Law
of Inheritance in Malaysia
of Inheritance in Malaysia
Family law and defined
inheritance rules
inheritance rules
There are two parallel
systems of law governing the matter of inheritance in Malaysia. The non-Muslims
are governed by civil law while the Muslims are regulated by Islamic law. However,
this segregation does not prevent the potential conflicts when one changes his
or her religion.
systems of law governing the matter of inheritance in Malaysia. The non-Muslims
are governed by civil law while the Muslims are regulated by Islamic law. However,
this segregation does not prevent the potential conflicts when one changes his
or her religion.
Under Shariah law,
inheritance follows the Islamic faraid principles of inheritance, which
determines the shares, limits, and path of inheritance relevant to a deceased
individual’s estate.
inheritance follows the Islamic faraid principles of inheritance, which
determines the shares, limits, and path of inheritance relevant to a deceased
individual’s estate.
Under Shariah law, up to
one-third of the total value of an estate may be decided using what’s known as
a wasiyyah, or Islamic will.
one-third of the total value of an estate may be decided using what’s known as
a wasiyyah, or Islamic will.
Under civil law, estate
inheritance is governed by a number of statutes and regulations.
inheritance is governed by a number of statutes and regulations.
Civil law allows for the
personal wishes of an individual to dictate the ownership of an estate upon
their death through the use of a will.
personal wishes of an individual to dictate the ownership of an estate upon
their death through the use of a will.
That means that, in theory,
a sole surviving parent with three children could leave the entire estate to ONLY
ONE individual.
a sole surviving parent with three children could leave the entire estate to ONLY
ONE individual.
If an individual dies
without a will, the estate is divided between surviving family members
according to legal precedents for what is known as ‘dying intestate’.
without a will, the estate is divided between surviving family members
according to legal precedents for what is known as ‘dying intestate’.
This essentially means that
there are no clear directions as to the division of your estate. Sabah follows
different laws under the Intestate Succession Ordinance 1960.
there are no clear directions as to the division of your estate. Sabah follows
different laws under the Intestate Succession Ordinance 1960.
If a deceased person left a
will, on death, the distribution of their estate will follow testacy laws, and
the appointed executor will just need to obtain a Grant of Probate from the
relevant high court.
will, on death, the distribution of their estate will follow testacy laws, and
the appointed executor will just need to obtain a Grant of Probate from the
relevant high court.
Whereas if a deceased person
dies without leaving a will, their assets are distributed according to the
rules of intestacy as laid down in the Distribution Act 1958 for West Malaysia
and Sarawak and the Intestate Succession Ordinance 1968 for Sabah, provided the
estate is valued at less than MYR2 million only. The intestacy laws enable
property to pass to survivors according to the rules of intestacy but these
rules do not operate as thriftily as a proper will. Both Muslims and
non-Muslims must appoint an administrator for the estate by applying to the
court to issue letters of administration authorising the person or persons
named to administer the deceased person’s estate in accordance with the
relevant statutes.
dies without leaving a will, their assets are distributed according to the
rules of intestacy as laid down in the Distribution Act 1958 for West Malaysia
and Sarawak and the Intestate Succession Ordinance 1968 for Sabah, provided the
estate is valued at less than MYR2 million only. The intestacy laws enable
property to pass to survivors according to the rules of intestacy but these
rules do not operate as thriftily as a proper will. Both Muslims and
non-Muslims must appoint an administrator for the estate by applying to the
court to issue letters of administration authorising the person or persons
named to administer the deceased person’s estate in accordance with the
relevant statutes.
1)
Do I Have To Pay Tax For Inheriting Property?
Do I Have To Pay Tax For Inheriting Property?
There’s currently NO tax for
estate inheritance in Malaysia. A previous version of it was repealed in 1991.
estate inheritance in Malaysia. A previous version of it was repealed in 1991.
Plenty of discussions about
the reintroduction of an inheritance tax have been held by successive
governments, but as of Budget 2020, no new laws have been introduced.
the reintroduction of an inheritance tax have been held by successive
governments, but as of Budget 2020, no new laws have been introduced.
However, let’s say the old
inheritance tax were to be brought back; do you know the MAIN reason why so
many people were against it? Let’s look at a simplified example!
inheritance tax were to be brought back; do you know the MAIN reason why so
many people were against it? Let’s look at a simplified example!
In the event that there’s
property to be inherited from a deceased family member or relative, an
inheritance tax may be imposed on those assets, even if there’s no economic
gain.
property to be inherited from a deceased family member or relative, an
inheritance tax may be imposed on those assets, even if there’s no economic
gain.
2)
Would The Inheritance Tax Have A Positive Impact Though?
Would The Inheritance Tax Have A Positive Impact Though?
According to Mohideen Abdul
Kader, the acting president of the Consumers Association of Penang (CAP),
reintroducing the inheritance tax would have “…been the best way to tackle
wealth inequality”.
Kader, the acting president of the Consumers Association of Penang (CAP),
reintroducing the inheritance tax would have “…been the best way to tackle
wealth inequality”.
So
what’s all the debate surrounding inheritance tax?
what’s all the debate surrounding inheritance tax?
For starters, there’s the
injustice where a person could work all day and all night and pay their taxes,
but still be stuck in the B40 group.
injustice where a person could work all day and all night and pay their taxes,
but still be stuck in the B40 group.
On the other hand, a person
who doesn’t do any of those could earn a fortune by simply inheriting multiple
properties and not paying any tax on them at all.
who doesn’t do any of those could earn a fortune by simply inheriting multiple
properties and not paying any tax on them at all.
Simply put, an inheritance
tax could be regarded as another way to impose a tax on inflation.
tax could be regarded as another way to impose a tax on inflation.
As property prices change
from the time of the property being bought right up to when it’s sold, the
inheritance tax would be imposed on the current market value of the property.
from the time of the property being bought right up to when it’s sold, the
inheritance tax would be imposed on the current market value of the property.
It’s a rather stark
contrast; imagine being taxed for a home that was valued at RM50,000 40 years
ago, compared to a home now valued at RM500,000!
contrast; imagine being taxed for a home that was valued at RM50,000 40 years
ago, compared to a home now valued at RM500,000!
Although inheritance tax is
touted as being good for the economy and government revenue, there’s no
guarantee of it being 100% effective to bridge income inequality and push
property ownership up the ladder.
touted as being good for the economy and government revenue, there’s no
guarantee of it being 100% effective to bridge income inequality and push
property ownership up the ladder.
3)
Does The Size Of My House Make A Difference To Inheritance Tax?
Does The Size Of My House Make A Difference To Inheritance Tax?
The size of your house, and
total value of your property, may impact which government agency is responsible
for overseeing the estate of a deceased individual. No inheritance tax will be
applied.
total value of your property, may impact which government agency is responsible
for overseeing the estate of a deceased individual. No inheritance tax will be
applied.
Estates which have a total
cash and property valuation of less than RM2 million are overseen by the Land
Office and Public Trustee.
cash and property valuation of less than RM2 million are overseen by the Land
Office and Public Trustee.
Malaysia’s High Court is
responsible for distributing assets (such as property) for estates valued over 2
million.
responsible for distributing assets (such as property) for estates valued over 2
million.
4)
What Exactly Is Estate Planning?
What Exactly Is Estate Planning?
When we talk about
inheritance, we often talk about an ‘estate’. What that means in practice is
the total amount of money, financial accounts, and property owned by an
individual.
inheritance, we often talk about an ‘estate’. What that means in practice is
the total amount of money, financial accounts, and property owned by an
individual.
That covers both inheritance
money and inheritance property.
money and inheritance property.
When it comes to property,
inheritance can be quite complex. It is of course a valuable asset, but one
where the financial value is quite literally locked into the bricks and mortar
of the building.
inheritance can be quite complex. It is of course a valuable asset, but one
where the financial value is quite literally locked into the bricks and mortar
of the building.
Estate planning attempts to
remove uncertainty when it comes to distributing your estate after death, by
laying out/providing for your wishes.
remove uncertainty when it comes to distributing your estate after death, by
laying out/providing for your wishes.
A professionally drafted
will is the first place to start, setting out your wishes in a formal document.
will is the first place to start, setting out your wishes in a formal document.
Insurance can be another
important part of estate planning, providing the financial support for your
family for everything; this is usually from a lump sum payment at the point of
death to cover funeral and future expenses.
important part of estate planning, providing the financial support for your
family for everything; this is usually from a lump sum payment at the point of
death to cover funeral and future expenses.
Trusts can also be an
important part of estate planning. These are legal agreements that deal with
the ownership and distribution of an individual’s property.
important part of estate planning. These are legal agreements that deal with
the ownership and distribution of an individual’s property.
Trusts can be established as
a revocable trust (can be altered or cancelled), or irrevocable trust (cannot
be amended once established).
a revocable trust (can be altered or cancelled), or irrevocable trust (cannot
be amended once established).
Trusts provide a useful tool
in some situations to ensure the smooth transition of ownership at the point of
death.
in some situations to ensure the smooth transition of ownership at the point of
death.
Muslim property owners can
also dictate their own wishes using a wasiyyah, or Islamic will. These
agreements outline an individual’s wishes around the distribution of property
upon their death.
also dictate their own wishes using a wasiyyah, or Islamic will. These
agreements outline an individual’s wishes around the distribution of property
upon their death.
A wasiyyah cannot contradict
established Islamic law around inheritance, but does allow for caveats such as
the permissible one-third of an estate bequeathed when an individual dies.
established Islamic law around inheritance, but does allow for caveats such as
the permissible one-third of an estate bequeathed when an individual dies.
To add complications to this
situation, a wasiyyah is also subject to procedural review under the following
laws:
situation, a wasiyyah is also subject to procedural review under the following
laws:
Rules of the Courts 2012
Probate and Administration
Act 1959 (Act 97)
Act 1959 (Act 97)
Small Estate (Distribution)
Act 1955 (Act 98)
Act 1955 (Act 98)
Public Trust Corporation Act
1995 (Act 532)
1995 (Act 532)
Relevant States’ statutory
provisions applicable in Shariah courts.
provisions applicable in Shariah courts.
Inherited property,
inheritance tax, inheritance money, estate planning, inheriting a house, trust
property, revocable trust.
inheritance tax, inheritance money, estate planning, inheriting a house, trust
property, revocable trust.
5)
Am I Required To Have A Will?
Am I Required To Have A Will?
No, but it’s a important and
sensible thing to do in order to ensure your wishes are followed upon your
death.
sensible thing to do in order to ensure your wishes are followed upon your
death.
6)
Can You Dispute An Inheritance?
Can You Dispute An Inheritance?
Yes, inheritance disputes
are why good estate planning is such an important part of inheritance. That
means setting out your wishes, but also discussing them with your family.
are why good estate planning is such an important part of inheritance. That
means setting out your wishes, but also discussing them with your family.
7)
What Happens To Property If Nobody Inherits It?
What Happens To Property If Nobody Inherits It?
This is a recognised
challenge in Malaysia. No official centralised record of unclaimed properties
is currently kept.
challenge in Malaysia. No official centralised record of unclaimed properties
is currently kept.
Unpaid quit rent (an
essential land tax) is often the only sign that a property remains unclaimed.
essential land tax) is often the only sign that a property remains unclaimed.
What
is a will and why do you need it?
is a will and why do you need it?
A will is a legal document that
will determine how your wealth will be distributed among your beneficiaries and
those under your care, such as minor children. It ensures it will be handled
and distributed according to your wishes.
will determine how your wealth will be distributed among your beneficiaries and
those under your care, such as minor children. It ensures it will be handled
and distributed according to your wishes.
Types
of Will
of Will
Holographic
will: A handwritten will that is written and signed by the testator.
will: A handwritten will that is written and signed by the testator.
Oral
will: Also known as a nuncupative will, which is a will that has been
delivered orally through speech to witnesses.
will: Also known as a nuncupative will, which is a will that has been
delivered orally through speech to witnesses.
Living
will: Also known as a directive to physicians, this willallows people to
state their medical care wishes in case they become unable to communicate their
medical decision.
will: Also known as a directive to physicians, this willallows people to
state their medical care wishes in case they become unable to communicate their
medical decision.
Wasiat: An Islamic
will where a Muslim will make a declaration during his or her lifetime
regarding assets.
will where a Muslim will make a declaration during his or her lifetime
regarding assets.
A will and surat Wasiat are
governed by different sets of laws, however, both serve a similar purpose.
governed by different sets of laws, however, both serve a similar purpose.
There
are two types of Wasiat:
are two types of Wasiat:
A Wasiat where the testator
can give property or asset to a non-beneficiary who is not entitled to anything
under Faraid Law. Only 1/3 of the assets that are not administered after deduction
of liabilities can be given. The remaining 2/3 of the Testator’s assets will
remain the lawful share of his or her beneficiaries under Faraid Law.
can give property or asset to a non-beneficiary who is not entitled to anything
under Faraid Law. Only 1/3 of the assets that are not administered after deduction
of liabilities can be given. The remaining 2/3 of the Testator’s assets will
remain the lawful share of his or her beneficiaries under Faraid Law.
A Wasiat where the testator
can choose to donate more than 1/3 of his or her assets provided that the
beneficiaries agree.
can choose to donate more than 1/3 of his or her assets provided that the
beneficiaries agree.
How
do you draw up a will and how much would a will cost?
do you draw up a will and how much would a will cost?
Wills and Wasiat can be
written at banks, trust management companies, will writing providers or also
with the help of lawyers. However, do take note that if you choose to go
through a lawyer when writing your will or surat Wasiat, make sure you engage
one who specializes in the field. This is because like doctors, lawyers have
their expertise, which means getting a corporate lawyer to help with writing
your will may not the best idea. Engaging a lawyer for a will or Wasiat will
also be costly, even for a simple one.
written at banks, trust management companies, will writing providers or also
with the help of lawyers. However, do take note that if you choose to go
through a lawyer when writing your will or surat Wasiat, make sure you engage
one who specializes in the field. This is because like doctors, lawyers have
their expertise, which means getting a corporate lawyer to help with writing
your will may not the best idea. Engaging a lawyer for a will or Wasiat will
also be costly, even for a simple one.
Some banks in Malaysia also
have their own will writing services that start from a few hundred ringgit per
will. If you have a large amount of money deposited at the bank (usually over
RM100,000), some banks also offer will and Wasiat writing services for
free. Aside from that, Amanah Raya
Berhad, a trustee company also provides the will and Wasiat writing services.
Their charges are as per below:
have their own will writing services that start from a few hundred ringgit per
will. If you have a large amount of money deposited at the bank (usually over
RM100,000), some banks also offer will and Wasiat writing services for
free. Aside from that, Amanah Raya
Berhad, a trustee company also provides the will and Wasiat writing services.
Their charges are as per below:
Charges for wills and
Wasiats will vary according to the number of clauses, or items inserted, as
well as the level of complexity of the intended will or Wasiat.
Wasiats will vary according to the number of clauses, or items inserted, as
well as the level of complexity of the intended will or Wasiat.
This is to safeguard yourself
and make sure the authenticity of the will or Wasiat will not be challenged or
deemed invalid.
and make sure the authenticity of the will or Wasiat will not be challenged or
deemed invalid.
Writing
a will in Malaysia, and the laws relating to inheritance and distribution in
Malaysia
a will in Malaysia, and the laws relating to inheritance and distribution in
Malaysia
The purpose of writing a
will is for a person to leave behind a legacy for loved ones, and to ensure
that they are well provided for in the unfortunate event of the testator’s
passing. If a person dies intestate (without having written a valid will), then
the provisions under the Distribution Act 1958 will apply unless he or she is a
Muslim in West Malaysia and Sarawak or is a native of Sarawak. If the person is
in the state of Sabah, then the Intestate Succession Ordinance 1960 will apply.
Both the act and ordinance set out the manner of distribution of any property
to specific beneficiaries, after all outstanding debts (including taxes) are
paid. In addition, the provisions under the Inheritance (Family Provision) Act
1971 allow the courts to grant an order that the maintenance of certain
categories of dependents shall be reasonably provided for where such dependents
have not been provided for, or are inadequately provided for, under the
testator’s will.
will is for a person to leave behind a legacy for loved ones, and to ensure
that they are well provided for in the unfortunate event of the testator’s
passing. If a person dies intestate (without having written a valid will), then
the provisions under the Distribution Act 1958 will apply unless he or she is a
Muslim in West Malaysia and Sarawak or is a native of Sarawak. If the person is
in the state of Sabah, then the Intestate Succession Ordinance 1960 will apply.
Both the act and ordinance set out the manner of distribution of any property
to specific beneficiaries, after all outstanding debts (including taxes) are
paid. In addition, the provisions under the Inheritance (Family Provision) Act
1971 allow the courts to grant an order that the maintenance of certain
categories of dependents shall be reasonably provided for where such dependents
have not been provided for, or are inadequately provided for, under the
testator’s will.
Foreigners
and Wills
and Wills
Malaysia recognises the
validity of international wills that relate to properties and assets owned by
the testator in other parts of the world. However, it is highly recommended
that a foreigner make a will in Malaysia under the following circumstances:
validity of international wills that relate to properties and assets owned by
the testator in other parts of the world. However, it is highly recommended
that a foreigner make a will in Malaysia under the following circumstances:
They are living permanently
in Malaysia and would be considered a ‘permanent resident’ of Malaysia at the
time of their passing.
in Malaysia and would be considered a ‘permanent resident’ of Malaysia at the
time of their passing.
They own immovable
properties in Malaysia (land and buildings, for instance) Failure to make a will in
Malaysia may mean that delays occur in the transfer of their properties and
assets in Malaysia to their beneficiaries, wherever they may be. In short,
having a will made in their country of origin that covers all assets is still
valid, but there may still be delays when it is applied in Malaysia, especially
when it involves immovable properties bound by administrative red tape. As
such, it would be advisable to make a will in Malaysia addressing Malaysian
properties and assets to avoid the risk of delays that may take years to
settle.
properties in Malaysia (land and buildings, for instance) Failure to make a will in
Malaysia may mean that delays occur in the transfer of their properties and
assets in Malaysia to their beneficiaries, wherever they may be. In short,
having a will made in their country of origin that covers all assets is still
valid, but there may still be delays when it is applied in Malaysia, especially
when it involves immovable properties bound by administrative red tape. As
such, it would be advisable to make a will in Malaysia addressing Malaysian
properties and assets to avoid the risk of delays that may take years to
settle.
What
are the Conditions for making a Will?
are the Conditions for making a Will?
1. There are three
prerequisites that must be satisfied when making a will before it is considered
valid:
prerequisites that must be satisfied when making a will before it is considered
valid:
2. The testator must be at
least eighteen years old as stipulated under the Age of Majority Act 1971 in
West Malaysia and Sarawak, whereas in Sabah, the age of majority is twenty-one
years old as stated under Section 4 of the Wills Ordinance 1953.
least eighteen years old as stipulated under the Age of Majority Act 1971 in
West Malaysia and Sarawak, whereas in Sabah, the age of majority is twenty-one
years old as stated under Section 4 of the Wills Ordinance 1953.
3. The testator must be of
‘sound mind’ (“testamentary capacity”) as provided by Section 3 of the Wills
Act 1959.
‘sound mind’ (“testamentary capacity”) as provided by Section 3 of the Wills
Act 1959.
The will must be in writing,
and must also be signed by the testator (or affixed with the testator’s mark)
at the foot or end of the will in the presence of two witnesses. The will must
be attested by two or more witnesses in the presence of the testator and each
other.
and must also be signed by the testator (or affixed with the testator’s mark)
at the foot or end of the will in the presence of two witnesses. The will must
be attested by two or more witnesses in the presence of the testator and each
other.
Contents
of a Will
of a Will
It is only sensible that
writing a will be personalized according to the wishes of the will maker rather
than in accordance to a template with modifications.
writing a will be personalized according to the wishes of the will maker rather
than in accordance to a template with modifications.
Having said that, the basic
contents of a will should include the following:-
contents of a will should include the following:-
1. Date – the date of writing the will;
2. Name & NRIC No. – the name, address and national registration
identity card’s number (‘NRIC No.’) or passport number of the will maker;
identity card’s number (‘NRIC No.’) or passport number of the will maker;
3. Last Will Clause – a declaration as to the last will and testament;
4. Revocation Clause – a declaration to revoke the earlier will and
codicil (if there is any);
codicil (if there is any);
5. Appointment of Executor – a clause to appoint an executor/executors
as well as another executor/executors in default of execution of the former
(collectively known as the ‘Executor’);
as well as another executor/executors in default of execution of the former
(collectively known as the ‘Executor’);
6. Debts, Funeral and Testamentary Expenses – a direction to the
Executor to settle such debts, funeral and testamentary expenses (It is
important to also note that our estate, does not only comprise of assets but
also our liabilities or debts accumulated during our lifetime);
Executor to settle such debts, funeral and testamentary expenses (It is
important to also note that our estate, does not only comprise of assets but
also our liabilities or debts accumulated during our lifetime);
7. Distribution Clause – a clause containing the description of
assets, whether specifically or generally, and the beneficiaries thereto. In
the event of provisions for children, it is prudent to provide for both living
children and children en ventre sa mere (i.e. children not yet born) to avoid
rewriting of a will every time a child is born especially for the young couple.
assets, whether specifically or generally, and the beneficiaries thereto. In
the event of provisions for children, it is prudent to provide for both living
children and children en ventre sa mere (i.e. children not yet born) to avoid
rewriting of a will every time a child is born especially for the young couple.
8. Appointment of Guardian – a clause to appoint a guardian or
guardians of children until they attain 18 years old;
guardians of children until they attain 18 years old;
9. Choice of Law Clause – a declaration that the will be construed in
accordance to the laws of Malaysia;
accordance to the laws of Malaysia;
10. Residuary Estate Clause – a precautionary clause to deal with the
residual of an estate, which includes the assets void against the beneficiary,
assets void or lapse by the death of the beneficiary during the lifetime of the
testator, assets missed out at the time of writing a will or acquired
subsequently;
residual of an estate, which includes the assets void against the beneficiary,
assets void or lapse by the death of the beneficiary during the lifetime of the
testator, assets missed out at the time of writing a will or acquired
subsequently;
11. Signature of Testator – at the end of the will; and
12. Attestation Clause – there is no standard form of attestation
clause required under the law as long as both witnesses sign at the end of the
will with their names, NRIC No., and addresses stated clearly.
clause required under the law as long as both witnesses sign at the end of the
will with their names, NRIC No., and addresses stated clearly.
It is optional to put in an
‘executor indemnity’ clause because there is an existing provision to indemnify
the executor as per Section 64(1) of the Probate and Administration Act 1959.
‘executor indemnity’ clause because there is an existing provision to indemnify
the executor as per Section 64(1) of the Probate and Administration Act 1959.
What
happened if the beneficiary dies during the will maker’s lifetime?
happened if the beneficiary dies during the will maker’s lifetime?
As a general rule, such gift
shall lapse or void by reason of the death of the beneficiary during the will
maker’s lifetime by reason of such devise incapable of taking effect pursuant
to Section 19 of Wills Act 1959. The lapsed gift shall then be included into
the will maker’s residuary estate and be dealt with in accordance to the
residuary estate clause. Where there is no residuary clause, the residuary
estate goes on to intestacy and be distributed under the Distribution Act 1958.
shall lapse or void by reason of the death of the beneficiary during the will
maker’s lifetime by reason of such devise incapable of taking effect pursuant
to Section 19 of Wills Act 1959. The lapsed gift shall then be included into
the will maker’s residuary estate and be dealt with in accordance to the
residuary estate clause. Where there is no residuary clause, the residuary
estate goes on to intestacy and be distributed under the Distribution Act 1958.
However, such devise shall
not lapse if the beneficiary being the testator’s child or descendants dies
leaving issues, as per Section 25 of Wills Act 1959.
not lapse if the beneficiary being the testator’s child or descendants dies
leaving issues, as per Section 25 of Wills Act 1959.
What
happened if the beneficiary dies after the will maker’s death but before the
will executed or received the inheritance?
happened if the beneficiary dies after the will maker’s death but before the
will executed or received the inheritance?
Fundamentally, a will carry
into effect upon someone’s death.
into effect upon someone’s death.
Therefore, since the
beneficiary survives the will maker’s death, the beneficiary shall be entitled
to the estate under the will.
beneficiary survives the will maker’s death, the beneficiary shall be entitled
to the estate under the will.
However, since the
beneficiary now died, the estate of the beneficiary shall be entitled to the
estate under the will instead, and be distributed according to the
beneficiary’s will or intestacy.
beneficiary now died, the estate of the beneficiary shall be entitled to the
estate under the will instead, and be distributed according to the
beneficiary’s will or intestacy.
Important
points on Will*
points on Will*
1.
Only For Non-Muslims
Only For Non-Muslims
For Muslims, inheritance
will be governed under Syariah law, where one would need to prepare their
“Wasiat” (the equivalent of a will) and appoint their “Wasi” (the equivalent of
an executor).
will be governed under Syariah law, where one would need to prepare their
“Wasiat” (the equivalent of a will) and appoint their “Wasi” (the equivalent of
an executor).
Contrary to popular belief,
a will and a “Wasiat” are two entirely different things governed by two
entirely different set of laws although they both serve a similar purpose.
a will and a “Wasiat” are two entirely different things governed by two
entirely different set of laws although they both serve a similar purpose.
2. Can a beneficiary be a witness to the will?
If your parents ask you to
be a witness to their will, you would know for sure that you are not a
beneficiary to the will (that means you will not inherit anything).
be a witness to their will, you would know for sure that you are not a
beneficiary to the will (that means you will not inherit anything).
So, if that ever happens,
make sure to ask them if they know what they are doing as they might not be
aware that a beneficiary cannot be a witness, and whether that is what they
really want to do.
make sure to ask them if they know what they are doing as they might not be
aware that a beneficiary cannot be a witness, and whether that is what they
really want to do.
3.
What is the time required to get right of inheritance of property?
What is the time required to get right of inheritance of property?
If you are thinking that you
can walk into a bank or the land office and claim your inheritance simply by
showing proof of your identification and your relation to the deceased anytime
you like, you are wrong.
can walk into a bank or the land office and claim your inheritance simply by
showing proof of your identification and your relation to the deceased anytime
you like, you are wrong.
If a non-Muslim dies
intestate (without a will), their next of kin would have to apply for a Letter
Of Administration, appoint an administrator (whom all legal beneficiaries will
have to agree on) and go through the lengthy process of administering an estate
which can take up to 2-5 years.
intestate (without a will), their next of kin would have to apply for a Letter
Of Administration, appoint an administrator (whom all legal beneficiaries will
have to agree on) and go through the lengthy process of administering an estate
which can take up to 2-5 years.
With a will, the process
would be much faster, but it would still take at least 3 months for the
executor to obtain a Grant Of Probate (a court permission to allow the executor
to execute the will) and execute the contents of the will.
would be much faster, but it would still take at least 3 months for the
executor to obtain a Grant Of Probate (a court permission to allow the executor
to execute the will) and execute the contents of the will.
4.
Is the value of your assets depreciate while waiting for your will to be
executed?
Is the value of your assets depreciate while waiting for your will to be
executed?
Usually, it would take at
least 3 months for a will to be executed. If your inheritance includes assets
like stock holdings, the value of the stocks might depreciate by the time legal
ownership is transferred to you.
least 3 months for a will to be executed. If your inheritance includes assets
like stock holdings, the value of the stocks might depreciate by the time legal
ownership is transferred to you.
Without a will, the process
could take up to 2-5 years, by which time a financial recession might occur and
significantly diminish the portfolio value you would inherit.
could take up to 2-5 years, by which time a financial recession might occur and
significantly diminish the portfolio value you would inherit.
5.is
it mandatory that witnesses and the testator must sign on the will at the same
time?
it mandatory that witnesses and the testator must sign on the will at the same
time?
One of the main functions of
witnesses is to ensure that the testator is of sound mind at the time the will
is made.
witnesses is to ensure that the testator is of sound mind at the time the will
is made.
Hence, the 2 witnesses and
testator must all sign on the will in the same session
testator must all sign on the will in the same session
6.
Wills Can Be Written At Banks, Trust Management Companies Or Will-Writing
Service Providers
Wills Can Be Written At Banks, Trust Management Companies Or Will-Writing
Service Providers
For most people who don’t
have complicated family relations or a huge corporate empire to leave to their
loved ones, a simple will done at a bank or a will-writing service provider
would suffice.
have complicated family relations or a huge corporate empire to leave to their
loved ones, a simple will done at a bank or a will-writing service provider
would suffice.
Most of us might not be
aware that some of the major banks have their own will-writing services that
start from a few hundred ringgit per will. If you have a significant amount of
deposit (usually over RM100,000) with them, some of them even offer will-writing
services for free.
aware that some of the major banks have their own will-writing services that
start from a few hundred ringgit per will. If you have a significant amount of
deposit (usually over RM100,000) with them, some of them even offer will-writing
services for free.
7.
Wills Do Not Interfere With Your EPF Or Insurance Policy Nominations
Wills Do Not Interfere With Your EPF Or Insurance Policy Nominations
Unless you did not name a
nominee for your KWSP(EPF) account or insurance policies, your KWSP(EPF) and
insurance policies are not subjected to the direction of any of the clauses in
your will.
nominee for your KWSP(EPF) account or insurance policies, your KWSP(EPF) and
insurance policies are not subjected to the direction of any of the clauses in
your will.
This is because KWSP and
insurance policies are governed under a different act (set of laws passed by
parliament) of their own.
insurance policies are governed under a different act (set of laws passed by
parliament) of their own.
8.
Getting Married Automatically Revokes Your Previous Will
Getting Married Automatically Revokes Your Previous Will
Any will that you have
written prior to a marriage will automatically be revoked once you do. This is
due to the presumption that your priorities would have changed upon marriage.
written prior to a marriage will automatically be revoked once you do. This is
due to the presumption that your priorities would have changed upon marriage.
If you do not amend or make
a new will after marriage and pass away unexpectedly, you will be deemed to have
died intestate (without a will) and your assets will be distributed according
to S6 of the Distribution Act.
a new will after marriage and pass away unexpectedly, you will be deemed to have
died intestate (without a will) and your assets will be distributed according
to S6 of the Distribution Act.
The exception to this is if
you were already contemplating marriage at the time you’ve written your will
and have written the name of your fiancé in your will and expressly stated so.
you were already contemplating marriage at the time you’ve written your will
and have written the name of your fiancé in your will and expressly stated so.
Hence, it is advisable for
you to make a new will after you get married (this applies to subsequent
marriages, if any).
you to make a new will after you get married (this applies to subsequent
marriages, if any).
Probate
process
process
Grant
of Probate (with a will):
of Probate (with a will):
Obtain original death
certificate, original will, a copy of the executor’s NRIC and residential
address of executor.
certificate, original will, a copy of the executor’s NRIC and residential
address of executor.
Executor applies from the
court for probate with list of assets and beneficiaries.
court for probate with list of assets and beneficiaries.
Probate obtained within
three to six months (depending on locality).
three to six months (depending on locality).
Executor distributes assets,
after payment of debts and other statutory obligations according to the will.
after payment of debts and other statutory obligations according to the will.
Intestacy
– Letter of Administration(Without a Will)
– Letter of Administration(Without a Will)
When a person dies intestate
(without leaving a valid will), there may be a delay in distribution due to the
following:
(without leaving a valid will), there may be a delay in distribution due to the
following:
Choosing
an administrator:
an administrator:
The beneficiaries may not
agree on the person intending to apply for the Letter of Administration. The
Probate and Administration Act 1959 requires all lawful beneficiaries to waive
in writing their right to be administrator when appointing an administrator.
agree on the person intending to apply for the Letter of Administration. The
Probate and Administration Act 1959 requires all lawful beneficiaries to waive
in writing their right to be administrator when appointing an administrator.
Valuing
the estate:
the estate:
a lot of time and manpower
is required to locate, collect, assess and value all assets and liabilities. As
a result, there will be increasing costs to the estate and its beneficiaries as
the need for legal services, accountants, tax consultants and other
professionals arises.
is required to locate, collect, assess and value all assets and liabilities. As
a result, there will be increasing costs to the estate and its beneficiaries as
the need for legal services, accountants, tax consultants and other
professionals arises.
Finding
two sureties:
two sureties:
the administrator must find
two sureties to sign an administration bond, and the sureties must have assets
within the jurisdiction equivalent to the value of the deceased’s estate.
However, no surety is required if:
two sureties to sign an administration bond, and the sureties must have assets
within the jurisdiction equivalent to the value of the deceased’s estate.
However, no surety is required if:
the estate does not exceed
RM 50,000
RM 50,000
a trust corporation is being
appointed as the administrator.
appointed as the administrator.
the administrator is the
sole beneficiary, in which case sureties are waivered at the discretion of the
court (as per Section 35 of the Probate and Administration Act 1959).
sole beneficiary, in which case sureties are waivered at the discretion of the
court (as per Section 35 of the Probate and Administration Act 1959).
Lawful
beneficiaries: When an individual dies intestate, their estate is distributed
according to the Distribution Act 1958. Due to the delays caused by the factors
mentioned above, sometimes the estate will have to be distributed to many
beneficiaries who inherit from the original beneficiaries (who may have passed
away over time), or who may have relocated to different countries. Even if
there are no difficulties with having many beneficiaries or with finding them,
the application of the intestacy law in Malaysia will create other difficulties
as shown below, be it the Distribution Act 1958 or the Intestate Succession
Ordinance 1960. In addition, the intestate will not be able to dictate the
terms of the distribution of their estate to the people chosen to be
beneficiaries, determine what assets are to be inherited by whom, or choose the
manner of their distribution. Section 6 of the Distribution Act 1958 provides
the following:
beneficiaries: When an individual dies intestate, their estate is distributed
according to the Distribution Act 1958. Due to the delays caused by the factors
mentioned above, sometimes the estate will have to be distributed to many
beneficiaries who inherit from the original beneficiaries (who may have passed
away over time), or who may have relocated to different countries. Even if
there are no difficulties with having many beneficiaries or with finding them,
the application of the intestacy law in Malaysia will create other difficulties
as shown below, be it the Distribution Act 1958 or the Intestate Succession
Ordinance 1960. In addition, the intestate will not be able to dictate the
terms of the distribution of their estate to the people chosen to be
beneficiaries, determine what assets are to be inherited by whom, or choose the
manner of their distribution. Section 6 of the Distribution Act 1958 provides
the following:
|
Intestate dies leaving surviving
|
Distribution of Estate
|
|
Spouse
only (no parent(s) or issue) |
Spouse: whole
estate |
|
Spouse
and parent(s) (no issue) |
Spouse: 1/2; parent(s): 1/2
|
|
Issue
only (no spouse or parent(s)) |
Issue: whole estate
|
|
Parents(s)
only (no spouse or issue) |
Parent(s): whole estate
|
|
Spouse
and issue (no parent(s)) |
Spouse: 1/3; issue: 2/3
|
|
Parent(s)
and issue (no spouse) |
Parent(s):
1/3; issue: 2/3 |
|
Spouse,
parent(s) and issue |
Spouse: 1/4; parent(s): 1/4; issue: 2/4
|
|
No
spouse, issue or parents |
The following
person(s), related to the intestate and alive at the death of intestate, in the following order:
Brother(s) and sister(s)
Grandparent(s)
Uncle(s) and aunt(s)
Great grandparent(s)
Great grand uncle(s) and aunt(s)
|
|
In default of
any person taking absolute interest under the foregoing provisions S.6(1)(a)-(i) |
Whole estate,
except land, to the government (land remains frozen) |
Employee
Pension Fund (EPF)
Pension Fund (EPF)
It is highly recommended
that all employees who contribute to the Employee Pension Fund (EPF) nominate
their beneficiaries on the EPF nomination form. Failing this, the EPF assets
will be distributed in accordance with their will. If the person dies
intestate, then it will be distributed in accordance with the acts earlier
stated.
that all employees who contribute to the Employee Pension Fund (EPF) nominate
their beneficiaries on the EPF nomination form. Failing this, the EPF assets
will be distributed in accordance with their will. If the person dies
intestate, then it will be distributed in accordance with the acts earlier
stated.
Cancellation,
Alteration and Revocation
Alteration and Revocation
A will is automatically
revoked when one or more of the following circumstances occur:
revoked when one or more of the following circumstances occur:
Marriage: marriage will
revoke a will made earlier by the testator unless it was expressed in the will
that it was made in contemplation of marriage, and shall not be revoked by the
solemnisation of the marriage contemplated to the named fiancé(e)
revoke a will made earlier by the testator unless it was expressed in the will
that it was made in contemplation of marriage, and shall not be revoked by the
solemnisation of the marriage contemplated to the named fiancé(e)
(Section 12, Wills Act 1959)
Writing a new will: only the
latest will would be recognised as the valid one by the courts.
latest will would be recognised as the valid one by the courts.
(Section 14, Wills Act 1959)
Declaration in writing of an
intention to revoke the will: the testator makes a written statement about
their intention to revoke the will. The said statement has to be signed by the
testator in the presence of two witnesses.
intention to revoke the will: the testator makes a written statement about
their intention to revoke the will. The said statement has to be signed by the
testator in the presence of two witnesses.
Conversion to the Islamic
faith: Section 2(2) of the Wills Act 1959 states that the Act does not apply to
wills of persons professing the religion of Islam. When the testator
(previously a non-Muslim) embraces the Islamic faith, the will made previously
shall be void as it no longer comes under the ambit of the Wills Act 1959. The
testator, after conversion, can write a new will in accordance with the Islamic
Laws whereby only one third of the total estate can be disposed of by way of a
will, and the remaining two thirds by Sijil Faraid (a certificate of Muslim
inheritance law). If the Muslim testator would like to dispose of more than one
third of their total estate, the consent of all lawful beneficiaries must be
obtained.
faith: Section 2(2) of the Wills Act 1959 states that the Act does not apply to
wills of persons professing the religion of Islam. When the testator
(previously a non-Muslim) embraces the Islamic faith, the will made previously
shall be void as it no longer comes under the ambit of the Wills Act 1959. The
testator, after conversion, can write a new will in accordance with the Islamic
Laws whereby only one third of the total estate can be disposed of by way of a
will, and the remaining two thirds by Sijil Faraid (a certificate of Muslim
inheritance law). If the Muslim testator would like to dispose of more than one
third of their total estate, the consent of all lawful beneficiaries must be
obtained.
Intentional
destruction: a will can be burnt, torn or otherwise intentionally destroyed by the
testator or a third party in the presence of the testator and under their
direction, with the intention to revoke the will (s. 14). Accidental or
malicious destruction by a third party does not render the revocation effective.
destruction: a will can be burnt, torn or otherwise intentionally destroyed by the
testator or a third party in the presence of the testator and under their
direction, with the intention to revoke the will (s. 14). Accidental or
malicious destruction by a third party does not render the revocation effective.
Estate
planning
planning
Use
of trusts in estate planning
of trusts in estate planning
Discretionary trusts and
fixed trusts are widely used for estate planning and succession planning.
fixed trusts are widely used for estate planning and succession planning.
The living trust concept is
also being used to carve out an individual’s assets from their estate to
achieve certain objectives. The living trust is a civil-law instrument for
wealth planning. It is a type of gift created during the lifetime of the settlor
that remains active thereafter. Essentially, the settlor appoints a trustee or
declares himself as a trustee to hold the property in trust for the
beneficiaries. This instrument permits the settlor to retain complete control
of the trust property during his lifetime, and enables the beneficiary to fully
benefit from the trust property as stipulated in the Trust Deed. The validity
of a living trust under civil law has also been legally recognised to be
applicable to Muslims (such as in the case of TM Feroze Khan & Ors v Meera
Hussain TM Mohamed Mydin [2006] 3 CLJ 616) as one of the estate planning
instruments in Malaysia.
also being used to carve out an individual’s assets from their estate to
achieve certain objectives. The living trust is a civil-law instrument for
wealth planning. It is a type of gift created during the lifetime of the settlor
that remains active thereafter. Essentially, the settlor appoints a trustee or
declares himself as a trustee to hold the property in trust for the
beneficiaries. This instrument permits the settlor to retain complete control
of the trust property during his lifetime, and enables the beneficiary to fully
benefit from the trust property as stipulated in the Trust Deed. The validity
of a living trust under civil law has also been legally recognised to be
applicable to Muslims (such as in the case of TM Feroze Khan & Ors v Meera
Hussain TM Mohamed Mydin [2006] 3 CLJ 616) as one of the estate planning
instruments in Malaysia.
Use
of foundations in estate planning
of foundations in estate planning
Foundations are recognised
in Malaysia in the form of a company limited by guarantee or an incorporated
trustee under the Trustees (Incorporation) Act 1952. Of note is the Labuan
Foundation, which is a statutory creature under the Labuan Foundations Act 2010.
These are generally no different from foundations found in other jurisdictions:
it is a separate legal entity that holds assets with the objective of managing
the assets for the benefit of a class of persons on a contractual basis. Labuan
Foundations are also typically used for private-wealth management and
charitable purposes.
in Malaysia in the form of a company limited by guarantee or an incorporated
trustee under the Trustees (Incorporation) Act 1952. Of note is the Labuan
Foundation, which is a statutory creature under the Labuan Foundations Act 2010.
These are generally no different from foundations found in other jurisdictions:
it is a separate legal entity that holds assets with the objective of managing
the assets for the benefit of a class of persons on a contractual basis. Labuan
Foundations are also typically used for private-wealth management and
charitable purposes.
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