Tag Archives: wills and trusts

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

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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 2)

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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

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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.)

Cry Me a River and Yet It Runs Dry

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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.

“Sad to Belong to Someone Else When the Right One Comes Along”

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By Peter Lee

David, a Malaysian businessman, is married with 3 children aged 10, 12 and 15. His wife, Catherine, who is also a Malaysian, has been residing in Australia for the past six years with their children because of the children’s education. Both of them are in their mid-forties and holding Australian permanent resident status. David has businesses in Malaysia and Australia. Therefore, he travels back and forth between Malaysia and Australia frequently. His busy life, in travelling and running his business, has put a strain on his marriage. To make things worse, he is involved with another woman in Malaysia whom he refers to as his living companion. Recently, Catherine applied and obtained Australian citizenship for herself and her three children, which means that they had to surrender their Malaysian citizenship. David, on the other hand, decided to keep his Malaysian citizenship for the time being. Knowing that his problem is like the song, “…sad to belong to someone else when the right one comes along”, he has to plan for his estate distribution just in case he dies. He intends to allocate some of his estate in Malaysia to his living companion and the balance of the bulk will go to his wife and children.

He realised that the only way to do it is through a will. However, his first problem will be the choice of Executors/Trustee because choosing his wife or living companion will not be ideal based on the fact that his wife is now a foreign citizen and his living companion may not be fair in the distribution. Therefore, it would be best that he chooses a Trustee Company like Rockwills Trustee Bhd. to be Executor/Trustee of his estate. It is also important for him to choose one or more guardians for his children if he and his wife die. In his situation, it is important for him to specify the distribution of his movable and immovable assets to his family in Australia to enable his wife and children to inherit the assets in Malaysia easily.

It would also be practical for him to instruct his Executor/Trustee to liquidate some of his assets such as properties, unit trust, shares, and transmit the money to his family in Australia especially for his children’s education. Since he wants to allocate some money for his living companion, he can decide on the percentage and take the money from one of his bank accounts. In view of his children’s ages, it is important that he sets up a “Testamentary Trust” in his will so that he could state the allocated amount for their living, education and medical expenses. The duration of this trust must also be mentioned. For example, the trust ends when the youngest child reaches the age of 21. Since applying for the Grant of Probate for his will to unlock his estate may require some time, it is extremely important for him to set up a “Living Trust” during his lifetime choosing Rockwills Trustee Bhd. as the Trustee to ensure that immediate funding is available for his family if he dies and such funding could also cover the cost of the probate application.

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.

Mommy, Where Is Daddy?

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By Peter Lee

With a busy career which requires extensive travelling, Brenda a professional trainer in her early forties decided not to get married but instead become a single mother by adopting Angel when she was 2 months old. Angel is now 4 years old and occasionally asks her mum, “where is daddy?” when she sees her classmates in her nursery being fetched by their fathers. Brenda normally avoids this question. Angel is cared for by Brenda’s 60 year old mother. The only other family member is her sister. Knowing that she has a small family unit made her worry about Angel’s welfare if she passes away. Therefore, she quickly prepared her own will naming her sister as the sole Executor and her mother the sole Guardian. It was further mentioned that upon her demise, her sister shall finance the living expenses of Angel from the estate until she reaches 21 years old. Not long after that, Brenda met with an accident which left both her legs paralysed. The most important question in her mind now is how is she is going to care for Angel financially? Luckily for Brenda, she had purchased an insurance policy of RM1.5 million before this incident. Therefore, she managed to claim for the insurance money. She had another insurance policy of RM500,000 which only covers death. However, with the insurance money received she wanted someone with perpetual existence to hold on to the money and continue funding Angel’s monthly living expenses if she passes away, realising that process for her probate to unlock her estate would require some time. The question is how to do it?

In Brenda’s case, it is best that she sets up two types of “Trusts”. The first one is the “Living Trust” whereby Brenda is the “Settlor” and she appoints a Trustee Company like Rockwills Trustee Bhd. to be the “Trustee”. Since Angel is still a minor, Brenda has to name the “Guardian” and Protectors are most likely to be her mother followed by her sister being the substitute. The role of the “Guardian” is to take care of the minor whereas the role of the ‘Protector” is to act as a watchdog on the “Trustee”. After this, Brenda can then name Angel to be the sole beneficiary and specify the condition of distribution for Angel’s monthly living, medical and education expenses, the Guardian’s allowance and the duration of the Trust. Since Brenda has an insurance policy that only covers death, it is timely for her to execute an absolute assignment for this policy to her “Living Trust”. This ensures that this insurance money will be passed to the Trustee for Angel’s funding when Brenda dies. The second type of Trust Brenda should set up is a “Declaration of Trust” whereby Brenda is the Settlor and the main Trustee meaning that when Brenda is alive she holds on to her entire estate. But when she dies some of her assets specified in her “Declaration of Trust’ such as Fixed Deposits, shares or unit trust shall be passed to the substitute Trustee like Rockwills Trustee Bhd. for distribution to the beneficiary through the Guardian. The condition of the distribution can be similar to the “Living Trust”. As for Brenda’s will, she must appoint at least two Executors instead of one, just in case her sister also passes away.

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.