Rockwills Wealth Planner

Will

Will

The law respects the rights of the owner of an asset. When the owner of the asset dies, the asset does not automatically go to his spouse or loved ones. The owner has to state categorically who (whether one or more persons) should get his assets after his death. And this is done through a will. If not, the Distribution Act 1958 (amended 1997) will decide the distribution.

When there is a legally valid will, a probate is applied for through the courts. In the absence of one (intestacy), a letter of administration has to be applied for, also through the courts. The probate and the letter of administration are the only documents that authorise the executor to legally transfer title from the deceased to the legal beneficiaries.

The big difference between the two is one of expediency and time - the probate (when a valid will exists) is obtained within a short time whereas an application for a letter of administration (an intestate case, i.e. when there is no valid will) goes through a more cumbersome process and can take a lot longer in time to obtain, commonly from two to five years. In the meantime, the heirs are unable to touch the assets which get frozen until unlocked by due process. (The more cumbersome process for intestate cases includes the procurement of two sureties. This means the family of the deceased has to find two persons who have net worth of at least the equivalent value of the estate to provide a bond to the court as assurance that the estate will be administered properly.)

Issues on succession and distribution can become very complicated and there are various rules to watch out for. To avoid disputes and the will being challenged by family members, the will should be carefully drafted, and not be ambiguous or capable of different interpretations, by experienced lawyers or trained professional estate planners.

Some people think that by putting in a co-owner or transferring their assets directly to the beneficiaries (inter vivos gifts), they would have addressed the issue of estate distribution and saved some costs. But these may not be good solutions and may give rise to new problems.

It is very easy to add joint owners to a property. But if there is a change of heart, to take a co-owner's name off is very difficult because his/her consent is needed and this might end up as a court fight. Worse, if the co-owner becomes incapacitated, a court appointed stranger may take his/her place. Moreover, adding a co-owner exposes the property to his/her debts and if the debts are in default and payment enforced by the courts, there may be a forced sale of the property. A forced sale could also happen in a divorce situation.

Outright gift of assets to the spouse/children (donees) by the donor can also give rise to the same problems if there is a subsequent change in circumstance, such as death of a donee and ownership passes to unfriendly heirs, or change in attitude of the donees. It is not uncommon for a donor to be transferred to an old folks' home against his/her will after title to the property has passed while the donor is alive.

When writing a will, there are many issues to think about. The following are some but they are not exhaustive:

Estate apportionment

While equal division among children is quite common, there may be factors that can cause the testator to vary the share for each child, e.g. when some are financially better off than others.

Asset allocation

When the estate is sizeable enough, asset allocation to each beneficiary is possible and preferable to each asset being shared by several beneficiaries who have to collectively agree the disposal or otherwise of such assets.

Estate equalisation

While some testators may have special reasons to vary the share for each child, others prefer to provide approximately equal share to each child. If the allocation is by way of specific assets, such as a business to this child and a property to that child, it may be hard to allocate the estate equally and under such circumstances, a common practice is to have estate equalisation through the purchase of insurance to make up the shortfall/s where applicable for each child.

Special needs child

A child who is mentally or physically handicapped or who requires constant medical care may need a higher allocation because of the cost of his maintenance, e.g. for nursing, therapy and medicine. Spelling out the instructions in the will to take care of the child mitigates the risk of the child being neglected after the demise of the testator.

Parents

A testator may be concerned that he/she dies unexpectedly before the parent/s. Rather than rely on the surviving spouse, the testator may provide in the will that in such an event, a portion of the estate is set aside to take care of the parents.

Prudency

A concern may be that a child heir has not reached maturity in handling a large inheritance or that he/she reflects character traits that indicate naiveté or impulsiveness. Such concerns may be addressed by specifying that distribution be spread out at various age milestones, e.g. 1/2 upon reaching 25 and 1/2 upon reaching 30.

Incentivising

The will can be used as an instrument to spell out conditions for a child to achieve before he can receive his share of inheritance. For example, the condition may be that he/she has to obtain a degree from a recognised university.

Predeceasing beneficiaries

In the event that named beneficiary/ies die before the testator, there is a need to spell out who receives their shares.

Disinheritance

There may be reasons to specifically exclude someone, who would otherwise have been an heir, from getting any share of the estate. For example, the will can instruct the executor to excude a named beneficiary should he challenge the will in court.

10.

Causes

There may be causes (such as conservation) or charities that are close to the testator's heart that the testator would wish to bequeath a portion of his/her estate to.

11.

Words of advice

The will can also be used to provide final words of advice and/or words of endearment to the loved ones.

12.

Guardian

If there are minors involved, a guardian (and a substitute if available) should be appointed in the will. This is the guardian for the property of the minors until they come of age. His role is to look after their interests and the Executor/Trustee refers to him for direction with regard to investment strategies, allowances to the minors, etc.

13.

Custody

Custody is an important issue often underestimated or overlooked. A will can get lost, kept in a place so secret that no one can find it. The will that is lost is as good as no will. The will can get faded or eaten by insects or destroyed by fire, flood, etc. Worse still, a will may be tampered with or forged to stake a claim. Such risks are avoided by keeping the will at a credible custodian centre. A credible custodian centre may equip with the following criteria:

i.	Prevent tampering and preserve confidentiality
ii.	Certain to be found when needed
iii.	Safe from calamities
iv.	Free from accidental or deliberate destruction

v.	Controlled access with special Custody Identification Cards
vi.	Strong room with fire resistant walls and doors
vii.	Motion detector
viii.	Smoke detector
ix.	Non explosive lightings
x.	Bio-metrics security features (Access only through cards and fingerprints)
xi.	24 hours security

14.

Choice of executor/s

The choice of executor needs to be selected carefully. So also the substitute executor (in case the first die). Whoever is chosen should be someone competent enough to understand the intricacies involved in estate administration and he must be willing to shoulder the responsibilities. Not only that, he or she must be willing to take on the position. Quite often, the choice for executor is the brother or sister but the problem is if they are in the same age group, the brother or sister may be old or senile or incapacitated at the time of death of the testator. More often than not, the individual executor ends up asking a lawyer or trust company to take on the role for a fee. Nowadays, it is common for testators to select a credible trust company with the right expertise as the executor. The following list is typical executorship duties and responsibilities:

i.	Locate the Will
ii.	Read out the Will to all beneficiaries.
iii.	Appoint a lawyer to apply Grand of Probate
iv.	Prepare all necessary documents for Probate application.
v.	Provide a list of assets for Probate application.
vi.	Insure properties
vii.	Pay off all liabilities
viii.	Distribution of estate
ix.	Act as testamentary trustee in the Will
x.	Prepare statement of account

For some changes in circumstances, such as marriage, birth of a child, death of spouse, divorce, or getting a live-in partner, a will may need to be rewritten to change the list of beneficiaries or proportions they receive.

Writing a will should not be taken lightly. Look at it as protection for the loved ones of wealth left behind which in most cases would be more valuable than insurance proceeds. Leaving a will is therefore just as important as taking insurance. Because of the many complexities involved, do consult a professional will writer.

Will FAQs

Who should I appoint as my executor and trustee?

Either a trustee company or an individual who is 21 years and above can be appointed as executor.

What happens if I die without a will?

If you are domiciled in West Malaysia and Sarawak, your intestate estate will be distributed according to the Distribution Act 1958 (as amended by the Distribution (Amendment) Act 1997). However, for Sabahans the estate will be distributed according to the Intestate Succession Ordinance 1960. When a will is written, the distribution instruction of the will is followed instead of the intestate laws.

Once the will is written, can it be changed?

Yes anytime before death.

What are the circumstances should the will be rewritten?

the list below is not exhaustive:

i.	Death or birth of a children or beneficiary
ii.	The witnesses of the will are missing, died or migrated
iii.	Marriage of the testator
iv.	Divorce of the testator
v.	Acquired new assets
vi.	Relationship breakdown with the beneficiary
vii.	Change of guardian for minor children
viii.	The executor of the will died, went missing or migrated or suffers from serious illness
ix.	Relationship breakdown with the executor and/or guardian of minor children
x.	Change of religion
xi.	Marriage or marriage breakdown of a beneficiary
xii.	Birth of a grandchild

How can a will be revoked?

It can be revoked by either:

i.	Testator's marriage
ii.	Destruction of the will
iii.	Writing a new will
iv.	Conversion to be a Muslim
v.	By executing a document signed by the testator and 2 witnesses stating the revocation of the earlier will

How many witnesses are required?

2 witnesses who are not beneficiaries or married to the beneficiaries named in the will.

If I have very little assets, do I still need to write a will?

As long as you have a responsibility to yourself and your family, then you need to write your Will legally to protect your loved ones according to your wishes, otherwise, the law will decide for you if you are not around.

How can estate planning protect my family's interests?

Estate planning will protect your family through the use of the will and trust instruments. By spelling out your conditions for distribution through such instruments, your estate is preserved and managed until such time you deem your beneficiaries are ready to receive their portions.

Approaches: Estate Planning > Pre-Need Planning >>

Ready to begin your journey for financial planning? Please sign-up at User Subscription.