AN OPTION that allows people to waive their rights to financial advice when making investments ought to be modified or scrapped, say some industry experts.
They believe the clause - called Option 4 - makes it far too easy for financial institutions to dodge their responsibility to give retail investors sound advice.
'In giving financial advice, we must try to rise to a higher level of practice, assume responsibility and ensure what we sell is appropriate and benefits the investor.' Mr Salim, on upholding the profession ... more
It is also seen as a culprit in the ongoing structured products fiasco, where many investors were sold products clearly unsuitable for their investment profile.
The president of the Association of Financial Advisers Singapore, Mr M. Salim, has said the existing Option 4 needs to be re-assessed. 'That concept of 'no advice' should not be something that advisers are so quick to offer investors.
'In fact, they should reserve making that offer to the investor unless it's explicitly requested during the KYC process.'
KYC - or know your customer - is a mandatory practice administered by financial advisers. It aims to detail a person's investment objectives, financial situation and personal needs so the right products can be recommended to suit his profile.
Many retail investors who bought failed products such as Lehman Minibonds and DBS High Notes 5 claimed that the risks were never explained to them by the people and institutions that sold them.
An adviser who sells an unsuitable product to an investor, or who carries on the sale process even when he knows the person does not understand what he is getting himself into, could be in breach of the Financial Advisers Act (FAA).
'However, one thing that relinquishes the adviser's liability in such cases would be if he had gotten the investor to sign on Option 4 during the KYC process,' said Mr Salim.
The process involves advisers, including relationship managers or personal financial consultants, offering four different options of 'advice' to an investor.
Option 1 includes a complete fact-finding process and needs-analysis before products can be recommended.
The second option is less stringent and involves a 'partial' fact-find, while Option 3 investors only want advice on a specific product.
The fourth option is 'no advice'.
'Option 4 is really when a client comes and says, 'I want to invest in this product but I don't want your advice',' said Mr Salim. 'Anything other than that should be an Option 3, 2 or 1, but if the adviser still puts it as Option 4, then it would be wrong and that happens.'
Industry veteran Stanley Jeremiah, now a council member of the Singapore Insurance Institute, agreed. He said: 'The 'no advice' has been used by financial advisers to avoid liability or responsibility.
'If the adviser tells the investors, 'If you want to save time, just agree to no advice, otherwise you have to fill up all this information', chances are the investors will do as the adviser tells them to.'
Mr David Gerald, chief executive of the Securities Investors Association of Singapore, said advisers also expose themselves to greater risk of complaints if they inappropriately convince investors to choose Option 4. 'An investor can sign to say he does not want advice but when he loses money, he may raise many issues, such as saying, 'I'm not well-educated and I don't understand the prospectus; I trusted the adviser because he represents a well-established institution'.
'So it is always better for the adviser to get the investor to understand the risks and get him to acknowledge that he has been advised,' he said.
Mr Leong Sze Hian, president of the Society of Financial Service Professionals, said there are other ways of looking at the relevance of Option 4. 'No advice may be applicable for investors who want to decide for themselves, such as an existing investor making a regular top-up, so no advice may then be appropriate.'
'And 'no advice' also does not mean that it's a way out for representatives to protect themselves.
It may also lead to advisers giving their recommendations in such a way as to protect themselves because they must give advice - such as only recommending low-risk products - to match an investor's profile.'
Instead of removing Option 4, Mr Jeremiah suggested monitoring individual sales and putting disincentives for advisers who report high Option 4 sales.
Mr Salim said advisers also have to recognise that they play a key role in the sale process. 'In giving financial advice, we must - even if there's no requirement to hold additional responsibilities - try to rise to a higher level of practice, assume responsibility and ensure what we sell is appropriate and benefits the investor.'
But he noted that investors also need to take some responsibility.
'They can't just accept the words of advisers. They have to do their own due diligence, read about the product, understand it and know if they need the product,' he said. 'They must not be afraid to ask questions regarding their money.
Showing posts with label Legal Concerns. Show all posts
Showing posts with label Legal Concerns. Show all posts
Tuesday, December 9, 2008
Sunday, March 16, 2008
Will Dependants be liable for debt ?
March 16, 2008
Will dependants be liable for my debts when I die?
Leong Sze Hian President Society of Financial Service Professionals
Q What happens to a person's liabilities when he dies? For example, if he is in debt to a bank for his personal credit line, will his dependants - say, his wife - be required to repay the debt even though she has no interest in the account, which is held in his name only?
A YOUR dependants, such as your wife, are not liable for your debts unless, for instance, they were joint-account holders with you, or acted as guarantors for your loan.
Your estate is liable for your debts. The estate includes your assets other than an HDB flat, the balance in your CPF account, and any life insurance expressed for the benefit of your spouse or children at the inception of the policy.
As the CPF Dependants' Protection Scheme (DPS) was transferred to two private insurers about two years ago, and CPF nominations are no longer applicable to DPS, DPS death proceeds will also form part of your estate.
While the balance in your CPF account is protected from creditors, any CPF used for investment will not be protected from creditors on death. You should therefore consider liquidating any CPF investments before death.
As in the high-profile case of former NKF chairman Richard Yong, when someone, while in a state of insolvency, makes any asset transfers that could be construed as an attempt to defraud creditors, those assets may be recovered by creditors too.
Leong Sze Hian President Society of Financial Service Professionals
Will dependants be liable for my debts when I die?
Leong Sze Hian President Society of Financial Service Professionals
Q What happens to a person's liabilities when he dies? For example, if he is in debt to a bank for his personal credit line, will his dependants - say, his wife - be required to repay the debt even though she has no interest in the account, which is held in his name only?
A YOUR dependants, such as your wife, are not liable for your debts unless, for instance, they were joint-account holders with you, or acted as guarantors for your loan.
Your estate is liable for your debts. The estate includes your assets other than an HDB flat, the balance in your CPF account, and any life insurance expressed for the benefit of your spouse or children at the inception of the policy.
As the CPF Dependants' Protection Scheme (DPS) was transferred to two private insurers about two years ago, and CPF nominations are no longer applicable to DPS, DPS death proceeds will also form part of your estate.
While the balance in your CPF account is protected from creditors, any CPF used for investment will not be protected from creditors on death. You should therefore consider liquidating any CPF investments before death.
As in the high-profile case of former NKF chairman Richard Yong, when someone, while in a state of insolvency, makes any asset transfers that could be construed as an attempt to defraud creditors, those assets may be recovered by creditors too.
Leong Sze Hian President Society of Financial Service Professionals
Sunday, February 24, 2008
How to claim one's rightful share of estate?
Feb 24, 2008
How to claim one's rightful share of estate?
Q I AM among the beneficiaries of an estate that is made up of the proceeds from the sale of a property. However, I am facing the problem of getting my rightful share from the executor.
I have a certified true copy of the will but I do not know what my rights are and how to go about claiming my share of the estate.
I was told that the executor has already committed a breach of trust by not distributing my share to me. Please advise if there is any waiting period before I can take legal action, since I know that the property has been sold and the executor has taken the proceeds. If there is, how long do I have to wait? What type of legal action should I take and what are the chances of recovering my share?
A An executor has a duty under the law to ensure that the assets in the estate of the deceased are distributed in accordance with the wishes as stated in his will, whose authenticity has been proved in the courts.
In your case, it appears that the deceased's will has already been proved and that a grant of probate naming the executor has already been obtained. This is typically required before realisation of any assets can take place, such as the sale of the deceased's property.
Prior to the distribution of the estate to the beneficiaries under the will, the executor also has a duty under the law to pay all the deceased's debts and the reasonable estate expenses. This may, in certain cases, result in a delay in distribution.
Other factors causing delay include legal complications in administering the assets or being unable to determine the full extent of the estate, which will create difficulties in accounting for the exact amount that each beneficiary ought to receive.
In your case, given that as far as you are aware, the estate of the deceased comprised only of the property's sale proceeds and that you are one of the named beneficiaries in the estate, it would be prudent of you to ask the executor about the status of the administration of the estate.
You can also, if you wish, ask for an account of the estate, which you are entitled to, as all executors are bound by duty to keep accounts of their management of the estate.
If the executor does not give you an explanation, or gives you one that you find unreasonable, you should seek legal representation in order to make a claim against him for an account of the estate, and subsequently for your share of the estate.
Such a claim will involve court proceedings and may be an expensive and lengthy task in the event that the executor contests your claim.
In such proceedings, you may also ask the court to grant orders to the effect that distribution of the estate (in the absence of any other impediments) be distributed to you within a specified time.
The length of time that has elapsed from the sale of the property will also be a relevant factor.
Navin Lobo Lawyer Harry Elias Partnership
Source: The Straits Times
Advice provided in this column is not meant as a substitute for comprehensive professional advice.
How to claim one's rightful share of estate?
Q I AM among the beneficiaries of an estate that is made up of the proceeds from the sale of a property. However, I am facing the problem of getting my rightful share from the executor.
I have a certified true copy of the will but I do not know what my rights are and how to go about claiming my share of the estate.
I was told that the executor has already committed a breach of trust by not distributing my share to me. Please advise if there is any waiting period before I can take legal action, since I know that the property has been sold and the executor has taken the proceeds. If there is, how long do I have to wait? What type of legal action should I take and what are the chances of recovering my share?
A An executor has a duty under the law to ensure that the assets in the estate of the deceased are distributed in accordance with the wishes as stated in his will, whose authenticity has been proved in the courts.
In your case, it appears that the deceased's will has already been proved and that a grant of probate naming the executor has already been obtained. This is typically required before realisation of any assets can take place, such as the sale of the deceased's property.
Prior to the distribution of the estate to the beneficiaries under the will, the executor also has a duty under the law to pay all the deceased's debts and the reasonable estate expenses. This may, in certain cases, result in a delay in distribution.
Other factors causing delay include legal complications in administering the assets or being unable to determine the full extent of the estate, which will create difficulties in accounting for the exact amount that each beneficiary ought to receive.
In your case, given that as far as you are aware, the estate of the deceased comprised only of the property's sale proceeds and that you are one of the named beneficiaries in the estate, it would be prudent of you to ask the executor about the status of the administration of the estate.
You can also, if you wish, ask for an account of the estate, which you are entitled to, as all executors are bound by duty to keep accounts of their management of the estate.
If the executor does not give you an explanation, or gives you one that you find unreasonable, you should seek legal representation in order to make a claim against him for an account of the estate, and subsequently for your share of the estate.
Such a claim will involve court proceedings and may be an expensive and lengthy task in the event that the executor contests your claim.
In such proceedings, you may also ask the court to grant orders to the effect that distribution of the estate (in the absence of any other impediments) be distributed to you within a specified time.
The length of time that has elapsed from the sale of the property will also be a relevant factor.
Navin Lobo Lawyer Harry Elias Partnership
Source: The Straits Times
Advice provided in this column is not meant as a substitute for comprehensive professional advice.
Sunday, January 6, 2008
How can landlord reclaim house when tenant fails to pay rent?
Jan 6, 2008
How can landlord reclaim house when tenant fails to pay rent?
Q MY FRIEND'S three-room terrace house in Singapore was rented out to a divorcee and her daughter. The tenant put down a total deposit of $1,200, consisting of one month's rental of $1,000 and $200 for utility bills.
The tenant last paid rent in April last year. She owes four months' rent, or $4,000. Before that, she had been late in making payments for several months. Unpaid bills for utilities add up to about $100.
The landlord has chased the tenant for rental payment since June. At first, the tenant gave many excuses and promises, but they all turned out to be false.
Since late July, the tenant has stopped answering the landlord's calls to her mobile phone and
has also not returned any SMSes.
She and her daughter were hardly ever at home. In late July, the landlord locked the front and back gates of the house with extra padlocks but did not enter the house. The tenant's possessions are still in the house. The tenant did not attempt to enter the house or contact the landlord.
The landlord made a police report that the tenant owed money and could not be contacted. The landlord's primary goal is to reclaim the house and rent it to someone else. The money owed is secondary.
A notice containing details of the amount owed and of the police report that had been made was posted on the front door of the house. The same notice was circulated to neighbours.
The tenant's furnishings were bought from a furniture company on instalment.
My questions are:
a) Does the landlord have the right to lock up the front and back gates of the house without entering the house?
b) What are the landlord's liabilities if he enters the house and then sells the tenant's possessions to reclaim part of the money owed?
c) What are the landlord's liabilities if he enters the house, takes photos of the interior of the house with all the tenant's possessions, for documentation purposes, and then moves the possessions into a storage room?
After that, can the landlord rent out the house to another tenant but keep the storage room for his own use in order to store the previous tenant's possessions?
d) If the tenant makes a police report that the landlord entered the house and took her possessions, can the police arrest the landlord?
e) Can the furniture company make a claim against the landlord for selling the furnishings that are still being paid for by instalment?
f) What is the best method to evict the tenant in my friend's case?
A WHEN a tenant fails to pay rent, the landlord may of course sue the tenant for the arrears of rent, just as he could with any other debt due and owing.
The action must be brought within six years of the date that the arrears became due. However, the landlord has two other specific remedies, namely, distress under the Distress Act and forfeiture of the lease.
Distress is an ancient remedy that is quite similar to seizure and sale - that is, the tenant's goods are seized and sold, and the rent owing must not exceed 12 months of the tenancy.
Such an action may be brought if the tenant is still in occupation or has his goods or belongings on the property. The procedure starts with the filing of a writ of distress that is addressed to the sheriff. The sheriff will seize the goods, and make an inventory and a valuation. He will also give the tenant a notice of the seizure, informing him of the rent owed and that the goods seized will be sold at a stated place and time.
Such a notice may be pasted in a conspicuous place on the premises. The tenant has five days to pay up from the date of notice or to apply to court for an order to stop the sale. On the tenant's application, the court may order that the goods be released unconditionally, direct that an issue be tried and so suspend the writ, or hold that the goods may be sold.
Of course, if no application is made, the goods will be sold and the proceeds applied first to pay the sheriff's costs and then to satisfy the outstanding rent. The balance, if any, would be returned to the tenant.
Certain items cannot be distrained, such as things in actual use in the hands of the tenant, tools and implements, and his necessary clothes and bedding for himself and his family.
Only movable items may be seized, so fixtures are excluded. It is also common for most hire-purchase companies to expressly provide in the hire-purchase agreement that the hiring shall automatically terminate if the hirer's landlord takes any steps to levy distress. Therefore, such goods cannot be seized and, if seized, would be released by the court.
Where the tenant has abandoned the premises and there is insufficient property for distress, then if (a) the rent is not less than 75 per cent of the annual value of the property and (b) the rent has been in arrears for at least two months, the landlord may apply to court to enter and take possession of the premises.
The sheriff will paste a notice informing the tenant that possession will be given to the landlord unless the tenant applies within 10 days, or the court orders otherwise, on the application of the tenant or some other interested party.
If the distress action is brought after bankruptcy proceedings have started against the tenant, then only three months of arrears of rent are recoverable against him. The landlord may also file a proof of debt with the Official Assignee against the bankrupt tenant, just as he could with any other unsecured creditor.
The landlord may also apply for forfeiture of the lease, which would effectively bring the lease to an end. This is usually an action for possession, and a well-drafted agreement will usually contain a clause for re-entry in the event of the tenant's failure to pay rent.
However, the tenant may apply to court before judgment for relief from forfeiture by paying into court all the arrears of rent and costs, in which case the tenant would be able to continue with the lease and not have to enter into a new lease.
Even after judgment for possession, the tenant is still entitled to relief if he pays up the judgment sum with costs within four weeks of the judgment. The law is not explicit about whether relief is still available to the tenant where the landlord has entered into possession peaceably and changed the locks.
While the court might still be able to grant relief, it would, however, take into account the lapse of time as it would not be fair to the landlord if the tenant were to appear out of the blue and pay the arrears to reclaim the lease. The tenant's significantly long absence could well be read as an implied surrender of the lease.
In your friend's case, it appears that he has entered into possession peaceably and that has effectively brought the lease to an end. However, your friend should be mindful of the tenant's right to apply for relief. The tenant's right to relief is extinguished only if your friend issued and served proceedings for possession, obtained judgment and then entered the premises on the strength of that judgment.
As for the tenant's goods, it is prudent and best to apply for a court order as the tenant might make all sorts of allegations that his property had not been properly valued or had been sold at an undervalued price.
The police usually treat disputes between landlord and tenant as a commercial matter.
Amolat Singh Lawyer Amolat & Partners
How can landlord reclaim house when tenant fails to pay rent?
Q MY FRIEND'S three-room terrace house in Singapore was rented out to a divorcee and her daughter. The tenant put down a total deposit of $1,200, consisting of one month's rental of $1,000 and $200 for utility bills.
The tenant last paid rent in April last year. She owes four months' rent, or $4,000. Before that, she had been late in making payments for several months. Unpaid bills for utilities add up to about $100.
The landlord has chased the tenant for rental payment since June. At first, the tenant gave many excuses and promises, but they all turned out to be false.
Since late July, the tenant has stopped answering the landlord's calls to her mobile phone and
has also not returned any SMSes.
She and her daughter were hardly ever at home. In late July, the landlord locked the front and back gates of the house with extra padlocks but did not enter the house. The tenant's possessions are still in the house. The tenant did not attempt to enter the house or contact the landlord.
The landlord made a police report that the tenant owed money and could not be contacted. The landlord's primary goal is to reclaim the house and rent it to someone else. The money owed is secondary.
A notice containing details of the amount owed and of the police report that had been made was posted on the front door of the house. The same notice was circulated to neighbours.
The tenant's furnishings were bought from a furniture company on instalment.
My questions are:
a) Does the landlord have the right to lock up the front and back gates of the house without entering the house?
b) What are the landlord's liabilities if he enters the house and then sells the tenant's possessions to reclaim part of the money owed?
c) What are the landlord's liabilities if he enters the house, takes photos of the interior of the house with all the tenant's possessions, for documentation purposes, and then moves the possessions into a storage room?
After that, can the landlord rent out the house to another tenant but keep the storage room for his own use in order to store the previous tenant's possessions?
d) If the tenant makes a police report that the landlord entered the house and took her possessions, can the police arrest the landlord?
e) Can the furniture company make a claim against the landlord for selling the furnishings that are still being paid for by instalment?
f) What is the best method to evict the tenant in my friend's case?
A WHEN a tenant fails to pay rent, the landlord may of course sue the tenant for the arrears of rent, just as he could with any other debt due and owing.
The action must be brought within six years of the date that the arrears became due. However, the landlord has two other specific remedies, namely, distress under the Distress Act and forfeiture of the lease.
Distress is an ancient remedy that is quite similar to seizure and sale - that is, the tenant's goods are seized and sold, and the rent owing must not exceed 12 months of the tenancy.
Such an action may be brought if the tenant is still in occupation or has his goods or belongings on the property. The procedure starts with the filing of a writ of distress that is addressed to the sheriff. The sheriff will seize the goods, and make an inventory and a valuation. He will also give the tenant a notice of the seizure, informing him of the rent owed and that the goods seized will be sold at a stated place and time.
Such a notice may be pasted in a conspicuous place on the premises. The tenant has five days to pay up from the date of notice or to apply to court for an order to stop the sale. On the tenant's application, the court may order that the goods be released unconditionally, direct that an issue be tried and so suspend the writ, or hold that the goods may be sold.
Of course, if no application is made, the goods will be sold and the proceeds applied first to pay the sheriff's costs and then to satisfy the outstanding rent. The balance, if any, would be returned to the tenant.
Certain items cannot be distrained, such as things in actual use in the hands of the tenant, tools and implements, and his necessary clothes and bedding for himself and his family.
Only movable items may be seized, so fixtures are excluded. It is also common for most hire-purchase companies to expressly provide in the hire-purchase agreement that the hiring shall automatically terminate if the hirer's landlord takes any steps to levy distress. Therefore, such goods cannot be seized and, if seized, would be released by the court.
Where the tenant has abandoned the premises and there is insufficient property for distress, then if (a) the rent is not less than 75 per cent of the annual value of the property and (b) the rent has been in arrears for at least two months, the landlord may apply to court to enter and take possession of the premises.
The sheriff will paste a notice informing the tenant that possession will be given to the landlord unless the tenant applies within 10 days, or the court orders otherwise, on the application of the tenant or some other interested party.
If the distress action is brought after bankruptcy proceedings have started against the tenant, then only three months of arrears of rent are recoverable against him. The landlord may also file a proof of debt with the Official Assignee against the bankrupt tenant, just as he could with any other unsecured creditor.
The landlord may also apply for forfeiture of the lease, which would effectively bring the lease to an end. This is usually an action for possession, and a well-drafted agreement will usually contain a clause for re-entry in the event of the tenant's failure to pay rent.
However, the tenant may apply to court before judgment for relief from forfeiture by paying into court all the arrears of rent and costs, in which case the tenant would be able to continue with the lease and not have to enter into a new lease.
Even after judgment for possession, the tenant is still entitled to relief if he pays up the judgment sum with costs within four weeks of the judgment. The law is not explicit about whether relief is still available to the tenant where the landlord has entered into possession peaceably and changed the locks.
While the court might still be able to grant relief, it would, however, take into account the lapse of time as it would not be fair to the landlord if the tenant were to appear out of the blue and pay the arrears to reclaim the lease. The tenant's significantly long absence could well be read as an implied surrender of the lease.
In your friend's case, it appears that he has entered into possession peaceably and that has effectively brought the lease to an end. However, your friend should be mindful of the tenant's right to apply for relief. The tenant's right to relief is extinguished only if your friend issued and served proceedings for possession, obtained judgment and then entered the premises on the strength of that judgment.
As for the tenant's goods, it is prudent and best to apply for a court order as the tenant might make all sorts of allegations that his property had not been properly valued or had been sold at an undervalued price.
The police usually treat disputes between landlord and tenant as a commercial matter.
Amolat Singh Lawyer Amolat & Partners
Sunday, December 23, 2007
Splitting an HDB Flat when there is no will
Dec 23, 2007
Splitting an HDB flat when there is no will
Q MY PARENTS died without a will stating which of their three children would be the sole owner of their HDB flat.
Two of us are married with an HDB flat each. Our brother is the only one without a flat.
As both of us have our own HDB flats, technically, neither of us are allowed to act as the administrator of my parents' estate as we cannot own two HDB flats. My brother is the only one eligible to become the administrator.
1. Can the administrator hold the HDB flat as long as we want? We want to keep the flat so my brother will have a place to live.
2. Can the administrator rent out the whole flat or some rooms? And when can that be done?
Fixed deadline
In a case where there is an HDB flat, the administrator would have to resolve the distribution of the entitlement to the flat to the three beneficiaries within six years of the date of death.
3. If the flat cannot be held, what are our options? Can we sell the flat, buy each other's shares or give up our shares?
4. We do not really want to give up our shares in the flat as we think that once our brother owns it, he can sell it.
Are there any clauses that we can insert in any legal agreement that would allow us to retain our shares if he sells the flat?
A: CONTRARY to your assumptions, a person who already owns an HDB flat can still act as the administrator of an estate that consists of HDB property.
The administrator is obliged, without delay, to distribute the assets to the deceased's spouse and children or, if he has none, to other family members.
Any transfer of ownership of the flat would be in the name of the court-appointed administrator, the person authorised to make such transfers.
In your case, where there is an HDB flat, the administrator would have to resolve the distribution of the entitlement to the flat to the three beneficiaries within six years of the date of death.
Any transfer by the administrator after six years would require court approval.
The administrator may rent out the flat to earn income for the estate, subject to prevailing HDB requirements and depending on how the distribution process is going. While the share of entitlement to the estate where there is no will is determined by law, the beneficiaries may - if they are over 21 years old and can give valid consent - arrange a scheme of distribution that would allow one or more of them to retain ownership of the flat.
Such an arrangement would be subject to HDB regulations governing the eligibility of the parties involved for ownership. Depending on the agreement between the beneficiaries, those who are not eligible to own or who do not wish to own the flat may realise their shares based on the value of the flat or by taking a share of the sale proceeds.
Mabel Lim Partner Harry Elias Partnership
Source: The Straits Times
Splitting an HDB flat when there is no will
Q MY PARENTS died without a will stating which of their three children would be the sole owner of their HDB flat.
Two of us are married with an HDB flat each. Our brother is the only one without a flat.
As both of us have our own HDB flats, technically, neither of us are allowed to act as the administrator of my parents' estate as we cannot own two HDB flats. My brother is the only one eligible to become the administrator.
1. Can the administrator hold the HDB flat as long as we want? We want to keep the flat so my brother will have a place to live.
2. Can the administrator rent out the whole flat or some rooms? And when can that be done?
Fixed deadline
In a case where there is an HDB flat, the administrator would have to resolve the distribution of the entitlement to the flat to the three beneficiaries within six years of the date of death.
3. If the flat cannot be held, what are our options? Can we sell the flat, buy each other's shares or give up our shares?
4. We do not really want to give up our shares in the flat as we think that once our brother owns it, he can sell it.
Are there any clauses that we can insert in any legal agreement that would allow us to retain our shares if he sells the flat?
A: CONTRARY to your assumptions, a person who already owns an HDB flat can still act as the administrator of an estate that consists of HDB property.
The administrator is obliged, without delay, to distribute the assets to the deceased's spouse and children or, if he has none, to other family members.
Any transfer of ownership of the flat would be in the name of the court-appointed administrator, the person authorised to make such transfers.
In your case, where there is an HDB flat, the administrator would have to resolve the distribution of the entitlement to the flat to the three beneficiaries within six years of the date of death.
Any transfer by the administrator after six years would require court approval.
The administrator may rent out the flat to earn income for the estate, subject to prevailing HDB requirements and depending on how the distribution process is going. While the share of entitlement to the estate where there is no will is determined by law, the beneficiaries may - if they are over 21 years old and can give valid consent - arrange a scheme of distribution that would allow one or more of them to retain ownership of the flat.
Such an arrangement would be subject to HDB regulations governing the eligibility of the parties involved for ownership. Depending on the agreement between the beneficiaries, those who are not eligible to own or who do not wish to own the flat may realise their shares based on the value of the flat or by taking a share of the sale proceeds.
Mabel Lim Partner Harry Elias Partnership
Source: The Straits Times
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