What is a Survivor Clause and Why Should You Have One?

A survivor clause in an ownership agreement, like a mortgage, could save you a lot of headache in the event of the sudden death of your wife, husband or partner. We explain how this works to protect you.

Death is a sensitive word to many; and, when it does happen, they struggle to sort themselves out as they aren't financially prepared for what's to come. The StarOnline reported that close to two million inheritance claims valued at RM45 billion are still frozen by various agencies due to a lack of legitimate trust or inheritance instruments.

This happens because people don't always prepare wills as they should and now the money is stuck until the Courts of Probate can decide how to distribute it. But, there is a way around it. Survivorship clauses aren't known to many but they could mean the saving grace you need when a loved one who is a joint asset owner passes intestate (meaning without a will). Let us give you the basics on these clauses and how they can help you plan for smoother inheritance distribution.

First, What is a Survivorship Clause?

This clause may not always be called a survivorship clause in every agreement but the purpose is the same. It aims to give the surviving party rightful claim to asset distribution from shared accounts, property ownership, and life insurance. For example, let's say Jane and Maurice have a joint account together. The survivor clause in their joint account would allow Jane to have her share of their joint account should Maurice pass on. Whether you are a surviving spouse, child or parent, the survivorship clause enables you to lay claim on the jointly owned asset.

Similarly, a joint ownership agreement will have a survivorship clause in terms of property ownership. This clause then gives the surviving owner the right to inherit the property in full should the other owner pass on.

Let's say Maurice and Jane decided to buy a new condominium together. They agree on a joint ownership and both their names will be listed in the agreement. With that said, if Maurice passes on, his right to the property will be transferred to Jane. Unless the will states otherwise, Jane will have full ownership rights to the property.

Why is it important?

Normally, a joint owner's interest can be protected by both parties preparing a will. This ensures smoother distribution no matter which party passes away first. However, if there was no will or if it was improperly made as to cause the courts to delay disbursement until matters are cleared; the surviving joint owner may find themselves locked out of controlling the asset in question. If the joint asset is a checking account with a couple's life savings and fund; this situation could be dire indeed.

As a desperate measure, getting a thumb print from the deceased to legalise a new will probably isn't the best way to go about it. Of course, the closest kin could go about trying to obtain a letter of administration but this long and dragging process of 2 – 5 years will not help a family in need of financial assistance.

In such an instance, a survivorship clause could help. The surviving joint owner of the account or property could easily take control of the asset without lengthy court interference.

But the problem is, not all joint bank accounts or joint agreements contain the equivalent of a survivorship clause. As such, you'd do well to ask your bank or lawyer if such a clause exists and if not; how soon you can set about getting it included.

Better Late than Never

Now that you've know the usefulness of this clause, take a look at your accounts and agreements. Does it contain such a clause? If not, best to talk to your lawyer or banker about it. Even in the worst case scenario, if you cannot include the clause, you now know how doubly important it is to write a will for your family's benefit. The last thing you want is to cause your loved ones financial hardship during the trying time of your demise.


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