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Q A WOMAN is the owner of an HDB flat and has two daughters, A and B. The father has died.

The daughters are grown up but are unmarried. The two of them invested jointly in a private property.

A is living in the private property while B lives in the HDB flat with her mother.

When the mother dies, what will happen to the HDB flat?

It still has an outstanding loan, and B is financing it.

The mother and daughters intend to have B take over the HDB flat (and B is likely to remain unmarried), and continue to finance it.

Is this going to be an automatic transfer?

Is there something that the mother must do to ensure this, such as by writing a will? What happens if she does not?

Or should the mother transfer, say, 10 per cent of the ownership to B first to ensure there is no problem?

A Whether or not the HDB flat can be transferred to B after her mother's death will depend on the eligibility criteria under HDB rules and policy at the time. This is so whether or not the mother leaves the flat to B in her will.

As well as HDB rules, B will have to take steps to deal with any outstanding loan before the flat can be transferred to her.

If the mother leaves the HDB flat to B in her will, then B will be entitled to at least the net proceeds of the sale if she is not eligible for the flat to be transferred to her.

Partial ownership of private property is not an absolute bar to the flat being transferred to B - the HDB may consider granting an exemption in exceptional cases, including acquisition of the HDB flat by inheritance or by gift.

If the mother dies without making a will, then A would be legally entitled to a half-share of her estate, which would consist of all her assets, including her flat.

But A could give up all or part of her entitlement to B at that time if she wants to.

The fact that B is paying or contributing to the mortgage does not give her any legal rights to the HDB flat.

In many cases where the owner dies, the flat has to be sold, any outstanding loan repaid and the net proceeds of sale distributed to the beneficiaries - in this case, A and B.

The fact that A presently agrees or intends that B should take over the flat after their mother's death is not much help if A later changes her mind and if the mother has not made a will leaving the HDB flat to B.

There is no automatic transfer of an HDB flat or any other real estate. Additional conveyancing steps must always be taken.

If the mother's intention is for B to have the flat - or the proceeds of the sale - after her death, she should certainly make a will to express her wishes.

If she transfers 10 per cent of the ownership to B before her death, then B would be the owner of that 10 per cent share and only the mother's 90 per cent share of the flat would be included in her estate with all her other assets.

There may be stamp duty to pay on the transfer of the 10 per cent share and possibly also additional estate duty after the mother's death.

The mother might consider instead transferring the HDB flat to herself and B as joint tenants, in which case, as long as B outlives her, the flat ought to become the sole property of B on her death and can be transferred to B's sole name by lodging a notice of death.

However, there are the costs to consider of transferring the flat to joint ownership, including any stamp duty which may be payable at the time of the transfer and, again, possibly a larger bill for estate duty after the mother's death.

The potential estate duty problem does not arise if the HDB flat is simply left to B by will. This is because there is an exemption from estate duty of $9 million for inherited residential property; but the exemption is not available for gifts of residential property before death.

Simon Trevethick
Associate
Colin Ng & Partners