|We hope our webinar on the topic of estate planning and distribution provided both insightful and beneficial information to you. Our guest speaker, Jayden Chen shared his view and expertise on the different distribution methods available and how the Law affects your choices.
In case you missed it, catch the replay below.
Here are the key takeaways:
1. Is a Will necessary?
Writing a Will is not compulsory, but it’s highly recommended to have one:
• it allows distribution of wealth according to your wishes instead of relying on the Distribution Act 1958.
• family disputes can be avoided and the estate distribution process can be carried out in a quicker manner.
• you may appoint an executor of your choice to administer the probate application process, pay creditors (if any), settle all the expenses, and distribute your estate according to your wishes.
2. What should be included in a Will?
• all assets including both movable and immovable assets.
• always include a residuary estate clause to cover all assets not specified in the Will.
• consider purchasing and making nominations for insurance policies to distribute urgent and important cash in a faster and efficient manner.
3. Can overseas assets be included too?
In general, Malaysia’s Will can be used to cover overseas assets, however:
• the need for an overseas Will depends on the urgency of the overseas assets to be distributed to the beneficiaries.
• although Malaysia’s Will is able to cover overseas asset, a probate needs to be issued and re-sealed in the foreign country where approval will be subject to local laws.
• if an overseas Will is available upon death, the executor can apply for the probate without waiting for the issuance of Malaysia’s probate in order to speed up the distribution of overseas estate.
• overseas assets may be subject to laws of the foreign country, ie. inheritance tax. Regardless of whether inheritance tax is applicable, it is advisable to always prepare the funds for it. This includes Malaysia in the event it is re-introduced in the future.
4. Are there any pitfalls with a Will that we should be aware of?
Potential 3Ds – Delay, Debts, and Disputes:
• Delay in estate distribution – due to the lengthy probate process that ranges from a few months to a few years.
• Debts owed by the estate – lower estate value after the settling of creditors which may lead to family hardship.
• Disputes – could arise as a result of family or disinherited beneficiaries challenging the validity of the Will.
5. What can we do to avoid them?
Ways to avoid potential pitfalls associated with a Will:
• distribute our important cash through instruments with legally protected nomination such as the EPF and insurance.
• EPF and Insurance monies do not form part of the deceased’s estate – there is no need for probate application, locating of assets and paying creditors.
6. Can joint accounts with a survivorship clause speed up asset distribution?
Survivorship clause merely provides convenience in accessing the money and not automatic ownership of the funds in the account:
• when being contested it may still form part of the estate and subject to claim by others.
• some survivorship clauses allow the freezing of the account under certain conditions such as when the deceased is a debtor to the bank and upon the existence of potential lawsuits.
• the beneficial ownership of the money can still be disputed in court – there are existing court cases where joint accounts with survivorship clause have been contested.
• the court will take into account other factors such as the source of the funds, intention of the parties, and the existence of a presumption of resulting trust when deciding the case.
7. Why is insurance policy an effective estate planning tool?
Insurance policy is one of the effective tools used for estate planning because:
• insurance death benefit is distributed without the potential delays of probate application and can be made available quickly to beneficiaries to provide immediate support during trying times.
• insurance with a trust nomination is creditor proof and can preserve the estate value to be distributed to beneficiaries.
• the Financial Services Act 2013 states that insurance proceeds of a Trust Policy shall not form part of the estate of the deceased or be subject to his debts. In other words, it will be paid directly to the nominees upon one’s death.
Thank you for the overwhelming questions raised during the session. Rest assured we are in the midst of preparing a FAQ to answer all the questions raised in the webinar. Stay tuned and please check this space for further updates!