Tag Archives: wills & trusts

In The Name Of My Father’s Estate (Episode 17)


Rockwills - wills and trusts - ipoh estate planning

After discussing with Dave (Lawyer) about the properties especially those that are mortgaged to the bank in Lee Sr’s estate, the Administrators of the estate namely, John, Michele (children of Lee Sr.)  and Connie (2nd wife of Lee Sr.) will now have to discuss and figure out where to source for funding for the on-going instalment payment. This is because they cannot utilize the money from the estate as the Letter of Administration (L.A.) had not yet been obtained. In the meantime, Dave moved on to the shareholdings of Lee Sr. in all of his private limited companies. John revealed that his father only had a 70 per cent stake in each of the three private limited companies he set up years ago. “These Companies are in housing development and have been managed by me and my other siblings all this while. I am sure you know about it?” he said while looking at Connie to which she responded by smiling.  Dave then asked, “What is the value of these shareholdings?” John responded and said, “I think it’s worth RM20 million as per the latest audited accounts. But, let me check again and confirm the value to you later.” Dave turned to Connie and asked, “Are there any shares of this type held by Lee Sr. that you are aware of?” Connie replied, “Yes! I only have an investment company which my husband and I set up. His shareholding in this company is 50 per cent and I have to check the value of his shareholding with my accountant.”

Dave then added, “Ok! Can I confirm with all of you that these are the only shares which he owns in the private limited companies?” Everyone nodded and said yes. John then said to Connie, “Even though all of us have to follow the distribution act, would you consider the idea of my side of the family keeping my father’s shares in the companies we’ve been managing and in return whatever shares held by him in your investment company will be given back to you.” Connie then replied, “Let me think about it and come back to you.” Dave intervened and said, “I suggest that it’s best we start off with the process of applying for the L.A. first and once L.A. is obtained then all of you can discuss and negotiate on this.” He further asked, “are there any more assets like the cars, safe deposit box, club membership, etc., which is under Lee Sr’s name?” Michele said, “As far as I know, there are only two cars under his name. So, how are we going to distribute it to so many family members according to the distribution act?”. Before answering Michele’s question, Dave asked Connie whether she knew of any other car which is in Lee Sr’s name. In reply, Connie said, “I only know of one car under my husband’s name.” Then Dave said, “Can you all please give me the registration cards of all these cars. Michele, the answer to your question is that if everyone wants to follow the distribution act, then I will suggest that these cars must be sold subject to consent of all the beneficiaries. In this way, it is much easier to distribute the proceeds from the sale.”

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 can be reached at: 012‑5078825/05‑2554853 or excelsecms@gmail.com. Website: http://www.wills-trust.com.my. His Book “To Delay is Human but to Will is Divine” (96 pages, RM28) is available at his office: 108 (2nd Floor), Jalan Raja Ekram, 30450 Ipoh; Rashi Mini Market (019-510 6284), 37 Jalan Perajurit, Ipoh Garden East; Ipoh Echo and at all major bookstores.

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


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.)

Please Hold On


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.

Looks Simple, Sounds Simple, but It’s Not Simple


by Peter Lee

A couple approached me and said they wanted to prepare a simple will. The next question was how much would it cost? My reply to them was “I don’t know” because I need to check their family structure and how they would like to distribute their estate. The husband said, “Our distribution is very simple. What we want in our will is that half of my estate goes to my children equally and half to my wife. Vice versa, my wife will give half of her estate to me and half to the children equally. If both of us die, everything will be given to our four children equally.” Their children are 5, 7, 8 and 10 years old. Furthermore, the youngest is mentally retarded. Based on this information, I told them that the most important thing is the appointment of Executors/Trustees whereby they can choose a minimum of 2 and maximum of 4 individuals. However, if the choice is to appoint a Trustee Company like Rockwills Trustee Bhd. as the main Executors/Trustee, then no further appointment is required. They further asked what is the role of Executors/Trustee. So I explained that they are individuals or a Trustee Company who will apply the Grant of Probate for the deceased, unlock the assets of the estate, settle debts and distribute the entire estate to the beneficiaries.

In their position, I pointed out that they would require a “Testamentary Trust” in which the duration of the “Trust” can be lengthy especially for the retarded child. Therefore, it is advisable to appoint Rockwills Trustee Bhd. to be the main Executors/Trustee. The couple looked at each other and said they needed to iron out this matter before giving a reply. Then I further discussed with them about choosing a Guardian for their children if both of them pass away together. I said that it is always best to speak to those whom they want to appoint as Guardian and obtain their consent for the appointment. The husband preferred his sister who has her own family while the wife preferred her sister who is still single. After some argument over their choice, they said that they have to revert to me on this.

When it came to distribution, I highlighted that since half of their entire estate was to be distributed to their minor children immediately after their demise, they must state the amount for each child’s monthly living, medical and education expenses. In addition, they have to specify the duration of the Trust especially for the child who is retarded and if possible set up a Living Trust using insurance as funding for this child. With this explanation, they said they needed further discussion before deciding. So until they revert to me I still would not know the cost of their wills. My story is not to frighten anyone from writing their will but to highlight that if you want to prepare your will for the benefit of your family, please avoid thinking of just a simple will but instead focus on your wishes, giving some thought and plan with your spouse for the benefit of your family. This way your family will cherish you forever.

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.

Breaking Up Is Hard To Do


by Peter Lee

After 10 years of setting up a private limited Company distributing soft drinks to local and overseas markets, the four shareholders having equal holdings in the Company prepared a simple Shareholders’ Agreement. The agreement is to bind them to transfer the portion of their shares to the surviving shareholders equally if anyone of them passes away and, in return, the family members of the deceased shareholder receives RM500,000. Since all of the shareholders are in their early forties and healthy, each of them purchased an insurance policy with a sum assured of RM500,000 as this is the cheapest form of funding for this transaction. Each of the insurance policies was assigned to the Company and upon the death of the shareholder, the insurance money will be released to the Company. Subsequently, this money will be paid to the family of the deceased shareholder and the shares of the deceased will be transferred to the surviving shareholders by way of a share transfer form pre-signed together with the shareholder agreement.

After 5 years, one of the shareholders died and the sum assured of RM500,000 was released to the Company. However, when this money was supposed to be paid to the family of the deceased shareholder, the Company encountered financial difficulties and hence the money was withheld to finance its operation. Subsequently, the family of the deceased shareholder filed a suit against the surviving shareholders for breaching the agreement. The surviving shareholders were also ordered not to transfer out the shares of the deceased shareholder.

This can drag both parties into a long drawn legal battle. In the meantime, the family of the deceased will not be paid the RM500,000 and the business may not be able to move on. To avoid such problems, the shareholders should have set up a Business Value Protection Trust which utilises a Buy-Sell Agreement, a Power of Attorney and Trust and Life Insurance Policies. The concept of the Buy-Sell Agreement is something similar to the shareholders agreement as mentioned above but a trust company, like Rockwills Trustee Berhad, is appointed as trustee to carry out the transfer of shares and directly claim the insurance proceeds from the insurer (instead of the company itself getting involved). In the Buy-Sell Agreement, among others, it is important to agree on the price to buy and sell the shares as well as when to have the shares sold, for example, due to death and/or disability and/or retirement.

In addition, it is essential that the shareholders prearrange the funding to purchase the shares easily. The most practical and cheapest funding is to use Life Insurance. All that is required for the shareholders to pay is their insurance premium for the sum assured to be paid out in the future. The personal assets of the shareholders need not be liquidated or there is no need to borrow the money to make the purchase. The insurance policies are transferred to the trustee to hold until death or disability occurs to a particular shareholder where the trustee (instead of the company) will make a claim to pay for the purchase of the shares. When the trustee receives the money, it could immediately release the money to the family of the deceased shareholder. At the same time, the shares of the deceased shareholder will be transferred to the surviving shareholders using a Power of Attorney signed by all shareholders during their lifetime authorising Rockwills Trustee Bhd. to deal with this transaction. At least, with this arrangement breaking up is not hard to do.

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.