What is a Will?
A Will is a legal document you draw up to declare your wishes for your loved ones as to how you want your assets to be distributed after you passed on.
WHY DO I NEED A WILL?
Without a Will, your assets could give more troubles than benefit to your family at a time when they are most vulnerable. Your loved ones could be involved in a long drawn legal process or fighting in a complex legal battle with other family members.
Without a Will, the law will decides who your beneficiaries, trustees and guardian would be. There is a legal process to go through before your loved ones can benefit from your assets. Leave nothing to chance. Make a Will and the law will protect your wishes.
When someone passed on, under the Malaysian law his/her estate will be FROZEN and to unlock the frozen estate, the following are the legal administration process (in general with exception):-
With a Will (Dies testate) - Apply Grant of Probate (GP)
The Executor appointed in the Will need to apply GP at the High Court. The GP can be obtained within 3 months to 1 year. Once the GP is extracted and all debts of the deceased settled, the Executor will distribute the estate according to the Will.
Without A Will (Dies intestate) - Apply Letter of Administration (LA)
The legal beneficiaries of the deceased’s estate need to apply LA. One or two administrator(s) will need to be appointed for this purpose. Upon extraction of LA, the administrator(s) will distribute the net assets of the deceased (after settled all his debts) according to the Distribution Act 1958 (As amended in 1997).
To apply for LA, the deceased’s family may need to fulfill certain requirements e.g. looking for 2 guarantors; the appointment of the administrator(s) need 100% consent from all legal beneficiaries; appointment of guardians for minors who will in-turn give consent to the appointment of administrator(s) etc, thus, this process could take 2 to 8 years and in between family contentions could occur.
Without a valid Will,
Firstly the deceased’s assets are frozen. His/her family, spouse and children might face cash flow problems while waiting for the extraction of LA.
With the LA, all his assets will be distributed according to the Distribution Act 1958 (As amended as at 1997).
- He has lost the right to appoint executor, trustee and guardian of his choice. His children’s welfare may not be taken care of by the right person.
- As Letters of administration (LA) is required, application to the High Court requires:
100% written consent is required from all lawful beneficiaries under the Distribution Act 1958 (Amended in 1997) for the appointment of the administrator(s). The administrator(s) who is chosen may not be the most suitable person to administer the estate. When there are minor beneficiaries, then, two administrators will be required before the court issues the LA. Guardians are appointed to decide for the minors as minors can not give written consent.
B. TWO SURETIES REQUIRED
Qualified guarantors are persons who have net worth value that is more or equivalent to the gross estate value of the deceased. The security may be by way of bond in the amount equivalent to the GROSS VALUE of the estate of the deceased.
- More time require to fulfill the requirements for the application of LA.
- More legal cost are involved.
- If both the husband and wife decease together, the court will appoint guardian for the minor children.
- Family contention may arise. Family members may be fighting in the court over the distribution or choice of assets.
- Under the Distribution Act, if there are surviving parents to the deceased, these parents received 1/4 share of the estate. Problems will arise if these parents die later. Their entitlements will in turn go to their children. This complicates the distribution as there are more claimants. (Please refer to the chart above).
You provide for your beneficiaries in the way you choose rather than letting the laws decides.
- You exercise your RIGHT under the law to appoint people of your choice to administer your estate (Will Executor) and carry out your wishes, ensure and safeguard the interest of those you loved and care. You select your preferred Will Executor whom is expected to do a good job when you pass on.
- You can also provide support in monetary form or in kind to other selected family members e.g. stay-in partner, aging uncles, dependants, friends, step-children, “god-children”, church, temple or any charity organizations etc. All these persons have no provisions under the law.
- You appoint Trustees (Will Trustee) and Guardian of your choice for your infant children in the event of your spouse predeceasing you or if both of you were to pass on. These are trustworthy persons who will ensure your children’s welfare are in good hands.
- No sureties are required for application of Grant of Probate (GP).
- Generally, it costs less in term of legal fees and less time to apply for a Grant of Probate (GP) than Letter of Administration (LA).
- Family members who depend on you can avoid facing financial hardship.
1. Require two guarantors
- Family members might have difficulty to look for the qualified guarantors. The guarantors must have a net worth equivalent to the gross value of the deceased’s estate.
- This results in the delay in estate administration. Beneficiaries might take a longer time to receive their shares of the estate. The delay might result in estate shrinkage and beneficiaries might receive less due to the shrinkage in estate.
2. Conflict & problems faced over the appointment of administrator(s)
- The Court requires 1 or 2 administrator(s).
- Family contention arises over the right to be appointed as the Administrator(s).
- There is risk of the Administrator(s) absconding the estate.
- Appointed Administrator(s) may lack competence to perform.
- Family might not be able to obtain the 100% consent from all legal beneficiaries required.
- When there is a minor beneficiary, two Administrator(s) are needed.
3. Legal Fees higher to apply for LA
- To apply for LA, the family members might receive less due to the generally higher legal costs incurred.
4. Financial difficulties faced by the family as it takes more time to apply for LA
- Normally it takes 2 to 5 years OR MORE, thus dependants may face cash flow problems as the deceased’s bank accounts are frozen.
- Distributions under the Law might results in a change in ownership in businesses/companies of the deceased which might lead to fragmentation and loss in continuity and control.
- As there is no Will, whom your beneficiaries are and the proportion for distribution are decided by the law. The distribution may not be that of your choice, and you lose your Right to distribute your hard earned assets the way you want it.
- Under the Law, there is no provisions for partner, stepchildren, illegitimate children, relatives whom you support.
- If both parents die in a common disaster, the Court decides who are the trustees & guardians for your minor children.
- The appointed person(s) might not be competent to perform the job.
- Welfare of minor might not be taken care of.
- Misuse of funds by the appointed Trustee might happen.
- You lose your Right to choose your preferred trustees/guardian.
WHY IT IS IMPORTANT TO HAVE A WILL?
|A PERSON DIES WITH A WILL||A PERSON DIES WITHOUT A WILL|
|You provide for your beneficiaries in the Will you choose rather than letting the law to decide for you.||Your estate will be distributed to the lawful beneficiaries according to the Distribution Act 1958 (As amended in 1997).|
|Partner, step children, illegitimate children, aged relative or others who depend upon you can be provided for in a Will.||Under the law, there is no provision for these group of people. They might fall into financial difficulties without your support.|
|You exercise the right to appoint people of your choice to administer your estate and to carry out your wishes, safe guarding the interest of those you love and care. He is your Will Executor.||The Court decides for you. It might not be your choice.|
|No family contention could arise over the choice of administrator(s).||Family conflict may arise on the choice of administrator(s).|
|You may appoint guardian of your choice for your infant children, so that their welfare, support, health and education will be taken care by the right person.||The Court decides for you. It might not be your choice.|
|No guarantor is required for application of Grant of Probate (GP).||Two sureties are required to provide security for the due administration of the estate. The security shall be equivalent to the gross estate of the deceased. There will be delay in the estate administration.|
|Generally, it costs less in term of legal fees to apply for Grant of Probate (GP) than Letter of Administration (LA).||Legal fees could be costly.|
|With a Will, the whole legal estate administration process could take just a couple of months with a Will Executor appointed by you.||The legal process could take years. Assets could have shrunk in value when LA is obtained.|
|Your loved ones are financially protected.||Your family could be facing serious financial difficulties.|
|Your appoint Will Trustee to hold on trust for your minor beneficiaries.|
DO YOU KNOW ?
Do you know?
That when someone passes on, all his assets including his/her banks account (joint/sole name), CDs share accounts, properties, private limited shares, business will be FROZEN?
Do you know?
On 21/01/2007 it was reported in major newspapers, our then Deputy Prime Minister said there is a total of RM40 billion worth of unclaimed cash and assets left by the dead. To avoid the problem, he urged fellow countryman to write a Will to avoid facing problems of claiming FROZEN assets of the deceased (please refer to NEW STRAITS TIMES, SIN CHEW DAILY, dated 22/1/07).
Have you ever wondered?
That if both parents were to go together, who will step into the parent’s position to take care of the children’s education and welfare? Who will be the guardian?
You may not know...
That without a Will, your loved ones might have to wait for years; running around searching for the required two guarantors. You lose your RIGHT to appoint the executor of your choice to administer your estate & your preferred trustees for your minor children.
You ought to know...
That without a Will, your assets will be distributed in accordance to the Distribution Act 1958(As amended in 1997). Under the Act, your assets will be divided between your surviving spouse, children and parent(s) in a certain proportion (1/4, 1/2, 1/4). More problems arise if your parent(s) pass on soon after you. Your assets may be subdivided further between your brothers and sisters etc. Result? There will be many more additional claimants!
Have you ever wondered?
What will happen to your loved ones / dependants if they are unable to receive your assets in the shortest possible time after your demise?
You may think...
That you do not have much to give away. The truth is writing a Will has little to do with your net worth but everything to do with leaving a legacy of love and care.
Do you know?
90% of your assets are without beneficiary(ies) & 90% of eligible Malaysians do not have a Will? Thus, there is an urgent need to write a Will. If not, the law will decide who your beneficiaries / trustee / guardian, NOT YOU! Assets may become FROZEN AND UNCLAIMED under the Law. Why leave it to the law when you can decide in a Will?
Who Are Named in the will? What is his/her roll?
|THE PERSON||WHO IS HE/HER?||HIS/HER ROLE|
|Testator||A person who writes a Will|
|Executor(s)||Person(s) or Trust Corporation appointed by the testator to administer his/her estate.||
|Trustee(s)||Person(s) or Trust Corporation appointed in a Will.||To hold on trust for beneficiaries who inherit assets in a Will.|
|Guardian||A person appointed in a Will.||To take care of the welfare of minor children.|
|Beneficiary||A person or corporation named in a Will.||To receive gifts.|
|Two Witnesses||A person who witness the signing of Will.||To confirm that the testator is of sound mind.|
Have you ever wondered?
Have you considered why you will make sure you have named beneficiaries for your insurance & Employees Provident Fund (EPF) payouts but omit to name beneficiary for your assets like house, bank a/c, car, land, shares etc?
WHAT IS A TESTAMENTARY TRUST
A testamentary trust (sometimes referred to as a will trust or trust under will) is a trust specified in a Will a person’s Will which arises upon the death of the testator. A will may contain more than one testamentary trust, and may address all or any portion of the estate.
A testamentary trust goes into effect upon an individual's death and is commonly used when someone wants to leave assets to a beneficiary, but doesn't want the beneficiary to receive those assets until a specified time. Testamentary trusts are irrevocable.
What is a testamentary trust?
A testamentary trust is a trust contained in a last will and testament that provides for the distribution of all or part of an estate and often proceeds from a life insurance policy held on the person establishing the trust. There may be more than one testamentary trust per will.
Who are testamentary trusts created for?
Generally, testamentary trusts are created for young children, relatives with disabilities, or others who may inherit a large sum of money that enters the estate upon the testator's death.
How is a testamentary trust created?
A testamentary trust is provided for in a last will by the Testator, who appoints a “trustee” to manage the funds in the testamentary trust during the trust period until the “beneficiary,” or person receiving the money, takes over.
When is a testamentary trust created?
The trust kicks in at the completion of the probate process after the death of the person who has created it for the benefit of his or her children or others; note this differs from “inter vivos” trusts, which are created during the lifetime of the settlor.
How long does a testamentary trust last?
A testamentary trust lasts until it expires, which is provided for in its terms. Typical expiration dates may be when the beneficiary turns 25 years old, graduates from university, or gets married. In Malaysia, the maximum trust period is 80 years.
Who can be the trustee of a testamentary trust?
The person creating the trust may choose anyone, but it should be someone the person trusts to act in the best interests of the children or others receiving the trust funds. If, for any reason, the person chosen declines to take on the responsibility of trustee, someone else may volunteer or the court will appoint a trustee.
WHO NEEDS A WILL?
- All Malaysian – Married or Single
- Foreigners who owns assets in Malaysia
- Expatriaate working in Malaysia who owns assets in Malaysia
- Foreigner who are under Malaysia My Second Home Programme (MM2H)