An individual sued his family members over a disputed property. Quek Hung Heong (QHH - the plaintiff) lays claim to the entire beneficial interest in the property in the lawsuit although the property was held under tenancy-in-common with the other 4 family members. The other 4 family members are his father, mother, an older brother and older sister. His father, mother and older brother have already died. His older sister did not contest.
QHH lost the lawsuit for the property he thought was his when it was purchased when he was 25 years old (my estimate). He is currently 72 years old. I spent the entire afternoon reading the judgment like a novel except that the story is not fiction. What struck me was a dispute had its origin 47 years ago. The property in dispute is a Bukit Timah property. You can use Google map’s street view to fully appreciate the monetary value at stake.
According to the judgment write-up HERE QHH, after graduating from an Australia university, wanted to buy a property by taking up a mortgage loan from his then employer – Ministry of Finance – at a concessionary interest rate. QHH was encouraged by his father to borrow from the family’s company interest-free instead. His father also asked him to register the property under the names of the 5 family members. The company paid the purchase price to the seller. QHH had to repay the loan before other family members would transfer their shares of property to him. According to the plaintiff, this was a ‘family arrangement.’
Other interesting things mentioned were that the company maintained separate running accounts for its male family members. Apparently, the running accounts were maintained by the company for each male member showing the credit, debits and net position. In other words, the male members of the family were borrowing from the company.
After 47 years old, the plaintiff wanted to get back his property. Unfortunately he was not successful. During five decades, the family had numerous disputes including two police reports made against QHH and lawyers’ letters flying all over the place.
As I read through the entire judgment, it does ring a bell because I know of families arranged in similar complicated fashion such as:
- The most common family arrangements I found is members having many joint bank accounts worth millions of dollars with each other for ease of transfer of assets upon the demise of the ‘true’ owners. This is what I call cheapskate estate planning. Why cheapskate? Normally the reason for such arrangement is because it is free. Isn’t it strange that millionaires cannot even afford to pay for estate planning advice? I have a lot of problem with joint accounts because it becomes unclear who are the true beneficiary owners of the monies.
- Treating the family company as a piggy bank is the next most common thing. Some businessmen have saving accounts of less than a few thousands of dollars only. The reason? They put all their savings into the company’s bank accounts. If they need the money to pay for personal matters, they issue cheques on behalf of the company like as if withdrawing from the ATM. Eventually it becomes unclear what truly belongs to the company and what belongs to the shareholders. The complication comes into the picture when there is more than 1 shareholder. Moreover, it becomes impossible for the business owner to ‘retire’ which brings me to the next point…
- Many businessmen do not have a retirement plan. They spent their entire life building the businesses only to realize they cannot retire. If they retire, the business will collapse because they are the only key person. Since they put all their wealth and money into the business, they cannot stop dancing otherwise they will be financially ruin. The time when they stop dancing is when they become incapacitated or pass away. When this happens, the entire company will collapse and all its staff losses their jobs. That is why retirement planning need to be done when young and not when one is old.
QHH thought that he own the property all along but little did he realized that he only have a minority share. It took him 47 years to find out. If his version of the story is true, it means the origin of the problem was due to an informal ‘family arrangement’.
An alternative to ‘family arrangement’ is a more robust method call financial planning because whatever happened when you are young can come back again when you are old.
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