THE normal perception of a life’s journey is to study hard and get a job, get married and retire.
However, life’s a bitch that keeps throwing a spanner into the works, so to say. Accidents and illnesses that result in unexpected losses. Unexpected losses result in young children and aged parents being left stranded without a provider.
There is no doubt that such a scenario should be avoided at all costs and yet, the one thing that can ensure this does not happen, a will and/or trust, is a taboo to be discussed. CARMEN PHANG, an Estate Planner, shed light on the misconceptions and taboos she has to plough through to get Malaysians to be receptive to discussing drawing up a will.
At what age should a person think about writing a will?
Writing a will is not defined by age or how much you have. As long as a person has a bank account and responsibilities such as dependents ( children and family members) he or she should have a will. A will is not just about the distribution of assets but how fast it can be distributed to create minimum disruption to the lives of the dependents.
What are the misconceptions and taboos about writing a will?
It is usually triggered by some happening, illness or tragedy. Awareness is greatly lacking among Malaysians about the need to have a will. From my experience, some of my clients come forward after being advised by their children, some before they travel overseas and there are also those who would think of writing one just before they go for surgery.
There is also the common misconception there is no need for a will becausei “I don’t have much. Most of my stuff are still being paid for and not much in cash”. But actually it’s not just what you have, it is how fast to use whatever it is you have left behind to ensure your next of kin won’t be left in the lurch.
How long will it take for the estate to be distributed without a will?
It will all be frozen before the court comes out with a probate (a process for the court to sought out the deceased assets and how it should be distributed to the legal inheritors). Depending on how big and how complicated the estate is, it will take about 2 years for the estate to be unfrozen.
This will pose a problem for the dependents as they will need to pay for living expenses such as rental and school fees. There may be money in the bank but without a will, it is all frozen. A will allow the process to take about 6 months before the assets can be passed on.
What is the difference between a will and a trust?
A will is executed when the person has passed away and his estate is distributed according to what is stipulated in the will. Whereas a trust can be a living trust or one that is executed when the person has passed away.
A trust to complement a will can help circumstances such as when a spouse is deemed unable to manage the estate, if the beneficiaries are too young and in the case of a family house the testator may want to keep the property from being sold until the beneficiaries are much older.
A living trust is when the testator is mentally incapacitated, caused by sickness like parkinson or dementia, comatosed or missing in action. They may have fixed deposits and pension funds that they are unable to withdraw. Then the personal care trust will be used to carry out his wishes by paying for nursing care, maintenance for the family and all other financial commitments. This can also include special diets and traditional care medicine. There will be a protector of the trust appointed by the individual who develops the trust to oversee the execution of the trust. If a protector cannot be named, then the individual can make institutions like Rockwill as the trustee. It is advisable for the individual to also have an insurance policy to help fund the trust. There are 36 critical illnesses that are covered under insurance policies. Any payout can go into the trust to fund all the requirements stipulated.
When does one need to review his will or trust after he has had one written?
A will or a trust follows the development of one’s life. Everyone is different as it is written based on individual desires and different backgrounds. To begin writing one, I would listen to a client tell his life story with as many details as possible describing his family, his assets, his desires and how he would like to distribute them. Only then can I advise with a solution. Wills that are written before marriage will be revoked and new one needs to be written to replace it.
“I had a client who was an unmarried 50-year-old business woman. Eight years ago she set up a will and recently, concerned over her finances, properties and an aged mother, she set up a trust stipulating that in the event of her being mentally incapacitated, her manager should sell her whole business and put the funds in the trust to care for her and her mother. And the balance from the trust fund after her death will be donated to a charity of her choice.
There is another client who named his wife as the first level of beneficiary. If hs wife doesn’t survive him, it will be put into a family trust. When their child reaches 28 years old, 25 percent of the inheritance would be released and the rest when the child reaches 35 years old. Otherwise it would too big a sum to give all at once to an 18- year- old eventhough he is not a minor. Parents know their kids best in terms of maturity and ability to sustain.
Who to appoint as executor of a will?
The executor to be appointed has an important role. He/she must be able to run around to gather the relevant documents and pass them to the lawyer who will take them to court for the purpose of obtaining a probate to manage and distribute the estate at the shortest time required. The appointed person must be informed of what he/she is required to do and where the will is kept.
If you don’t have anyone, appoint Rockwills and they will do the running around for you for a fee. For liquid assets they will charge 1.8 percent of your total per year. And if it takes less than a year then it will be pro rated.
How will the estate of an individual without a will be distributed?
“In Malaysia this will be done according to the Distribution Act 1958 whereby after all the intestate’s (intestate is a person without a will) debts have been paid, the remainder of his estate will be paid to the lawful beneficiaries.
Another issue that may arise if there is no will is that part of the estate may fall into hands of people who are not the immediate family. Under the Distribution Act, when a spouse dies intestate, the children will get 50% of the estate, 25% to the surviving spouse and 25% to the
deceased’s parents. When the parents die this 25 percent will go to their next of kin which can be their other children, relatives or whoever they will it to. If this estate is a property such as a house that the deceased’s immediate family are staying in, the beneficiaries of the parents’ estate can claim their share of the house. It will lead to disputes and complication.
What are the circumstance that may be too late to write a will?
“When a person is hospitalised and is severely ill, two witnesses are requires to determine that his is of sound mind before he can sign the will. In most cases the doctor would not want to be a witness or be involved. So there will be no one to confirm that this person is of sound mind when signing the will.
“Under such circumstances of sickness the patient can also be vulnerable to cheat and scam.
One of my contacts who was working in a hospital came across the case of an old man who was in a coma in the ICU. A man who said he was a pastor came to pray with him and he was alone with this old man. After the pastor left, she check on the patient and saw there was ink stain on the old man’s thumb. It raised suspicion because one can either thumb print or sign a will. So she believed the man was not a pastor. We don’t want to leave it to that stage. All your hard earn assets you want to leave to you loved ones and charity. And you won’t want to put yourself in a situation where it can be “cheated” off you.
“You can be 18 or 60, have a good summary to a well lived life by having a choice in passing on your hard earned money over 30 to 40 years according to your wishes,” Carmen advises. – JE Tan
Contact Carmen Phang at +60 12-391 5161 for enquiries.
