Question: 

Hi, I’m Kate. I had opened a Senior FD account with my mother where I parked a sum of RM 500,000 into it to earn myself a higher interest rate than a typical FD account. My questions are as follow: 

1. If my mother passes on, what’ll happen to my RM 500,000 and its interests?

2. Could I withdraw the money without informing the bank about the passing of my mother? 


Answer: 

Let’s assume, the amount within had grown to RM 520,000 upon the passing of Kate’s mother, where RM 500,000 is the principal and RM 20,000 is its interests accrued. 

Yes, Kate is able to withdraw the sum in the Senior FD account from the bank, if the account is termed as ‘either to sign’, which allows either Kate or her mother to make transactions from the account. 

But, Kate is only entitled to use ½ of the RM 520,000, which is RM 260,000. The other half shall form part of her mother’s estate and thus, will be distributed to her beneficiaries based on her testacy status. If she does not have a valid will, it will be distributed in accordance to the Distribution Act 1958. 


Does Kate have Siblings? 

Or, is Kate’s father still present? 

Why? This is because, based on the Distribution Act 1958, her mother’s portion of monies, assuming Kate’s maternal grandparents had passed on, shall then be distributed to the following beneficiaries based on the following ratio:

 – ⅓ to the Surviving Spouse (Kate’s father if he survives) 

– ⅔ to the Surviving Issue (This would include Kate and her siblings) 

Otherwise, if Kate’s father has passed on, the monies would be allocated evenly among Kate and her siblings. 


Who Shall Administer to Her Estate if Kate’s Mother Doesn’t have a Will? 

Here, let’s assume that Kate’s father is still alive and Kate has two siblings, Kellie and Keith. They are all beneficiaries to the estate owned by Kate’s mother. 

First, the four beneficiaries will have to decide who should be the administrator of the estate. This person is most likely chosen from any one of the four people, thus, there is a possibility that the administrator is not Kate herself. In this case, let’s say, Keith, Kate’s brother has been chosen to be the administrator. 

Second, Keith shall then proceed to compile all of the documents such as death certificate, identification card numbers of all beneficiaries, the list of assets and liabilities owned and owed by his mother … etc. They would be submitted with the application of the letter of administration (LA) from the High Court. 

Third, in this case, the estate value is worth more than RM 50,000. Thus, Keith’s next task is to find himself two sureties who have assets that are equal or more than the estate value owned by his mother. They will act as guarantors to make sure that the estate is distributed accordingly and not squandered away. 

This process will take around 6-9 months from the passing of Kate’ mother. 


Once Keith Obtained the Letter of Administration (LA) …

Keith is now authorised to transfer the estate from his mother to his name. This enables him to use the estate collected to pay off any outstanding tax and debt owed by his mother and subsequently, complete his duties as the administrator by distributing the estate in accordance to the Distribution Act 1958. 

Now, here lies the problem. 

Keith, the administrator is authorised to collect the RM 260,000 from the bank, which has been withdrawn in advance by Kate, his sister. Imagine … the siblings could have the conservation as narrated below: 


Keith: ‘Hey sis, Ma has a Senior FD Account worth RM 520,000 with you. Where is ½ of the money?’ 

Kate: ‘I withdraw it already. It’s my money. I’m just using Ma to open the Senior FD account to get a higher interest rate. So, it’s not Ma’s money but mine.’ 

Keith: ‘Cannot like that, Sis. The money belonged to Ma. So, I have to collect the money from you and distribute it accordingly. It’s the Law.’ 

Kate: ‘Hey, I already told you. The money is mine. Why don’t you understand?’ 


Can you see that things will most likely get messy between the siblings?

If Kate insisted on not relinquishing the monies, Keith has the right to take Kate, his sister, to court. 

If Keith chooses to let Kate have the money, he is not doing a good job acting as an administrator as he fails to act impartially to the other beneficiaries, himself included. If he is married, his wife may even assert ‘pressure’ onto him. 


How to Avoid this Potential Conflict? 

By now, you may realise that having a Senior FD account with your parents is an idea that is not bright, especially if you just wish to enjoy a little better interests for your money. 

But, if you have a substantial sum in a Senior FD account with a parent of yours, it won’t be smart either to just cancel the account for you’ll lose its interests. In this case, I believe it is more practical for you to have the parent to write a Will. 

In Kate’s case, she could ask her mother to include her as her beneficiary of the sum of RM 260,000 in full in the Will. This would immediately avoid any dispute over who shall inherit ½ of the monies within the Senior FD account. 

Kate may appoint a Trust Company to act as the executor of her mother’s Will. It will solve the headache arising from an absence of a Will. They include the need to appoint an administrator, find sureties, asset collection, negotiation with the deceased’s creditors, application for income tax clearance, and finally, having to distribute the deceased’s estates accordingly. 


By Having Kate’s Mother to Write Her Will …

The RM 260,000 will still fall under her mother’s estate, despite Kate having the ability to withdraw it in advance. 

The executor is still authorised to collect RM 260,000 from Kate after the Grant of Probate (GP) has been obtained from the High Court. But, no worries as Kate is assured that she will eventually collect the money back to her in full after the settlement of all outstanding taxes and debts owed by her mother. 

So, what if you are like Kate today? 

Well, you should engage a professional estate planner to assist you in this issue so that you can avoid most, if not all, potential conflicts that may arise after the passing of a family member. You can book an appointment by first filling up the details below: 


Jocelline Chee
Jocelline Chee

As a Full-time Senior Professional Estate Planner, Jocelline seeks to understand every client’s unique asset holdings and legacy wishes, before recommending a suitable Will and/or Trust structure to meet their needs. She is well-equipped to point out various blindspots in Legacy Planning, that her clients may have. With Jocelline, you can be assured that your legacy planning journey will feel more like having an open-hearted coffee session with a trusted friend, as compared to a formal and awkward session with an equipped advisor.

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