Executor

The cornerstone of the Will lies in your choice of Executor because who you choose will determine whether your instructions are carried out when you are no longer around. While most individuals are awared of the duties the Executor are entrusted to, but, few realize the Executor they appoint will be granted temporary custody over the estate which the Executor is going to distribute. They, possess the same power & right over the estate as the deceased person, i.e. issuing cheques, transfer or liquidate the estate be it movable or immovable.

It is understandable that when choosing our Executor, we would consider someone whom we trust or familiar with. None of us would think of appointing someone whom we are uncomfortable with, furthermore if it is a trust corporation especially when fees are involved during the estate administration.

Although there is advantage appointing someone whom we are familiar with, there is risk involved. Selecting an individual to manage your estate may do more harm than good, apart from the risk of loss from misuse or mismanagement. Below is an example...

Frank was a fit man and was always on the go. Already a general manager of a large financial group at the age of 40, with a big house, no liabilities and more than RM 10 million in investments to his name, he was in the prime of his life. At the suggestion of his wife, Angeline, he decided to have his will done, naming his wife and kids as beneficiaries. He appointed Angeline as executor and his younger brother, John, as substitute executor.

One day, he and his wife were travelling outstation. Fate played a harsh hand and they met with an accident that left no survivors. John, in his capacity as executor, took over the administration of his estate. Coincidentally, John was struggling with his business and had a large debt at this point of time. Succumbing to pressure from his creditors, he used part of the proceeds from the sale of Frank’s investments to cover his own debt. The business deteriorated further and he continued his ‘temporary borrowings’ to fund his business losses. Soon, he was using the estate to fund the education of his own children along with that of Frank’s kids!!

Setting up a TRUST

As parents, you would protect your children. For example, you may purchase insurance so that in case something happens to you while they are young, there will at least be cash to provide for their needs. If you have taken insurance, chances are, you may think that you have done enough in providing security to your loved ones by nominating them as your beneficiaries in your insurance policies. Think again...

Are your loved ones completely protected when you nominate them as beneficiaries in your insurance policies? Is that actually enough?

You may want to consider:

• If your spouse is the sole beneficiary to your insurance policy, what happens to the insurance proceeds upon your spouse’s passing? Or,
• If your young children are the beneficiaries, who should claim the insurance proceeds for them in the event both you and your spouse are unable to?
• Are your beneficiaries mature enough to handle large sums of money?
• Is there someone competent enough to assist the beneficiaries?

TRUST

You have probably accomplished a great deal with your life. Over the years you have worked hard, planned and saved.

You have made sacrifices to be where you are. You will want to pass along your wealth to your loved ones with minimal hassle and delay by the legal process. What arrangements have you made?

If you have yet to draw up a Will, then you must have one and update it periodically. 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.

A Trust is one of the most effective financial planning tools 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.

Trust is a legal arrangement 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 teed. The Trustee then acts for the benefit of the named beneficiaries in the Trust deed for a specified period of time.

Where is the best place to keep your Will?

Is your Will kept so safe that no one could find except the RAT?? Then it is as good as having no Will...

Although making a Will ensures your wishes will be fulfilled, you should however also ensure that your Will can be found quickly & easily when the need arises. Writing a Will is just half of the story, the other half is to keep it in a secure place.

Some people hide their Wills so well, it is as good as lost! Or, some people would keep it in a bankNot a good idea to keep the Will because when a person passes on, all the bank account including the safe deposit box will be frozen too!

So.... Where is the BEST place? ~~ i) it is known to your family members, ii) confidentiality is maintained, iii) can be found when the need arises in many years to come

Where....? Yes, at Rockwills which offers you the professional custody services for your Will by Rockwills Trustee Berhad. Our unique retrieval service will ensure your Will could be found quickly & easily when the need arises.

Here is why :

1. Prevent tampering and confidentiality preserved
2. Safe from calamities, such as flood or fire
3. Free from deliberate destruction
4. Controlled access with special custody identification card
5. The Unique retrieval system with personal bar-coded custody card
6. Will custody centre with humidity control, CCTV & bio-metric security

Estate Planning

Does it mean having your Will written mean that you have sufficiently planned the distribution of your estate. On the contrary, you should have an estate plan, before you have your Will written. This is because your Will merely implements your estate plan. If you refuse or fail to plan, there is a possibility that things may not turn out the way you wish when you are no longer around.

Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses. Guardians are often designated for minor children and beneficiaries in incapacity.

An Estate plan will achieve maximum realization of the testator's objectives - which include provision of financial management for the benefit of a surviving widow and children, appointment of trustees or guardians for children and selection of executors and a trusted adviser.

Your estate planning sets up contingency planning to meet your goals and allows you to plan for your disability and direct the distribution of your property upon your death.

With an estate plan you can control all your property, giving what you own to whom you want to receive it, the way you want them to receive it and when you want them to receive it in the event of disability or if you die.

It also provide instructions for your health care matters in the event of your disability where you are unable to give directions. Estate plan also allows you to leave explicit instruction for the care of your loved ones and create protective trusts for your children.

Article extracted from FPAM

In planning your Will, be sure not to make the following common but dangerous presumptions:

i) As your parents are older, they will predecease you
*Possible consequences:
So you leave them out of your Will. Big mistake! If they depend mainly on you financially, could your spouse be expected to support them on your behalf when you are no longer around, especially when your spouse may not be in the position to do so financially, or may remarry?

ii) Your children will be looked after by your spouse in the event of your demise
*Possible consequences:
As a result of this common presumption, many parents fail to appoint testamentary guardians or create testamentary trusts in their Wills. In some cases, a parent may even will everything to the spouse in the expectation that the spouse will look after the children. What happens if the spouse is also unable to be there?

iii) Your spouse will pass on the property she inherited from you to your children
*Possible consequences:
It is likely that some or all of what you will to your spouse, may end up with your spouse’s new husband or wife, parents, siblings and children by the new marriage instead of your own children. Are you willing to take this risk? Would not your children be better protected with a testamentary trust?

iv) Your parents will leave to your children the assets which they inherited from you
*Possible consequences:
You may not mind a part of your estate going to your parents. However, you must remember that they are entitled to do whatever they wish with the portion which they receive, including passing it on to whomsoever they wish. If they do not have a Will, your other siblings may also receive the assets you meant for your children. Is that fine with you? Isn’t there a possibility that your nephews and nieces will be grateful for the inheritance from their grandparents when
it could actually be part of your hard-earned savings for your children’s education or spouse’s retirement?

v) The relative or close friend who you appointed as your executor will not charge an executor fee on your estate
*Possible consequences:
Many Malaysian are reluctant to appoint trust corporations as executors to administer their estates, despite the obvious advantages because trust corporations charge for their professional services. In an attempt to save on estate administration costs, they appoint relatives and friends
instead. Sometimes, this backfires. Under Section 43 of the Probate and Administration Act 1959, an executor or administrator of an estate may be allowed by the High Court a commission of up to 5% of the value of the assets collected by them. This provision is applicable even though your Will does not expressly provide that the executor can charge. In addition, these relatives and friends may not have the time or expertise to administer the estate. As a result, lawyers and other professionals are engaged, whose fees are also charged to the estate. Consequently, the estate administration costs and fees are as much as, if not significantly more than, in cases where a trust corporation is appointed. Is it not worth considering appointing trust corporations, who are specialists in this area, to be your executors?

vi) The relative or close friend who agreed to be appointed as your executor will continue to accept the appointment even years later
*Possible consequences:
It is not uncommon for testators to appoint their friends and relatives as executors of their Wills without informing them. There is no certainty that these friends and relatives are willing to take on the responsibility. Even where an executor is informed of their appointment, a testator may only pass away years after the Will is made. Will the executor still be willing and able to undertake the responsibility then? More importantly, will the executor even remember his
appointment under the testator’s Will? Is there not a possibility that the executor himself may be deceased or no longer reside in Malaysia?

Q & A re Nomination on EPF

Extracted from ~ kwsp.gov.my

Q : I have made a nomination and at the same time I also have written a Will. What is the status of the nomination and the Will?

A : The status of nomination supersedes the will. Payment will be made to the nominee/nominees that you have elected.

Q : I did not nominate the beneficiary of my savings, but I have a Will on my savings. What is the status of this Will?

A : The will cannot be used to determine the beneficiary of your savings. Your next-of-kin needs to produce the Letter of Administration/Grant of Probate/Distribution Order to claim your EPF savings.

Q : What will happen to the member's savings if the member and his nominee die simultaneously?

A : If the member and his nominee die simultaneously, payment will be determined according to the time of death and the age between the member and the nominee. If the nominee dies before the member, payment will be made as for cases without nomination. However, if the nominee dies after the member, payment will be made to the nominee’s next-of-kin.

Q : What is a letter of Administration?

A : A Letter of Administration is an appointment letter for administrator/administrators issued by the High Court to administer the deceased member’s properties.

Q : What is the Letter of Administration/Court Order?

A : The Letter of Administration or Court Order is an Order granted by the Court to the administrator/administrators to administer the estate of the deceased.

Q : What is the Grant of Probate?

A : Grant of Probate is a document granted by the High Court to administer the deceased's estate when the deceased had left a Will.

Q : How to obtain the Letter of Administration or Grant of Probate?

A : The documents can be obtained as follows:

• Letter of Administration is issued by Amanah Raya Berhad
• Distribution Order by the Land Office
• Grant of Probate by the High Court

Q : How does the EPF process application under the Death Withdrawal for embers who dies without making any nomination?

A : Applications from member's next-of-kin are processed according to the amount of savings as follows:

a. RM2,500.00 and below
Full amount will be paid to the member's next of-kin immediately after application is received.

b. RM20,000.00 and below

First payment amounting to RM2,500.00 is made immediately after application is received.
The balance is processed after two months from the date of member’s death.

c. Exceeds RM20,000.00
First payment amounting to RM2,500.00 is made immediately after application is received.
Second payment (not exceeding RM17,500.00) is processed after two months from the date of member's death.
The balance is paid upon producing the Letter of Administration/Grant of Probate/Distribution Order.

However, if the Letter of Administration/Grant of Probate/Distribution Order is presented at the point of application for withdrawal, payment will be paid to the persons/administrators concerned accordingly.

Q : Can I nominate an association or welfare organization as beneficiary of my saving?

A : No. You can only nominate an individual or several individuals as beneficiary of your savings.

Q : When someone has nominated the children who are all below 18 years old as beneficiaries, and in the event when this person and the spouse have passed away at the same time, can the children claim the saving? If not, what are the procedures?

A : The nominee may apply to withdraw the deceased member's savings provided that the nominee is 18 years old and above. If the nominee is below the age of 18 years, he/she will not be eligible to apply for the death withdrawal until he/she has turned 18 years old. However, the guardian of the nominee may apply for the withdrawal attached with an appeal letter on the grounds of financially supporting the nominee. The appeal will be considered at EPF's discretion.