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Q MY COUSIN was a sleeping director in her husband's firm and was made a bankrupt 12 years ago when his company was wound up.

She was discharged from bankruptcy two years ago and recently inherited some money from her mother-in-law who died.

Is my cousin still accountable for the debts that were not paid up? Do the creditor banks have a right to claim money from her?

Last year, she opened a savings account with a bank, which rejected her application on grounds that she had 'problems with banks before'.

Does the bank have a right to do that?

Bankruptcy is not a crime and in her case, entirely not of her doing. Shouldn't she be treated fairly?

A The easiest and fastest way to discharge oneself from bankruptcy is to pay off all of one's debts in full.

If that is not possible, the Official Assignee can discharge a person from bankruptcy after considering various factors, including the cause of the bankruptcy, the amount outstanding, the level of cooperation rendered by the bankrupt to the Official Assignee, as well as the contributions made by the bankrupt to his or her estate.

Once discharged, the bankrupt is given a new lease of life, so to speak.

He is not obliged to make any further payments to the previous creditors.

Your cousin can keep the money that she received from her mother-in-law.

You are right in saying that bankruptcy is not a crime, but the financial institutions are entitled to decide who they want to lend money to.

As such, your cousin may have difficulty in obtaining credit facilities (such as overdraft facilities and car loans), or if she does get them, the financial institutions may impose a higher interest rate to reflect the higher risk.

You must realise that the financial institutions have no way of knowing what was your cousin's role in the business that collapsed.

Having said that, I do not see why she should have difficulty in opening a pure savings account which is not tied to any overdraft facility.

Perhaps she should consider speaking to the relationship officer of the bank concerned.

Vijai Parwani
Principal Partner
Parwani & Co

Q MY FATHER has three children. He wants to buy an apartment in my name as a gift to me.

However, he intends to live in it till he dies.

Of course, my family can live there as and when we like.

If he should die within five years or after five years, can my brothers lay a claim on the property?

What are the legal documents my father should execute in order to prevent any litigation and to make sure that the property is properly transferred to me?

A Your father has full rights to purchase an apartment in your name.

Under the law, this would be his gift to you.

But your father has to ensure that the title deed of the apartment clearly states that you are the owner of the property.

Once this is properly done, you become the owner of the apartment.

If your father dies within five years from the date of purchase of the property, the property would be liable for estate duty.

If his death occurs after the five-year period, the property would not attract estate duty.

The five-year rule does not give your siblings any rights to make a claim on the apartment.

To avoid any future family squabbles over the apartment, your father may wish to clarify in his will that the apartment is his gift to you.

However, if your father exercises certain rights over the property (such as keeping the rental income of the property for himself or mortgaging the property for his own purpose), the law does not treat the property as his gift to you.

It is irrelevant whether the property was bought within or outside the five-year period. The property would attract estate duty. To avoid this, your father must ensure that he gives the property as a gift to you without placing any conditions on the property.

If your father made the gift on the condition that he wishes to live there for the rest of his life, the apartment may not be regarded as his gift to you upon his death.

The Inland Revenue Authority of Singapore may request your father's executors to pay estate duty on the property on after his death.

I would advise your father not to impose such a condition. He can just make a request to you to allow him to live in the apartment. It would then be up to you to grant his request.

Rajan Chettiar
Lawyer
Rajan Chettiar & Co

Advice provided in this column is not meant as a substitute for comprehensive professional advice.

E-mail questions to lorna@sph.com.sg