Tag Archives: Rockwills

Corporate Trustee The Ultimate Protection

Share

Corporate TrusteeIt is said that life insurance is like a parachute. Therefore, many breadwinners of urban families in Malaysia have bought life insurance to protect their families from the many uncertainties of life.

Ironically, before the Insurance Act 1996 was replaced by the Financial Services Act 2013, many life insurance policy holders have appointed themselves as trustees of their own policies.

This didn’t make sense at all, as to file a life insurance claim, the policyholder has to either be suffering from a critical illness, is senile, in a coma, permanently disabled, or dead. How good is a trustee if he or she was in such a condition as described above?

Under this new Act, which came into effect on July 1, policyholders can no longer name themselves as the trustee to their own life policies. This applies to new policies but existing policies may be affected as well should the policyholder die without making proper back up plans.

During a talk held at a leading hotel in Ipoh recently, Saw Leong Aun, Group Managing Director of Rockwills Corp Sdn Bhd, explained to participants the potential risks involved in relation to this change. He described at length, Schedule 10 of the Financial Services Act 2013 and its implications on policyholders.

The potential risks include the inability of the surviving spouse to manage a large sum of money, the spouse remarrying before the children reached the legal age of 18, or even death of the spouse who is the automatic trustee, if there was no proper appointment made.

What if the individual trustee was biased, or if there was a special-needs beneficiary involved?

In cases like these, the purpose of taking out life insurance is defeated, as the insurance monies may not go to the persons the policyholder had intended it to go to, or it could even be held by the public trustee, Amanah Raya Bhd.

Saw also explained the differences between a direct nomination and licensed corporate trustee, and how assigning the policy to a corporate trustee is the ultimate protection for life insurance money.

Major advantages of an insurance trust are naming of substitute beneficiaries, instructions to distribute insurance funds periodically, and customised payment schedule for each individual beneficiary to prevent squandering or being conned by others.

While the onus is on responsible insurance agents or estate planners to explain this new policy to their clients, those who are holding a life insurance policy and have appointed him or herself as trustee of the policy are advised to make the necessary changes to comply with the new rule and protect their insurance monies.

Incidentally, Rockwills Corp Sdn Bhd is the number one financial and estate planning company in Malaysia. The company is in a position to advise anyone who requires further information.

Emily

In The Name of My Father’s Estate (Episode 6)

Share

Rockwills - wills and trusts - ipoh estate planningBy Peter Lee

After the meeting with Connie, Dave phoned John and said, “I have met up with Connie and she wants to be one of the Administrators in your father’s estate. John’s response was “I think my family is not going to be happy with this!” Dave then said, “I understand your family’s position but based on the fact that she and her children are entitled to a portion of your father’s estate, I think your family would have to consent to her appointment. Otherwise, she would most likely disagree with the appointment of you and your sister, Michelle to be the administrators.” John then asked, “do we have another choice or can we maybe offer her something attractive so that she will back off?” Dave replied, “John, by the looks of it, she is eager to claim her own family’s entitlement to your father’s entire estate in which the assets and value needs to be ascertained with the co-operation of all family members. So, I suggest that you have a word with your family because the appointment of Administrator is crucial to kick start the application for Letter of Administration (L.A.). Futhermore, I need to highlight that once this is done, your family and your father’s second family would have to list down all of his assets and their value which must be attached to the application for L.A. This can be a tedious process.” “Okay! I will speak to my family,” said John.

After two days, John contacted Dave and said “Whew ! It was not easy  explaining to my mum and siblings for the last two days but I think we have no choice but to consent to the appointment of Connie as the joint Administrator. The other thing is, my family would like to have a meeting with Connie and her children.” Dave replied “This is what I am going to suggest next because I have to brief everyone before I start applying for the L.A.” After a week, the meeting of all family members with Dave took place in Dave’s office. When John, his mum and siblings stepped into the meeting room, Connie and her three children were already waiting with Dave. Dave stood up and said, “come, everyone please sit down.” When everyone sat down  both sides of the family looked at each other in silence, unsure whether to greet one another. Dave stepped in and introduced both sides of the family to each other. Thereafter, he said “now I have more or less explained briefly to all the procedure for applying for the L.A. in our previous meeting. So, the first thing I need is the consensus of everyone here that the Administrators of Lee senior’s estate will be John, Michelle and Connie before I start my paper work.” After a few minutes of silence everyone agreed to it. Then, Mrs Patricia Lee asked, “Dave, since I am one of the Guarantors of my husband’s estate, then who will be the other Guarantor?”  Dave replied “Connie informed  me just now that she will be the other Guarantor. Is that okay with you?” “Well, if it’s acceptable by the courts then I rest my case,” replied Patricia while glaring at Connie.

To be continued

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my.

In The Name of My Father’s Estate (Episode 5)

Share

By Peter Lee

Dave met up with Connie in his office the next day. She was accompanied by another lady. The first thing that crossed Dave’s mind when he saw Connie was, “Lee senior really had good taste”. Connie introduced herself and her friend Liza to Dave. Then Connie said to  Dave, “I think my husband’s will states very clearly that he intended to give his entire estate to me and my three children. Since I am the Executor I wish to execute it as soon as possible. Do you have a problem with that?” “Yes” was Dave’s immediate response. He then proceeded to tell Connie, “Do you know that your husband’s will is invalid because it has only one witness?” Her response was, “I was told by my friend here that this will is valid.” Dave then turned to Liza and showed her section 5(2) of the Wills Act, 1959, which states that two witnesses are required for the will to be valid. There was a minute’s silence as Liza read the section. Then, Liza looked at Connie and said, “I think the will is invalid according to this section.” Connie immediately responded, “What? I was told earlier that my husband’s will is fine and now it’s not. Are you reading it correctly, Liza?” Liza nodded. Connie at this point was looking anxious and said, “my husband’s name and my name are on the birth certificates of my children. That means we are still entitled to his estate. Is that correct, Liza?” Liza looked puzzled and Dave intervened by saying, “yes, but since your customary marriage took place before March, 1982, there is an issue.”

Dave further told Connie, “Look, I am not going to beat around the bush with you. The reason I called to meet you is to inform you first, that your husband’s will is invalid. Secondly, since he does not have any will, his estate will be distributed according to the Distribution Act, 1958 that was amended in 1997. So, you have to share your one-third entitlement with your husband’s first wife and your three children will have to share their two-thirds entitlement with five children from his first customary marriage that took place before March, 1982. Your husband’s estate is now frozen and to unlock it, we have to quickly apply for a Letter of Administration (LA). The first family have already appointed two of the children to be joint Administrators and this also requires your consent.” “What do they do?” asked Connie. “Well, they have to collect assets, settle debts and then distribute the estate to the rightful beneficiaries.” “Does that mean that the entire estate will flow into the two Administrators’ hands before distribution?” “Yes” replied Dave. Then Connie said, “I want to be one of the Administrators.” Dave’s response was “I have to speak to them on this but are you willing be one of the Guarantors or get someone else to be Guarantor of the estate if they agree to your appointment?” “Why is it necessary?” asked Connie. Dave replied, “It’s because if the Administrators run away with the estate’s money, then the Guarantors will have to compensate the beneficiaries.” “Okay, what about the other side?” “The first wife and eldest son agree to be Guarantors,” replied Dave. “In that case, I am okay with the appointment if they are okay with my request,” said Connie.

To be continued…

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 2nd Floor, 108 Jalan Raja Ekram (Cowan St.), 30450 Ipoh. Tel.: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my. (Peter Lee’s column appears monthly.)

In The Name of My Father’s Estate (Episode 4)

Share

By Peter Lee

John said to his family in the meeting “I think we can only decide how best to deal with father’s estate once I receive news from Dave, our lawyer, regarding Connie’s claim on his estate.” Before the meeting ended Mrs Patricia Lee said to John in anger “Find out for me who this woman is and her claim as soon as possible. I wonder whether this is your father’s reward to me after all these years of marriage and loyalty.” She further asked her children “so are you guys still going to fight over the appointment of Administrators?” Sandy then asked “Mum, what do you have in mind?” Patricia replied, “I suggest that John and Michele be appointed as joint administrators of the estate, and since Dave mentioned we need Guarantors, then John and I will be the Guarantors. Are you people okay with my suggestion?  If you people are agreeable, then we still have to hear from Dave whether your father’s so called second wife and her children are also the beneficiaries of the estate. If it is, god knows what will happen next!” Nick and Sandy were uncomfortable with the suggestion of the appointment of Administrators but finally agreed with the rest out of respect for their mum.

After the meeting, John quickly phoned Dave and said “Hi Dave, I just finished my meeting with my family. Mum is really upset now. Can you please check on Connie’s claim as soon as possible?”

When they met in Dave’s office, Dave said to John “I have checked Connie’s documents. The will is invalid due to only one witness signing. The requirement of two witnesses to sign is clearly defined in Section 5 (2) of the Wills Act, 1959. However, I have yet to verify whether the marriage between your father and Connie was in 1980 because any marriage before March 1982, whether registered or customary, is considered legal. This is stated in Section 4 of the Law Reform (Marriage & Divorce) Act, 1976. Your father’s name on the birth certificates specifying him as the father of the three sons is genuine. The ages of these children are 10, 12 and 15.” “So does it mean that if it is proven that their marriage was before March 1982, then Connie and her three children stand to inherit my father’s fortune?” asked John. Dave replied “yes” and further said “since your father’s parents have passed away then your mother and Connie will share the one-third entitlement of your father’s estate while two-thirds will be shared by you, your five siblings, and your three step siblings who are still minors. This distribution is stated in Section 6(1) of the Malaysian Distribution (Amendment) Act, 1997. Another thing is the appointment of administrators for your father’s estate would also require the consent of Connie and her three children. This is stated in Section 30 of the Probate & Administration Act, 1959 with the approval of the court.  “Oh my God, what has Father got us into” said John. “So, what shall we do now?” John asked Dave. Dave said “since I have her contact number on her letter, why not let me make an appointment to meet up with Connie on your behalf and find out more on her status before we decide on the next course of action.” John agreed and asked Dave to proceed with it.

To be continued…

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 2nd Floor, 108 Jalan Raja Ekram (Cowan St.), 30450 Ipoh. Tel.: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my. (Peter Lee’s column appears monthly.)

In The Name of My Father’s Estate (Episode 3)

Share

By Peter Lee

As John was heading back to the conference room after Dave left, Maggie, his personal secretary passed an envelope to him and said, “I just received a call from a lady and she asked me to tell you that it’s important for you to read the documents in the envelope immediately because it’s about your father’s estate. Looking surprised, he hurried back to the conference room and opened the envelope. Before his mother started talking to the family, John told her to give him a minute to read the documents in the envelope. His mother asked what it is about. John replied, “There is a letter here from a woman named Connie Cheah claiming that she married father in 1980 and has three sons with him. She has also attached the birth certificates of her three children with father named as the father of the sons and a copy of father’s will saying that all his movable and immovable estate are given to her and her three sons. “I don’t believe this is happening and I thought it happens only in movies. As far as I am concerned, we can forget this and distribute father’s estate as soon as possible,” said Nick Lee. “Believe it or not, I think we have to check this first with Dave before we proceed,” replied John.

Then suddenly Sandy called out “mum are you okay?” Patricia looked pale at this point and asked for a glass of water and her hands were trembling while taking out some heart medicine from her bag. John quickly poured her a glass of water while the rest scrambled to get her medicine. After taking her medicine, she managed to recover. Everyone in the room was silent for a few minutes and then John said “mum I think its better for you to go home and rest while I check with Dave on the validity of this claim.” Patricia said “no, I am feeling better now. You can call him now.” Within minutes Dave was on the line as John put him on speakerphone and said, “Dave, I have in my hands a copy of a letter from a woman claiming that she was married to my father in 1980 and from that marriage they have three sons. She also enclosed a copy of the will and apparently my father’s entire estate goes to her and her three sons.” In response, Dave asked, “Who are the executors?” John said “let me check. Oh! It’s her name only.”  Dave replied, “Since there is an Executor, the will is valid” but for your information it’s better to have at least two Executors.”

Then, Dave asked “can you check on the number of witnesses who signed this will. John replied, “I can see only one,” to which Dave said, “are you sure, because if that’s true, then this will is invalid.” Upon hearing this, John quickly said, “Yes! I only see one witness signature. So, does it mean the will is invalid?” “Looks like it” replied Dave. There was a sigh of relief on the faces of all in the room. John continued asking, “Then what about the birth certificates of the three sons?” Dave replied, “I think it’s better you scan and email to me all the documents you received before I can advise because even though the will is invalid, she can lay claim to the estate due to the fact that her marriage to your father was before March, 1982.”

To be continued…

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my.

In The Name of My Father’s Estate (Episode 2)

Share

By Peter Lee

After one week of contacting all his family members, John Lee managed to arrange for a meeting between his family members and his lawyer, Dave, on Thursday morning in John’s office. As Dave walked into the office conference room, John and his family members were already there waiting.  Dave apologised to all as he was ten minutes late. John then continued  by introducing his family members starting with his mother, Mrs Patricia Lee who is seventy five years old, his second and third brother named Nick Lee and Steven Lee aged 48 and 45 respectively, sisters Michele Lee, Nancy Lee and Sandy Lee who are aged 40, 39 and 37 respectively.

After the introduction, John asked Dave to explain. “Thanks John” said Dave. Then Dave told the family members that since Mr Lee senior died without a will,  an application for the Letter of Administration (LA) is essential for the family to unlock his estate which is now frozen. Dave further explained that “to apply for this document, all the beneficiaries would first have to appoint an administrator or administrators.”  “Who is the administrator and what does he or she do?” asked Nick Lee. Dave replied, “Anyone of you present can be the administrator if you get the consent from all the beneficiaries of the estate and the court approves it. So in your father’s case, the beneficiaries would be his wife, Mrs Patricia Lee and all his children which means all of you who are present in this room.” For a few seconds, everyone was looking at each other wondering who it shall be.

Then Dave said, “the responsibility of an administrator is to make a list of all of the assets of the estate and attach it to the rest of the legal documents for submission to the High Court and once the LA has been issued by the High Court, the Administrator can then collect all the assets in the estate. Thereafter, he or she has to ensure that all the liabilities in the estate must be settled before distribution to the beneficiaries. Now, according to the Malaysian Distribution Act, 1959, Mrs Patricia Lee will be entitled to one third of the estate while six of you will share equally the remaining two thirds of the estate.”

Dave also highlighted to all that after appointing the administrators they would also have to appoint two guarantors (who are sureties to provide an administration bond) for the estate so that if the administrators abscond with the estate money, the two guarantors will have to pay the beneficiaries. So, the guarantors must provide a guarantee of the gross estate value of the deceased’s estate. “What if we can’t find the guarantors because we ourselves may not qualify to that value” asked Sandy Lee. “I have to check on whether there is any exemption on this,” replied Dave.

He continued by asking the family members to choose an administrator first. Nick Lee volunteered to be the administrator while John said it’s better for him to take up this role because he is the eldest and has been helping his father manage his property company during his lifetime. Then, Sandy Lee said, “that is a separate matter. Why not we take a vote on this and decide on the appointment by a vote of majority.” Michele and Nancy proposed John to be the administrator while Sandy preferred Nick. Steven was undecided and looking for his mother’s decision. At this point Dave interrupted and said, “the decision must be unanimous before it goes to the courts.” Then Mrs Patricia Lee said, “for heaven’s sake can you all stop arguing.” She then turned to Dave and said, “I think I have to speak to them privately. Can we come back to you later?” “Sure” replied Dave and then left the room accompanied by John.

To be continued…


Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills &Trust services for Muslims. His Book “To Delay is Human but to Will is Divine” (96 pages, RM28, Hard copy) is available at Rashi Mini Market (019-510 6284), No. 37, Jalan Perajurit, Ipoh Garden East or at Ipoh Echo. Chinese and English version of his book is also available at his office: No. 108 (2nd Floor), Jalan Raja Ekram, 30450 Ipoh, Perak. He can be reached at:

 
 

In The Name of My Father’s Estate

Share

By Peter Lee

Episode 1

“Good Morning, Maggie.” “Good Morning, Mr Dave.” “Is John Lee in?” asked Dave. “Yes, Mr Dave. Let me intercom him”, replied Maggie. As Dave was about to open the door to John’s room, the door swung open and John was there to greet him. Both men shook hands and greeted each other. “Would you like to have coffee or tea” asked John? “Coffee please” was Dave’s response. John leaned towards his phone and pressed on the intercom asking Maggie to bring in two cups of coffee.

Then, John said, “Dave the reason I asked you to come today is to ask for your advice on my late father’s estate. As you know, he died one month ago and my brothers and sisters have been asking me when the distribution of his estate can commence. Now, my father’s estate is sizable and he died without a will.” “Since your father died without a will, the first thing your family has to do is to apply for the Letter of Administration (LA),” replied Dave “and to do that, an Administrator has to be appointed.” “So, what is the Administrator’s role?” asked John.

“Well, the Administrator is the person responsible for all the assets of your father’s estate and needs to collect all the assets of the entire estate after the High Court issues the LA.  Then the Administrator is to ensure that all the debts of the estate are settled before distributing to the beneficiaries.” “So, can I be the Administrator since I am the eldest?” asked John. “Yes but provided you get the consent of all the beneficiaries and the Court agrees to it,” replied Dave. “I will be damned,” retorted John. “What’s wrong?” asked Dave. “I have to tell you that I am not on good terms with my second brother and youngest sister,” said John. Then their conversation was interrupted by the appearance of Maggie holding a tray with two cups of coffee.

Once Maggie left the room, Dave said to John, “One thing I know is that your mum is still alive but can you tell me how many surviving brothers and sisters you have?” John replied, “I have two brothers and three sisters.” Dave paused for a moment while referring to the Malaysian Distribution Act and then told John that his mother would be entitled to one-third of her husband’s estate and two-thirds would be shared equally among the children. Dave further said to John that the Administrator would also be required to prove the death of his father’s parents with their death certificates. John quickly asked, “what if we can’t get that because they died some thirty years ago?”

Dave replied, “The other way of proving your grandparents death is by way of getting two witnesses who have witnessed their death or apply to the High Court for the Presumption of Death Certificate. John smiled for a second and said, “I think the witnesses would be in heaven by now.” “There is one more thing you need to know, you also need to appoint two guarantors (who are sureties to provide an Administration Bond) for the estate”, said Dave. “Why?” asked John. “The reason is that if the Administrator runs away with the estate money, then the Guarantors will have to pay the beneficiaries. The Guarantors are required to provide a guarantee of the gross estate value of the decease’s estate,” replied Dave.

“After listening to you Dave, I think I have to arrange for my family to meet up with you next Thursday so that we could start off the LA application by appointing the Administrator. Is that ok with you?” Dave asked John. “I think I am okay but please confirm the time later.”

To be continued in Episode 2.

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my.

(Peter Lee’s column will appear monthly.)

Ho Ho Ho! Santa Claus Is Coming To Town

Share

By Peter Lee

Whenever Christmas arrives, I always look forward to songs like “You better watch out! Better not cry! Better not pout! I’m telling you why, Santa Claus is coming to town.” The thought of Santa Claus to children means lots of presents are on its way and you have to be good to receive them. Such a festive season creates the atmosphere of celebration with joy and happiness within the family. An atmosphere like that does create the mood for shopping where most of us will be busy buying presents for our family to celebrate this joyous occasion. If you look around in the shopping malls, it is common to see parents trying out clothes on their children and at the same time taking the opportunity to shop for their children’s basic school needs before school reopens.

All these activities, bring to mind that we, as parents and breadwinners, are like Santa Claus for the family because we have been providing them with all their daily necessities all year round regardless of whether they are good or bad and wondering if they would be saying “Ho Ho Ho! Santa Claus is coming to town” everyday. I guess most of us take this for granted because everyday we expect the breadwinner to come home, and likewise, the breadwinner would always think that they would come home unscathed. Even though no one in their right mind would want to think of the worst, it is time to give a serious thought to the phrase “precaution is better than cure” because I have seen spouses and minor children looking lost when their breadwinner who is supposed to return home safely from the hospital dies from complications.

Taking precaution through planning for our family is not difficult if one is serious about it because it doesn’t take up much of our time. One can start off by thinking of immediate funding for the family upon the demise of the breadwinner and I am sure this is always in everyone’s mind when something happens to the breadwinner. Immediate funding can come from Insurance and EPF through nomination where beneficiaries can receive the monies quickly. But it is also advisable to set up an “Insurance Trust” to provide immediate funding by transferring the insurance policy to the Trust just in case your sole beneficiary, who happens to be your spouse, dies or is disabled or in coma. Such a Trust requires you, during your lifetime as the “Settlor”  to appoint a Trustee Company like Rockwills Trustee Bhd. to pass the insurance money to your intended beneficiaries immediately upon your demise. Other assets, such as money in your bank accounts, investments, properties, shares in your business which will be frozen, can be protected and distributed through a will and with this instrument you can choose your Executors/Trustee, Guardian, beneficiaries and state the condition of your distribution especially when minor children are involved.

Before I sign off, I would like to wish everyone a Merry Christmas and Happy New Year.

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my.

Please Hold On

Share

By Peter Lee

Just the other day while I was having coffee with my friend, he told me that recently his mother tried to match make him with three girls all of whom he found unsuitable. So I asked him why? The first girl, he explained, works as a telephone operator and during the whole week of their date she frequently said to him “please hold on”. Then, his mother introduced him to another girl who is a teacher. This time, his date always had the habit of saying “one more time” to whatever they did. With two unsuccessful dates, his mother was rather upset but continued and introduced him to another who is a bus conductor. After two weeks of courtship, he told his mum to stop the match making game. His mum thought this one would be a success but to her disappointment he told her this one also didn’t work because she kept telling him “can you go further in” of whatever they do.

Such a story reminds me of how most people would behave towards planning for their families in the event of death. The common reply when asked to do their will would be “please hold on,” stating reasons like resolving their personal issues first…too busy with their business…will think about it…maybe after Chinese New Year. Then, there are those, to whom I have explained several times about the importance of making a will, who would return to me and ask me to explain “one more time” all over again. Sometimes this would go on for a few months and still their will is not done. Another group of people whom I have met would ask many hypothetical questions and every answer will invite more questions like “can you go further in” on the subject. All questions and doubts which all of us have are valid. However, to take action immediately by planning for your family is crucial.

One way of doing it is through a will, where you can choose your Executors/Trustee to ensure that your estate is fairly distributed in the event of death. That’s the reason one has to seriously consider appointing a Trustee Company like Rockwills Trustee Bhd. The choice of the Guardian is equally important when both parents of minor children die, because Guardians will take over the role of parents of the children. When minor children are involved, then there must be a condition stating how much to pay them progressively on a monthly basis for their living, education and medical expenses in the form of a “Testamentary Trust”. Besides having a will, a Living Trust or Inter-Vivos Trust is essential for immediate funding. However, such a “Trust” is still sadly under-utilized perhaps due to lack of awareness. Setting up such a Trust requires you as the “Settlor” to appoint Rockwills Trustee Bhd. as the “Trustee”, choosing a person whom you trust to be the Guardian and Protector of your children, naming your “Beneficiaries”, stating down the mode of payment to your beneficiaries and assigning some assets like an insurance policy to the “Trust” for funding. All these must be stated in a legal document called a “Trust Deed”. If you have a business, then it is strongly encouraged to set up a business continuation plan for your shareholdings which requires a “Buy-Sell Agreement”, a Trust, Power of Attorney and insurance policy for funding. So don’t hold on but just do it.

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my.

Cry Me a River and Yet It Runs Dry

Share

By Peter Lee

Ananda, a widower, nominates four of his children as beneficiaries of his insurance policies and EPF in equal shares. His children are aged 5, 8, 10 and 12. After his wife’s passing two years ago, his parents in their mid 60s had been taking care of his children while he worked. He had been working very hard to provide for his children. One day, he suffered a stroke and went into a coma where he died one week later. His parents then discovered that he died without a will. Although he had nominated his four children as the beneficiaries of his EPF, they would not be able to receive it because they are still under 18 years old. He did the same nomination for his insurance policies and because the children were still minors at the time of nomination, he chose his wife to be the Trustee in the nomination form. However, he did not change the Trustee when his wife died. As a result, the insurance money was disbursed to Amanah Raya Berhad (ARB) (as the Public Trustee). Ananda’s parents as the guardians can liaise with ARB to have some of the proceeds released periodically. The children will be able to obtain any balance when they reach 18 years old. The insurance proceeds are simply not enough and the heavy responsibility of funding now falls on the shoulders of Ananda’s parents as his other assets are frozen and can only be unlocked after his family obtains the Letter of Administration. This tragic and sometimes unexpected situation can befall anyone and his children’s position is like cry me a river and yet it runs dry.

Nomination of beneficiaries in EPF and insurance, like Ananda’s case, is vital because it provides immediate funding for his family. However, his estate encounters another set of problems because his children are still minors. If he was alive, he could minimise the problem by drawing up his own will. In his position, it’s strongly advisable to choose a Trustee Company like Rockwills Trustee Bhd. to be the Executors/Trustee of his estate. Then it’s natural that he chooses his parents as the guardian for his children since they have been taking care of them. However, he must also choose a substitute guardian just in case anything were to happen to his parents. The appointment of guardian is extremely important because they can also claim a certain amount from EPF for immediate funding while the whole estate is frozen. EPF would definitely investigate who the rightful guardian is. So it helps by mentioning the name of the guardian in his will. As for distribution, he must specify a monthly amount to be paid progressively for his children’s living, medical and education expenses until at least the youngest child attains the age of 21. This is what we refer to as a “Testamentary Trust”. As for the Insurance policies, it is always important to review the status of the beneficiaries and Trustee whom he has chosen. Since immediate funding is always the biggest concern for all families upon the demise of the breadwinner, it is of great importance that he sets up an Insurance Trust during his lifetime whereby he, as the settlor, must assign all his insurance policies to a Trustee company like Rockwills Trustee Bhd. so that when he dies, Rockwills Trustee will receive it immediately and pay for his children’s expenses.

Peter Lee is an Associate Estate Planning Practitioner (Wills & Trust) with Rockwills International Group. He is also an Islamic Estate Planner providing Wills & Trust services for Muslims. He is based in Ipoh and can be reached at: 012‑5078825/ 05‑2554853 or excelsec@streamyx.com. Website: http://www.wills-trust.com.my.