4 Common Mistakes Malaysians Make on Will Writing

Most of us spend most of our time earning income. 

We build careers, grow businesses and manage our investments to accumulate wealth. But, few think about protecting the wealth accumulated. According to reports, 80%-90% of the population in Malaysia do not have a written will. Many are leaving their 5, 6 or even 7 figures of properties, cars, shares, bank accounts and other possessions to “chances” and “assumptions”. 

Even for the 10%-20% who have a written will, some of these wills are outdated or impractical. 

If you read this, it is possible that you are considering either writing or updating your present will. In both instances, that is awesome. Given its importance, I’ll like to list down 4 mistakes that you should avoid when writing yours. They are as follows: 

1. Not Updating After Change of Status

Personally, I wrote my first will when I was a single dude in my 20s. Upon marriage last year, my existing will was automatically nullified. Thus, I write a new will. If I have a child or choose to buy new properties in the future, I would revise and update my will document. Basically, it is practical to review our will once every 3 years or whenever there is a change in status as follows:

2. Impractical Methods of Asset Distribution

For example, a father wishes to bequeath his RM 1.2 million house equally to his wife and all his four children upon his passing. He believes each will be entitled to RM 240k in home equity. The arrangement seems fair, at least on paper. However, in practice, the method of distribution could be problematic depending on the actual dynamics of his family. For instance: 

1. If any of the children is a minor, the house is not transactable and could not be sold. 

2. Upon the father’s death, the house is frozen and it could take 1-2 years for it to be transferred to the beneficiaries (wife and children). If any of the beneficiaries pass on, this same house shall once again be “frozen” and it would take yet another 1-2 years to “unlock” and transfer his or her portion of the house to his or her beneficiaries. 

3. Let’s assume the beneficiary who passes on is one of the children. If he or she is an adult and married with children, it depends if he or she passes on with or without a will document. So, if he or she passes on without a will, the parent (mother), spouse (wife or husband) and children shall inherit the portion of the house. As such, the number of co-owners of this house increases. 

4. Imagine owning a property with 4 other co-owners. All decisions are to be made unanimously. This includes major decisions like selling off the property. If one of the 5 owners would not agree to the sale of the property, the transaction could not proceed. 

The list of potential issues to such a method of asset distribution goes on and on. Typically, such situations arise as most of us aren’t aware of the regulations applied to managing these estates. 

3. Mistakes in Nominating Beneficiaries

There are some who appoint only one sole beneficiary for his or her estate. But, what if that sole beneficiary happens to pass away together with the deceased? This could happen when both of them are “husband and wife” or “parent and child” who pass on due to a tragic accident. 

Also, there are some who appoint their children (minors) to be beneficiaries in their wills. So, the question is: “How will minors inherit their share of inheritance as they are not an adult who could open bank accounts and sign legal documents?”. 

Plus, there are some who appoint their beneficiaries, who are financially immature, to inherit the estate. They could be college kids who lack real world experiences, spendthrift adults who could waste the inheritance through frivolous spendings and gamblings and older folks who could be a target for scammers and swindlers. 

In many ways, estate planning today isn’t just about transferring wealth to beneficiaries. Now, as our society continues to evolve, estate planning is about ensuring that our wealth is managed or utilised in a way that is meaningful to us and our beneficiaries. 

4. Not Naming Executors, Guardians and Trustees

You may wonder: “Who are these people and are they important?”. 

Well, an executor is one who executes your will. These include obtaining the Grant of Probate, a full settlement of outstanding debts and taxes to your creditors and LHDN and finally, distributing all estates to your nominated beneficiaries. So, if you intend to bequeath your estate to 5 people (beneficiaries), who do you entrust to execute your will? Would it be one or a few of the 5 people or would it be a third-party individual or trust company who has no stake in your estate? 

A guardian is one who takes care of your minor children. Imagine leaving behind RM 5 million to your minor child and he or she is orphaned. In such a situation, who do you trust to be taking his or her interest? Is it his or her grandparents, uncles, aunties, … etc? Are these relatives from his or her paternal or maternal side of the family? 

Let’s say you want a property to be only transferred to your child at the age of 30 (not upon your death). In this case, you need to appoint a trustee to hold onto the property on your behalf. Here is how it works. Upon death, the property is frozen. The executor shall “unlock” it by applying for the Grant of Probate. Then, the executor would transfer the property to the appointed trustee for safekeeping. The trustee shall only transfer the property to your child when he hits 30. Hence, in this case, who would you like to appoint to be the trustee? 

Imagine a will that has no executor, guardian or trustee. Wow! Can you imagine the chaos which arises from the absence of any of these people? 

Conclusion

While writing a will can be DIY-ed, I believe it is best not to do so. I prefer hiring a professional to write a will. The professionals would bring multiple angles such as execution, administration and the practical side to conflict management, which I think is useful when writing a will. Presently, in Malaysia, the fee to have a professionally written will is quite affordable. It ranges between a few hundred to a few thousand ringgit. It is a simple document that would save a lot of headaches or nightmares. So, I don’t see a need to “save” on such a cost. 

You can hire a lawyer, an estate planner or a financial planner to guide you on this. To obtain the most suitable assistance, you may contact any of the following below: 

1. Sim & Rahman
2. Nathalie Annette Kee – Thomas Philip (Principal Associate)
3. Financial Planner: Stephen Yong, Wealth Vantage Advisory

Remember: 
It’s okay to spend 90% of our time accumulating wealth. Make sure we spend 10% on protecting the wealth accumulated.