Appoint a Trustee Company to be your Executor

If you feel the duties of an Executor are too compelling to burden your family or friends, have doubts about the abilities and honesty of your potential Executor, or can not find an appropriate Executor, do consider to approach a Trustee Company. It is an excellent alternative to individual Executors. Registered under the Trust Companies Act 1949, it is authorized to act as executor, Trustee or Investment Manager, if required.

The advantages of appointing a Trust Company are :

• It will never be biased towards any particular parties resulting an unfair distribution
• It has perpetual existence as compared to individual who may die, incapicitated, becomes of unsound mind or becomes a bankrupt
• It would be in a better position to handle and manage estate administration because of its expertise and competency
• The work done by an Executor is complex and the role of a Trust Company is basically deals with estate administration; therefore there is no issue in facing different obligation.

The individual Executor may charge a fee for his or her services. Often this individual is a relative, and he or she may choose not to charge a fee. If a fee is charged, the amount is regulated by statute, and in others it is what is “reasonable” for the work performed. In Malaysia, an Executor can charge up to 5% of the estate value.

Today, there are more testators appoint a Trust Company as their Executor for total peace of mind knowing your family will not face the problems, the estate administration is a small fee to pay. There are special packages available for reduction of the estate administration fees which amount to substantial saving for the estate.

Executor

The Executor is vital to ensure all the final wishes come true. He/She oversees and is responsible for the administration of the entire estate of the Testator until the distribution of the assets is completed. The Executor can be anyone whom the Testator decides on, including a spouse, a member of the family or a close friend. As your entire estate will be vested with your Executor to enable distribution, the chosen person must be honest, capable and a high level of integrity as the duties carried are tedious & time-consuming.

Depending on the size and value of your estate, and the age of your beneficiaries, the role can lasts over an extended period of time. Under the Probate And Administration Act 1959, a Testator can appoint upto 4 Executors to act jointly. When choosing the Executors, consider important factors such as assets management skills and professionalism, as a large assets and businesses may require the Executor to direct, invest or continue these operations to enhance your estate. They will also need time to understand and to garner the expertise to obtain the legal rights to execute the Will so that that neither unnecessary costs not further grief is incurred or caused.

The expertise and legal understanding involves obtaining a Grant of Probate from the High Court by submitting various documents. The Executor has to confirm and settle all the liabilities and debts by writing to Financial Institutions, Government Departments and search for records so that the remainder of your estate can be distributed to the beneficiaries. Upon completion of this, the Executor will prepare a proper set of accounts for the approval of the beneficiaries before subsequently distributing the estate according to the terms of the Will.

Small Estate

If the gross value of the estate does not exceed RM 600,000 and consists of movables only, Amanah Raya Berhad(ARB) can administer the estate by issuing a declaration whereby the assets will be administered and distributed accordingly. Should there be a Will, the distribution will be according to the Will; and if it is Intestacy, the distribution will follow the Distribution Act.

If the gross value of the estate does not exceed RM 2mil and consists of both immovable & movable assets, ARB will not stand in to administer. For those who dont have a Will, the lawful beneficiaries have to go to the District Land Office and will follow the Distribution Act. For those who has a Will, the procedures will be according to the High Court.

Administrator

When a person passes away without a Will, the first issue arise would be to determine who to be the Administrator of the estate. How to appoint? He can be someone appointed among the beneficiaries to act on behalf of the deceased; he can be one of the beneficiary also. Every other beneficiary must agree to the appointment and renounce their rights if they are not applying as an Administrator. This can be lead to a contention when the beneficiaries can not agree on who should be the Administrator, the dispute may turn into a legal suit and drag for years.

All the lawful beneficiaries under the Distribution Act 1958 (as amended in 1997) must give written consent to appoint 1 Administrator if all lawful beneficiaries are 18 & above OR, 2 Administrator if not all are 18 & above.

Estate Planning = Written your Will??

Does Estate Planning associate with a Will written? Prior to having a Will written, one have to understand the importance of Estate Planning as to ensure your loved ones are able to receive your assets soonest possible and to your choice of beneficiaries. It is a legacy of love to your family.

So, how to ensure your loved ones are able to receive your assets soonest possible? We all know under the law, all the deceased's assets will be frozen until Probate (where there is a valid Will) or Letter of Administration (where there is no Will) granted by the High Court. Therefore, the dependents are unable to withdraw the money from all the bank accounts, sell/transfer the ownership of the properties i.e. houses, shares, unit trust, cars etc. If a person dies without a valid Will, there is delay in unlocking the frozen assets and incur unnecessary costs.

And, the first issue is to appoint an Administrator of the estate. Since there is no Will to appoint the deceased’s choice of Executor, the petition for a Letter of Administration is normally filed by a beneficiary who has priority over other beneficiaries. Every other beneficiary must agree to the appointment and renounce their rights to petition. This can at times be a problem when the beneficiaries cannot agree on whom should be the administrator. This dispute may turn into a legal suit, who knows, it may drag on for many years... Would you like that to happen to your dependents?

Next, is to look for 2 sureties, akin of Guarantor. Each of the sureties must be willing to provide an administration bond more or equivalent to the gross value of the estate of the deceased. Obviously, it is not easy to find 2 sureties unless they have an interest in the estate or they have a special relationship with the deceased. The purpose of the sureties is to protect and secure the creditors and beneficiaries against losses caused by the improper administration of the estate.

The court may have its discretion to reduce the number of sureties or dispense with them, and/or reduce the amount of the bond. In the event where a trust corporation is appointed as the administrator or where the gross value of the estate does not exceed RM 50,000, no surety shall be required. No also required if the administrator is the sole beneficiary of the estate.

When all these requirements have been fulfilled, the High Court will then issue the Letter of Administration and only then can the deceased’s estate be distributed according to the law of intestacy.

By having a Will, all these hassle could be avoided. You also exercise your right under the Law to appoint people of your choice to administer your estate and carry out your wishes, ensure and safe guard the interest of those you love and care.

Trustee?! Who and what are the responsibilities?

A Trustee is a Trust Corporation or a person chosen by you to carry out your instructions. As a Trustee, he has a fiduciary duty to act in the best interest of the Beneficiaries. This is achieved by fulfilling the terms of the Trust and governed by various laws and regulations, such as the Trustee Act 1949 and the Probate and Administration Act 1959.

The Trustee is the keeper of trust assets and acts as the implementer of terms of the Trust Deed for the Beneficiaries who shall enjoy the income generated from the Trust during the trust period and also the trust capital when the Trust ends.

Isn't a Will enough? Why is there a Trust is set up too?

If you have drawn up a Will, that is the first step. It may however not be enough. To complete your estate planning process, you may need to create a Trust. Why?

Do you know that trust is an extremely effective Estate Planning tool to protect your assets and to pass wealth to your heirs efficiently whilst maintaining privacy? You can continue to have control on how the assets are distributed even when you are no longer around.

A Trust is one of the most effective Financial planning tool to safeguard your assets for your loved ones. The Trust will contain specific instructions to manage, protect, preserve and distribute your assets. It will also outline the duties and responsibilities of the Trustee.

A Trust is where the creator of the Trust called the "Settlor" entrusts and transfers legal ownership of the assets to another person called the "Trustee" under a Trust Deed. The Trustee then acts for the benefit of the named Beneficiaries in the Trust Deed for a specified period of time.

A Trust which can be used in many ways to benefit your loved ones is generally set up with various objectives such as;

• distributing assets quickly and without the hassle of applying for Grant of Probate or Letters of Administration;
• staggering the distribution of money and assets over a specified period of time;
• preserving the accumulated assets from breakup and loss in value for the enjoyment of successive generations;
• risk management to protect your assets against claims by creditors;
• supporting various family members for objectives such as education, maintenance, retirement, medical and for handicapped children.

What to consider on planning your estate

If you have decided to write a Will, planning your estate should be taken into consideration thoroughly.

Think of --

• What do you have? (movable : cash, unit trust, stock/shares, insurance, EPF etc..even your expensive jewellery, antiques, artwork..; immovable : house, shop, land etc..) And, not necessary in West Malaysia but also East Malaysia.
• What do you owe? (bank loan, house loan, car loan, tax, credit card, overdraft etc..)
• Who to give? (not only to your children or husband, maybe your siblings, parents, good friend, charity etc..)
• How to give? (periodically, in a lump sum etc..)
• Who do you trust? (to be your Guardian of your children, to be the Trustee to hold the Trust and an Executor to run all matters related to your last wishes in the Will)
  

Appointing Executor is an important decision in your Will because this person will be responsible and full authority for the administration of the deceased's estate. Therefore this person must be reliable, honest and just, also to have the time and competence to complete the process.

If you have minor children (children below 21 years old), do appoint Guardian(s). The surviving spouse is duly act as the role of a Guardian and the appointed Guardian is the substitute when both parents are not around anymore.

As for the beneficiaries, they will be someone you love in your immediate family or extended family. You can also benefit any charitable and other non-profit organization. It is highly advisable to name substitute beneficiaries should there be an event when the sole beneficiary predeceased the testator.

If you have written a Will before, you have to re-write in these circumstances :-

• Marry or Re-marry
• Change of Executor/Guardian/Beneficiaries
• Change of Assets (Start of a new business or partnership, new properties purchased or inherited etc..)
• Addition of new family member (New-born or adoption)

we are all mortal and we can't deny it...

As we are all mortal and death often comes like a thief when we least expected, we owe it to our loved ones to make a Will during our lifetime. After reading my earlier blogs, we know that it is important to write a Will because by not making a Will, all our assets will not be distributed according to our wishes after our death.

When a person dies without making a Will, he is said to have died "Intestate", his property is called his " Estate" and his children, his "Issues". The law that deals with the distribution of the property of an Intestate is the Distribution Act 1958, which applies to non-Muslims in Peninsular Malaysia only. An Intestate's estate will be distributed among the surviving family members according to the Distribution Act. The same law applies to the male or female deceased persons. The procedures for an Intestate to apply the Letter of Administration will be different from those who has a valid Will.

About Writing a Will

Q : How to define a valid Will?
A : The testator must be of sound minded when signing the Will and above 18 years old (West Malaysia & Sarawak whereas 21 in Sabah); the Will in written/typed format, the testator sign in front of 2 witnesses & the 2 witnesses sign in front of the testator at the SAME time.

Q : Who can not be the witness?
A : The beneficiaries or their spouse. Otherwise, they will loose their right to inherit the assets.

Q : What is the name of the person to carry the duties to administer the assets? What are the duties?
A : Executor; the duties included

• To locate the Will
• To make funeral arrangement
• Apply for Grant of Probate (GP)
• Calling in assets of deceased
• To pay debts
• To prepare Statement of Accounts
• To distribute assets according to the Will
• To carry out wishes mentioned in the will

Q : Can a Beneficiary be the Executor?
A : Yes, and he can still inherit the assets.

Q : Who can be an Executor?
A : Someone you trust i.e. your spouse or one of your children or a Trust Corporation.

Q : What is the pro & con when appointing individual as an Executor?
A : It is understandable that you would appoint the one you trust and you have confidence in this perosn but it is not easy being an Executor, it is because this person needs to have enough knowledge in Estate Administration, legal or accounting related issues, and also the time & effort. Should this person lacks knowledge & time or may not be competent, the duration of a Probate granted will be prolonged. What if this person couldnt survive you? What if this person becomes greedy after obtaining the Grant of Probate since all assets are transferred under this person's name?

Q : How about appointing a Trust Corporation?
A : It is advisable to appoint a Trustee Company to be your Executor because there is continuity in administering your assets. It has the expertise & competency in handling your estate. A Trustee Company will be fair to distribute according to the instruction in the Will.

Q : Can my Will in Chinese? is it still valid?
A : A Chinese Will is still valid.

Q : How about a Will being tape recorded?
A : No, it is not valid.

Q : Can I distribute all my assets to my children in equal shares?
A : Not all, i.e. car. You can sell it and distribute the proceeds equally though. You can however distribute a house to all your children. But the problem is all of them must consent when selling the house.

Q : Is it necessary to have my beneficiaries around when I sign my Will?
A : Not necessary

Money left behind... Sigh!

From the Star newspaper dated 9 Nov 2009 ( more than a year ago).. there were RM3bil remain unclaimed from the Accountant-General's Department because the depositors failed to name their beneficiaries before dying. It could be the deceased depositors' next-of-kin or their children didnt even know didnt even know about the money that was left behind. The money could be left in the EPF or the banks, or they are not awared of the procedures to claim. Most of all, the deceased didnt write a Will before dying.

It is not that easy for the next-of-kin or children to inherit the deceased assets if there is no Will written. They have to go through a tough time before they could claim the deceased's assets. And it has to go according to the Distribution Act 1958. What is Distribution Act 1958?

The Distribution Act 1958(As Amended in 1997) is applicable to all Malaysian and Foreigners with Malaysian domicile who die intestate in Malaysia. The Act apply to foreigners whether they are working here as an expatriate or living in Malaysia on the MM2H programme(My Malaysia Second Home Programme). Please view the image attached.