Beneficial Ownership of Joint Accounts Upon Death of an Account Holder in Malaysia

 Authored by Radhia Razali

Joint bank accounts are commonly used for convenience or financial management during a person’s lifetime. However, disputes frequently arise after the death of one account holder, particularly regarding the rightful ownership of the remaining balance. This article examines the legal principles applicable in Malaysia, focusing on survivorship clauses, testamentary intentions, and the presumption of beneficial ownership.

1. Survivorship Clauses and Their Limited Legal Effect

Many banks incorporate a survivorship clause in joint account agreements, permitting the bank to release the balance to the surviving account holder upon the death of the other. While operationally convenient, this clause does not conclusively determine beneficial ownership of the monies.

Its primary effect is procedural: it authorises the bank to make payment to the surviving account holder. It does not resolve the question of who, in law, is entitled to the funds.

2. Beneficial Ownership Must Be Determined by the Will

The central inquiry in determining ownership is the intention of the deceased, which is most clearly expressed in a Will. If the Will provides that all monies form part of the estate and are to be distributed to specified beneficiaries, that testamentary intention prevails—even where a survivorship clause exists.

Beneficial ownership therefore depends on the Will, not on the bank’s administrative practice.

3. Presumption of Equal Ownership and How It Operates

Malaysian courts recognise a presumption that joint account holders share the monies equally, arising from the fact that both individuals are named on the account. This principle is supported by:

• High Court decision in Teo Choon Heng v Teo Pek Hong & Ors [2021] MLJU 1746, and

• Court of Appeal decision in Koh Siew Keng (P) & Anor v Koh Heng Jin [2008] 3 MLJ 822.

  
  

Under this presumption, the survivor is assumed to own half of the balance, with the deceased’s half forming part of the estate.

4. Rebutting the Presumption: Evidence of Intention

The presumption of equal ownership is not absolute. It may be rebutted by demonstrating that the deceased did not intend the surviving account holder to have a beneficial interest. Such evidence may include:

• proof that the deceased was the sole contributor of funds;

• statements or circumstances showing the account was for convenience only;

• testamentary directions contradicting survivorship;

• financial records showing the survivor never treated the funds as their own.

  
  

When rebutted, the entire balance may be deemed part of the deceased’s estate.

Conclusion

The legal ownership of funds in a joint account does not automatically pass to the surviving account holder. While survivorship clauses allow banks to release funds for administrative purposes, they do not determine beneficial ownership. Malaysian courts examine the deceased’s intention, the terms of the Will, and the factual circumstances surrounding the creation and operation of the account.

Beneficiaries and executors should therefore assess joint accounts carefully to avoid disputes, ensuring alignment between the deceased’s testamentary plan and the legal treatment of the account.