivery of the property, then that is an outright gift in every sense of the word unless there was an agreement behind the making of the gift to you.

In law, it is possible to make a gift to someone on the face of it but at the same time, if the recipient is told of a purpose or of some beneficiaries whom the maker of the gift really wants to benefit, you would then be said to be holding the property on trust. As this property is an HDB flat, no trust can be created without HDB’s prior approval and if so created, such a trust is void.

The HDB Act says there shall be no resulting or constructive trust of an HDB property as would arise if money is, say, contributed by one person but someone else is the owner of the HDB flat. This is understandable because the objective of the HDB is to provide affordable public housing and not to allow those with money to ‘invest’ in HDB flats behind a trust by using other people’s names.

Finally, although there has been a significant relaxation of HDB’s rules for singles to own flats, you should check with HDB about your eligibility to hold the flat as a single lessee. Much would depend on such factors as your age and the type of flat.

Source : Sunday Times - 2 Apr 2006

Q I REFER to your article on reverse mortgages on March 12. My father, aged 70, is the sole owner of a three-room HDB flat. He paid for the flat fully about 30 years ago.

Currently, my mother and brother live with him. My mother and brother paid for the renovations, and have paid the electricity and water bills all these years.

If my father decides to reverse mortgage the flat to NTUC Income without his family’s knowledge, is there any law to protect the interests of his spouse or the occupiers of the flat?

Before a reverse mortgage is approved, is my mother’s consent needed?

When my father dies, will NTUC Income boot my mother and brother out of the flat?

A NTUC Income offers the reverse mortgage scheme to benefit older HDB owners whose savings have been depleted.

We start this new scheme with an interest rate of 5 per cent a year for HDB owners. This rate is much lower than rates for many other forms of debt in the market.

Under the scheme, owners mortgage their properties to NTUC Income and draw cash regularly as a loan from us. These regular cash advances are used to meet retirement expenses. They continue to retain ownership and stay in their homes.

When the application is made for the reverse mortgage, a family member of the applicant needs to be present, and to confirm that he or she is aware that the property will be placed under reverse mortgage.

The family member will also witness the acceptance of the Letter of Offer and take part in the execution of the mortgage documents.

When the property owner dies, we will discuss options with family members on how the deceased’s estate will settle the outstanding loan.

These options include allowing a family member to take over the loan and the property.

Any person who intends to take up a reverse mortgage should consider the interests of the spouse and children. He should consider if it is necessary to reflect their interests as joint legal owners in the property.

To learn more about reverse mortgages, you can call our hotline at 6788-1122 or check out our website at www.income.coop

We invite you and your family members to attend an educational session conducted by us. We will explain how the reverse mortgage works and answer your questions.

You might wish to seek independent professional advice regarding the legal rights of your mother and brother.

Tan Kin LianChief Executive OfficerNTUC Income

Q A PERSON dies with $800,000 worth of stocks in his Central Depository (CDP) account and $500,000 in cash.

In his will, can he instruct that someone, such as his stockbroker, sell off the entire portfolio within a year to maximise the gains?

If this is allowed, how is estate duty computed?

Is it done at the point of his death or when the portfolio is completely sold?

Assume also he has a new car worth $100,000. Is this to be sold immediately and turned into cash for tax purposes? Who decides the ‘right price’ to sell at?

What if he owns property worth $800,000 in the United States?

Must it be immediately sold, and who decides that the price offered is a fair price when it is finally sold after six months?

This person, 2 1/2 years before his death, gave $20,000 to his granddaughter and put it into her bank account.

Will it be considered as part of the taxable amount too?

As he is a good stock investor, can he instead open a joint CDP account and use this money to purchase stocks?

Suppose this amount has doubled at the point of his death. Will it be taxed too?

Finally, what happens to those items that were not specifically mentioned in the will, such as a stamp collection worth $50,000? Are such items taxable?

A Estate duty is payable on the aggregate market value of all Singapore assets (both immovable and movable) and movable assets outside Singapore belonging to a deceased at the date of his death.

His immovable assets (such as land and buildings) outside Singapore are not liable to duty.

Movable assets include cash, bank accounts, insurance monies, shares, CPF balances and motor vehicles.

A $600,000 estate duty exemption is given for all assets other than residential properties owned by the deceased. The exemption is not given for cash alone. That is to say, it does not matter if the assets are cash or non-cash in nature.

For estate duty purposes, the open market value of the assets at the time of death is used to determine the value of the assets. This is regardless of whether the assets are mentioned in the will.

In this example, the motor vehicle bought for $100,000 would have depreciated over time.

For the purpose of estate duty, the car as well as stamp collection would be valued at the open market value as at the date of death.

If the open market value of an asset is not readily available, a professional valuer may be engaged to assess its value.

The property in the US worth $800,000 is considered immovable property outside Singapore and hence not dutiable in Singapore.

If the US property is sold after death, proceeds from the sale would also not be included in the value of the deceased’s estate.

We assess all gifts made by a deceased within five years of his death. In this case, the $20,000 given away 2 1/2 years before death may be assessed under either of these situations:

The money was given as an outright gift. The sum assessed would be $20,000.

If the deceased had used the $20,000 to invest in stocks and shares under a joint CDP account, their market value as at the date of death would be subject to estate duty, whether it is higher or lower than the original amount invested.

Whether a person dies testate (with a will) or intestate (without a will), all his assets as at the date of death are subject to estate duty.

If there is a will, his assets would be distributed according to his wishes as specified therein. However, the executor cannot deal with the deceased’s assets, such as by selling the shares on the stock market, until the Grant of Probate is extracted.

If there is no will, the assets would be distributed according to the Intestate Succession Act.

The assets given in your example that are subject to estate duty are as follows:

Value of shares in CDP account: $800,000

Cash: 500,000

Car: Market value as at date of death (say, $80,000)

Cash gift to granddaughter: $20,000

Stamp collection: Value, as at date of death (say, $50,000)

Total value of assets: $1.45 million

Less exemption of $600,000

Net value = $850,000

Estate duty is levied on this $850,000 at 5 per cent = $42,500.

Mrs Lee Leng Kiong Director (Corporate Communications)Inland Revenue Authority of Singapore

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

Source : Sunday Times - 19 Mar 2006

Q I AM an only child and my father has two sisters and two brothers, all of whom are Muslim.

My father has two landed houses held in joint tenancy with me. I did not contribute financially to their purchase.

He also has investments in some foreign currencies and local bank accounts in our joint names. He holds one local bank account under his name. I’m the nominated beneficiary for his Central Provident Fund money.

Upon his death, which of the assets cannot be contested by his siblings? How should he reinforce my claim so that it will not be subject to the Muslim law of division? Can he draw up a will?

A UNDER civil law, joint tenants of a property have an equal interest in the property, regardless of the amount of money each co-owner has contributed towards its purchase.

When a co-owner dies, his share of the property will automatically pass to the remaining co-owner(s) regardless of whether the deceased joint tenant has left behind a will. Thus, upon your father’s death, you will become the sole legal and beneficial owner of both the landed properties.

However, things are different under Islamic law. You are entitled to only a half-share of the two properties. The other half-share is to be distributed according to faraid, the Islamic law of inheritance.

This is on the assumption that it was your father’s intention to give you a half-share when he included your name as a co-owner.

If not, the whole 100 per cent is subject to faraid.

Where there is a conflict of laws in matters such as joint tenancy, insurance and CPF nominations, the general rule is civil law overrides Islamic law.

Hence, your father’s siblings cannot, in law, claim for their faraid share of the two properties held in joint-tenancy.

However, as a believer, you may wish to consider waiving your rights under civil law and apply the Islamic law instead, and distribute the estate according to faraid as follows:

You as the only daughter/child: Half share

Your father’s siblings: Half share

Alternatively, your uncles and aunties may waive or disclaim their rights to their share after your father’s death. However, for you to deprive them of it is forbidden in Islam.

To avoid the application of faraid and any pressure from your father’s siblings to divide his joint ownership of properties, accounts and assets according to faraid, your father may wish to distribute his assets during his lifetime.

There are several ways to do this, including hibah (gift) and nuzriah (vow). He could seek an expert’s opinion on how this can be done.

As for you being named the beneficiary of your father’s CPF money, under the law, you will receive it for your personal use and benefit.

But under Islamic law, you are to receive it as the representative/trustee for the deceased’s estate for distribution according to faraid.

If it is your father’s intention to leave all his CPF money to you upon his death and to make it Islamic-compliant, then he could execute a nuzriah (subject to certain terms and conditions) in your favour so his siblings cannot contest it in law and in Islam.

As for the will, under the Administration of Muslim Law Act, a Muslim domiciled in Singapore shall dispose of his property by will only in accordance with Muslim law.

It allows a Muslim testator (that is, a Muslim who has a will) to dispose a maximum of one-third of his net estate to his non-waris or those who are not automatically entitled to his inheritance under faraid.

This is after payment of his debts due to God (for example, zakat or tithe), debts to his creditors, estate duty and his last expenses (including his medical, funeral and testamentary expenses).

The process of clearing these expenses is for the purification of a Muslim deceased’s estate.

The balance of his estate must be distributed according to faraid. A Muslim is not allowed to make a will in favour of his heirs, unless approved by the other heirs after his death.

Suhaimi SallehChairman Barakah Capital Planners

Advice provided in this column is not meant as a substitute for comprehensive professional advice. E-mail questions to chanteik@sph.com.sg

Source : Sunday Times - 1 Mar 2006