Question:
Hi, I’m Sam, a 45-year old business owner from Petaling Jaya. Presently, I own a biscuit factory and a bakery in Klang. I’m happily married with Jenny and we are blessed with three children namely, Jack, Jim and Jason aged 10, 8, and 3 today. I’m planning to write a will where Jenny and our children will be included as the beneficiaries of my estate. Here, my question is: ‘Should I appoint Jenny to be the executor of my will?’

 

Answer: 

For a start, there are three parties involved in Sam’s will document. They are: 

 

In this case, Sam is a testator. Jenny is to be appointed as his executor of his will and is also nominated as a beneficiary alongside their children. Hence, if Sam is to pass on in the future, Jenny would be entrusted to manage and distribute his estate according to his will. From Sam’s point of view, it seems fitting to appoint Jenny as his executor for she is his beloved wife and the mother to his children. 

 

But, is this a wise move? 

 

To answer this question, I’ll explain the roles and responsibilities of an executor. The executor of a will is very crucial in the process of collection and distribution of the deceased’s estate. Simply put, a will is less effective if the testator fails to appoint an executor to execute his will. 

 

Executor’s Job #1 – Grant of Probate

Let’s say, Sam passes on. His assets namely, his biscuit factory, bakery and other personal assets will be frozen, except for his life insurance policies and EPF. 

 

First, Jenny will need to first apply for the Grant of Probate from the High Court to prove that she is the executor in his last will and testament. To do so, she will need to prepare a list of documents which include Sam’s death certificate, a list of his assets and liabilities, and the original copy of his will. Subsequently, Jenny will engage a lawyer to assist her in her application for the Grant of Probate. 

 

If Jenny is able to locate Sam’s will easily where it states what assets he owns in clarity, Jenny will have an easier time in applying for the Grant of Probate. Most often, the issue lies in locating the testator’s will and having knowledge of what assets the testator owns before his passing on. For instance, 

 

 

 

  1. Sam may rent a safe deposit box from a bank to place his will. Jenny does not know which bank Sam chose to place his will. 

 

  1. Sam may write himself a simple will with a simple clause stating that his wish to distribute all ‘immovable and movable’ assets to his beneficiaries. This poses a big obstacle to Jenny as she may not know what exactly Sam’s immovable and movable assets are referring to. This includes Sam’s personal investments into a portfolio of real estate, shares into other businesses, and bank accounts. 

 

Depending on the size of Sam’s estate, this process takes some 3-6 months and the time frame could be longer if Jenny fails to locate Sam’s will and his estate.

 

Executor’s Job #2 – Asset Collection

Next, Jenny is authorised to collect assets that were owned by the testator with the Grant of Probate. It includes his biscuit factory, bakery, and his other assets. This process can be lengthy as it takes time for the ownership of these assets to be effectively transferred to Jenny, the executor. In general, it could take up to 6 -12 months time for Jenny to collect these assets. 

 

Executor’s Job #3 – Paying Off Outstanding Debt and Taxes 

Subsequently, Jenny may advertise on leading newspapers to notify all of Sam’s creditors so that they can recover their credit given to Sam. In addition to this, Jenny would need to settle the outstanding amount of income tax owed by Sam to the Inland Revenue Board (IRB). The process which involves efforts in advertising, negotiating, and settling of debts and taxes to all of Sam’s creditors including the IRB would take around 12-15 months. 


Executor’s Job #4 – Asset Distribution 

Finally, Jenny would distribute Sam’s remaining estate to all of his beneficiaries. It would take at least 2 years from Sam’s passing to distribute his estate to all of his beneficiaries. It assumes that there are no hiccups along the entire process. 

 

Let’s put ourselves into Jenny’s shoes. 

 

She will have a lot to do as an executor. She has to engage a lawyer, attend High Court hearings, make trips to banks, advertise, negotiate with creditors, pay tax and debts, and the list goes on. It takes time, effort, and money to carry out the roles and responsibilities required as an executor. Jenny needs to fulfil her tasks while she is mourning for her husband’s passing and has three children to feed and care for. Would you like to be in Jenny’s position? 

 

What if Jenny Could Not Act as an Executor? 

Sam may appoint Jenny to act as his executor of his will. With that being said, it is possible for Jenny to lose her ability to act as his executor. This arises in the following situation:


  1. Jenny becomes insane. 

 

  1. Jenny passes on before or together with Sam. 

 

  1. Jenny passes on before obtaining the Grant of Probate from the High Court. 

 

  1. Jenny passes on before fully completing the tasks of an executor. 

 

So, what happens? 

In this case, an interested person may apply to Court for an order to ‘substitute’ Jenny as the executor by applying for the Grant of letters of Administration with Will Annexed.

The Court will grant the Letter of Administration with Will Annexed to allow the process of distributing Sam’s estate to proceed to people who are viewed to be fitting to administer the estate. The person chosen will be based on the ranking order stipulated under Section 16 of the Probate and Administration Act 1957.

 

In Sam’s case, his children would qualify under Rank #1. But, they are incapable of administering Sam’s estate for they are still very young. This may open up an opportunity for Sam’s relatives such as Sam’s siblings, grandparents, uncles and aunties to step forward to apply for the Letter of Administration. If you are Sam today, would you want your relatives to manage your estate on behalf of you? 

 

Should I Elect a Trust Corporation to Execute My Will? 

If I’m Sam, I think, electing a trust company to act as the executor of my will is a lot more practical and convenient. This is because a trust company has a couple of advantages that enable it to perform estate administration works a lot more efficiently than an individual, even if the individual chosen is a lawyer. 

 

Instead of adding burden and workload onto Jenny, it is better for Sam if he can elect a trust company to act as the executor of his will. It allows Jenny to have a peace of mind because she knows that her finances will be managed efficiently and responsibly by the trust company. 

 

In short, we encourage all to have a well-crafted estate distribution plan so that the financial future of our loved ones will be protected. To learn more, you may watch our webinars on estate planning matters as listed below: 

 

Link: Writing a Will – Common Mistakes that Squander Your Assets Rather Than Protect Your Family

 

 


Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 450+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

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