What Happens Without a Will

When a person pass away, the deceased’s estate will be frozen.

The absence of a will does complicate matters. The estate would have to pass through a long and tedious process that is costly and time consuming. Many families are now experiencing the difficulties and lengthy process of liquidating the estates left behind by their parents and loved ones who passed away without a will.

Are you bothered by these concerns ?

  • What is estate planning ?
  • Why should I plan for estate distribution ?
  • What are the complications without a Will ?
  • Should I have a will ?
  • How should I plan my will ?

By failing to prepare, you are preparing to fail~ Benjamin Franklin

What is complications of estate without a Will ?

When a person dies intestate (pass away without a valid will), the estate would have to pass through a long and tedious process, this includes who has the right to administer the estate and how to determine the rightful beneficiaries. Here are the few issues to handle :

Appointment of an administrator

Who would be the administrator of the estate represent the first challenge. Since there is no will to appoint the deceased’s choice of personal representative, i.e. executor, then the beneficiary who has priority over other beneficiaries may file petition for the Letter of Administration. However, other beneficiaries may not agree on the arrangement.

The Probate and Administration Act 1959 requires all lawful beneficiaries to waive in writing their right to be administrator when appointing an administrator. This dispute may turn into a lawsuit that drag on for many years.

Finding two sureties / guarantors

The administrator must find two sureties(guarantors) to sign an administration bond, and the sureties must have assets equivalent to the value of the deceased’s estate and willing to stand guarantee during the estate administration process.

The administration bond is to protect the creditors and beneficiaries against losses caused by the improper administration of the estate such as the administrator runs away with the deceased’s assets.

It is almost impossible to look for two sureties and need to appeal to the court for sureties reduction. The court may at its discretion reduce the number of sureties and/or reduce the amount of the bond. There are 3 scenarios when the requirement of surety be waived :

  1. where a trust corporation is appointed as the administrator
  2. where the gross value of the estate does not exceed RM 50,000
  3. where the administrator is the only beneficiary of the estate.
All this in turn will cause further delay to the estate administration process.

Distribution hierarchy and beneficiaries

When an individual dies intestate, their estate is distributed according to the Distribution Act amendment 1997. Effect of this distribution Act is that the deceased cannot determine who are the chosen beneficiaries to the estate and the terms of distribution.The estate is left to distribute according to the hierarchy as follow :

  • 1st – spouse + issue(children)
  • 2nd – parents
  • 3rd – brothers / sisters
  • 4th – grandparents
  • 5th – uncles / aunts
  • 6th – great grandparents
  • 7th – great uncles / aunts
  • 8th – government

As a result of the hierarchy, some beneficiaries may be left out and not eligible for distribution such as :

  • adopted child without legal papers
  • step child or step parents are excluded
  • divorced spouse

Furthermore, another challenge here is to locate and find the many eligible beneficiaries before the estate administration process can be continued. This is a daunting task for the administrator!

Cost and time delay of estate administration

Due to many complex legal and administrative matters, the process of estate administration is very much longer and the cost to administer the estate including legal fees is much more expensive. The delay and the cost involved in transferring the deceased’s estate to the beneficiaries will cause the family a lot of hardships.

Do you need a Will?

Answer Yes / No for the below Question to find it out

Upon your demise :

  1. Do you own assets in the form of properties or investments in shares, unit trusts ? (YES / NO)
  2. Do you want your investment and deposit accounts to be passed on to your family member within shorter time, less hassle and less cost ? (YES / NO)
  3. Do you have properties under joint name ? (YES / NO)
  4. Do you have outstanding loans to settle ? (YES / NO)
  5. Do you use your EPF money to purchase approved unit trust scheme ? (YES / NO)
  6. Do you have elderly parents or children below age 21 to take care ? (YES / NO)
  7. Do you feel upset if your assets are NOT distributed according to your wishes? (YES / NO)
  8. Do you have intention to provide donation to any trusted organisation ? (YES / NO)
  9. Do you worry your family may not know how to handle or administer your estate ? (YES / NO)
  10. Do you worry your family members quarrel or fight over the estate ? (YES / NO)

Monitor

Less than 2 “Yes”

You have little financial responsibilities. Not much of concern. May not need a Will now.  Review your action when situation changes.

Alert

3 - 6 “Yes”

You have moderate financial responsibilities. Recommend to start plan for your Will. Our financial superhero can add value in your planning process.

Urgent

7 - 10 “Yes”

Your have heavy financial responsibilities. Urgently need to get your Will done.  Ask our financial superhero for advice.

Considerations when planning your Will

Stage 1 : Who to write your Will

Remember a Will is a legal document that needs to be present to the court. While the law does not require the will to be written by a lawyer, it is important that you get professional help when preparing your will.

Do you know many lawyers only familiar with property conveyancing or business law ? Please note that in order to get proper advice, get a lawyer that is familiar with family inheritance law. Alternatively seek help from a will writing professional.

Stage 2 : How you settle off your debts and liabilities

Before an estate can be passed on to the beneficiaries, it would have to settle all outstanding debts and liabilities first. These debts and liabilities include funeral expenses, estate administration expenses, taxes, outstanding medical expenses and all outstanding loans.

So make sure do some debts cancellation planning to ensure that the estate is debt-free or at least sufficient to distribute to beneficiaries after settle the main liabilities.

Stage 3 : Who you trust to be your executor and trustee

The function of the executor is to wind up the estate and distribute the assets while the trustee is to hold the assets until a particular time such as a trustee is appointed to hold the assets for minor children until they attain the age of 23.

The person you choose should be a trustworthy person that is willing and has the essential skills to manage the estate distribution duties. Executors can be your spouse, children if they are above 21, brothers or sisters, relatives or even friends.

Are you aware that a natural person executor can “resign” to carry out the duties as executor ? Furthermore, if the executor is having a lawsuit and being sued by creditors for bankruptcy, he or she cannot become a executor anymore ?

If you have sizeable asset and want peace of mind, you may consider appointing a trust corporation as your executor / trustee to manage your estate professionally.

Stage 4 : Who will be your children guardian

Avoid keeping your Will in the bank safety box as all bank related accounts will be frozen upon demise.

The appointed guardian shall have legal custody of the minor children and will be responsible for their support, health and education. Make provision for the children maintenance cost into your Will.

Stage 5 : Where to keep your Will

Avoid keeping your Will in the bank safety box as all bank related accounts will be frozen upon demise.

A better option is to keep your will with a trust corporation. It has some advantages e.g. the will remains safe from tampering and easy retrieval upon the testator’s demise.

While writing a will is not difficult, the Will planning process is never easy. To make sure all angles are thought of and covered, we would recommend that you seek professional advice to get your will prepared.
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