| We hope our webinar on the topic of estate planning and distribution last weekend provided both insightful and beneficial information to you.
Our guest speaker, Jayden Chen shared his view and expertise on the effects of debts and Tax Laws on your estate.
In case you missed it, here are the key takeaways:
1. When a person is deceased, who is responsible for the deceased’s debts and taxes?
• The executors are responsible to pay off the estate’s outstanding debts and taxes and will be held personally liable if they distribute the estate to beneficiaries without first ensuring that all creditors are paid in full.
2. How will outstanding debts and taxes affect your estate distribution?
• Actual value of the estate distributed to beneficiaries may reduce significantly after paying off all the outstanding debts and taxes.
• Since the executors will need to first locate all the creditors and pay off the estate’s liabilities before distributing it to beneficiaries, it may prolong the time required before the estate gets distributed.
3. Life insurance and EPF are protected from creditors
Life Insurance:
• 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 subjected to his debts. The law protects insurance proceeds from the claims of your creditors after death.
Employee Provident Fund (EPF):
• The savings in EPF (provided nomination of beneficiaries is made) is creditor proof as well (for non-Muslims).
4. How can insurance help in estate planning?
Creditor Proof
• Insurance proceeds are protected by Financial Services Act 2013 and creditors are not allowed to make a claim on it. This can preserve the value of your inheritance to loved ones.
• To enjoy this protection, you need to ensure that your appointed nominees are trust nominees, and premium was paid with no intention to defraud creditors.
Faster Distribution
• Since insurance proceeds does not form part of the deceased’s estate, it can be distributed faster – there is no need for probate application, locating of assets and paying creditors. This can provide immediate support to your loved ones during trying times.
Multiplier Effect
• Insurance provides leverage as it can multiply the premium you have paid towards the policy, making it an ideal tool for creating inheritance to the people you care for.
You can watch the webinar playback below and discover the written responses from the speaker for popular questions posted during the event HERE.
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