Appoint a Trustee Company to administer your estate

[The following is an adaptation based on a true story. The names have been changed to protect the identities involved.]

“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 do a will through a will-writer, 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. Unbeknownst to Frank, John was struggling with his business and had a large debt. 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.

By the time Frank’s kids grew up, there was hardly anything left for them. When they questioned him on how this could arise, he said he had to settle their father’s debts and gave no account of the monies used.”

Cases like this are common. When you wish to write your will, the keys are:

• Who will get what and how best to provide for your beneficiaries?
• Who do you appoint and is that person qualified to be the executor of your estate?
• Can you trust this person with everything you have and will he/she be always there for your beneficiaries?
• You have started planning for your loved ones by writing a Will but you wish to ensure that your wishes in your Will would be followed.
• You need the Executor to have the expertise and experience to handle your estate and spare your family from the hassle of administering your estate.
• Ensure continuity in the Estate Administration and avoid delay caused by the critical illness or death of the appointed Executor, his delay, procrastination or his disinterest in administering your estate.

Understandably, you may want to appoint someone close to you as the executor. Selecting an individual to manage your estate may do more harm than good, apart from the risk of loss from misuse or mismanagement. The executor will be required to deal with various tedious and time consuming legal matters beginning with the application for probate, attending court hearings, preparing reports, etc. until the distribution according to the instructions in the will. The process can get very complicated.

Therefore, you need these qualities to be the Executor :-

• Knowledge and experience in administering the different aspects of Executorship and Estate Administration so that the management and distribution of the estate can be completed smoothly and expeditiously.
• Continuity – unlike an individual who may be affected by death, critical illness or cause delay, a Corporate Trustee provides continuity in carrying out the terms and conditions of the Will.
• Independence and accountability – Rockwills Trustee is independent in its management and administration of the Estate and acts impartially to all beneficiaries. At the same time, we are under legal obligation to ensure that the funds are properly managed, accounted for and properly distributed.
• Peace of mind – with Rockwills Trustee acting as your trustee, you are assured of a professional and experienced trustee to follow through all your wishes.

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.