Published April 2018
High net worth individuals hold bank accounts in different jurisdictions like Singapore, England, Dubai and Switzerland. These accounts are an asset of the account holder and will form a part of the individual’s estate on death. Consequently, the legal issues which might arise on the death of the account holder need to be carefully considered.
Key issues to note:
As bank accounts are considered ‘movable assets’, the money in the bank account will be distributed in accordance with the inheritance laws of the country of ‘domicile’ of the deceased person at the time of his death.The meaning of ‘domicile’ of a person generally refers to the country that a person treats as his permanent home and has a substantial connection with. In many cases this will be the place of birth of the individual. It is important to understand that ‘domicile’ and ‘residence’ are different legal concepts. An individual’s ‘domicile’ can be separate from that individual’s ‘residence’ (tax or otherwise). For example, an account holder may be domiciled in Kenya but resident in the UAE. If such an individual holds a Singapore bank account and has made a Singapore will, it is still necessary to consider the law of his domicile. If the law of his domicile gives him the freedom to dispose his assets freely then the bequests in the Singapore will in relation to the disposal of the proceeds of the account will be recognised and given effect to by the Singapore courts. However, if the account holder is domiciled in, say, the UAE and is Muslim by faith, then he will not enjoy freedom to dispose his assets and the Singapore courts will recognise and give effect to Sharia’h, being the inheritance law of his domicile. A Singapore will by such an account holder may therefore not have much value if it does not accord with UAE Sharia’h law principles.
To summarise, an individual who holds a foreign bank account has a number of technical legal issues to consider in relation to his succession planning. He will need to first understand where his bank account is booked in addition to the law of his domicile and then consider whether he can freely make bequests or if there are any restrictions on his ability to freely dispose his assets made under a will. These issues are critical to consider so that any wills drawn up are valid and recognised by law and the deceased account holder’s wishes in relation to his accounts are upheld.
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