The Star Malaysia Sunday February 21, 2010 BY SHAHANAAZ HABIB
Generally, Malaysians know the importance of having a will but most are still putting off writing one. Till now, only 10% have written their wills.
FINAL year student Amy Liew (not her real name) was frantic when she called up will writer Jeff Chong. Her father was on his death bed and she needed to have his will done.
When Chong arrived at 5pm, Amy's father was weak but still able to talk. He asked for a simple will to make Amy his executor and for his property and money to be divided equally among his children.
Chong: 'You never think twice about buying a house that costs RM300,000 so why can't you spend RM380 to wi ll it?'
He asked Chong to make the will immediately but it was after office hours then, and Chong could not do anything. But he promised to come back first thing the next morning.
When Chong arrived at the house as promised, he saw a tent set up in front of the house and realised that he was too late. Amy's father had died in the night.
As Chong drove off feeling a bit guilty, Amy phoned. She wanted Chong to get the thumb print of her dead father for the will!
"Of course I couldn't do that. It goes against my code of ethics," he says.
"Besides, her father's spirit might just pay me a visit in the night!" he quips.
Amy's father was just a few hours too late in getting his will made. That meant poor Amy would have to go through the whole rigmarole of going to court to get a letter of administration (LA) to get hold of her father's assets.
It would not only cost her a few thousand ringgit in legal fees but it would also take months if not years.
If there had been a will, Amy could easily have obtained a grant of probate from the High Court to take out the assets and it would have been quick.
Malaysians procrastinate
Despite all the hassle it would save grieving family members, a lot of Malaysians are still not writing wills. In fact, only 10% have prepared their wills and the figure hasn't changed much over the past decade.
It isn't because people aren't aware of the importance of wills. Gone too are the days when people were too superstitious to write their wills.
"Procrastination is the number one disease," says Chong.
"People are always saying 'Aiyah, I am still young' or 'Later lah. I've got no time now. I am so busy.'"
Sometimes it takes a shock to jolt them – like being admitted to the hospital or having a family member, friend or colleague die unexpectedly.
Chong says he once had three young couples come in at the same time to write their wills. The reason: their badminton kaki, a fit and healthy man in his 30s who played the game with them twice a week, had keeled over and died right in front of them!
There's also another perception that only the rich write wills or that wills are too expensive to make. Both, says Chong, are misconceptions. A will is not about how much assets you have but how to distribute it, he explains.
"You can have a loyar Proton Saga and still will it. Or a low-cost apartment or some unit trust or money in the bank and you can already write a will."
Wills cost as little as RM380 to write, though on the high end, there are wills that cost up RM12,000.
"You never think twice about buying a house that costs RM300,000 so why can't you spend RM380 to will it?" Chong reasons.
The amount one pays to write the will does not depend on one's fortunes but on how comprehensive the will is, he adds.
According to him, one can be a rich person and still write a simple will (and be charged RM380). On the other hand, some people in the middle income range may want a comprehensive will because of certain peculiarities, for instance they might need to set up a trust fund for their young kids or for their elderly parents.
For example, if you have an elderly mother or mentally-disabled children, you can set up a property trust to ensure that they can continue living in your house rent-free even after you are dead. This ensures that they will not be kicked out.
Or you can set up a maintenance trust with a certain sum of money for your parents' upkeep until they die or the money runs out, whichever comes first.
There are also many considerations when young children are involved.
Parents often think that because their spouse is working and is financially independent, they should name their young children as beneficiaries instead. But this can pose problems as well.
Under the law, a person can get hold of the money he or she inherits only when he or she turns 18.
Even then, Chong questions if it is wise to give huge sums of money or property to an 18-year-old.
"If you have RM2mil in your EPF savings and three children and make them your beneficiary, that's about RM700,000 per child. Do you think an 18-year-old is mature enough to handle that sum of money?
"Throw in insurance policies, some properties and money in the bank and they could get a lot more than that.
"It's risky because your sweet 18-year-old daughter might be cheated by her boyfriend or your son his girlfriend."
In such cases, says Chong, it is better to have "a few rounds" to distribute the assets because it is unlikely that the child would be stupid enough to be cheated a second or third time around.
So when the children are very young, he recommends either making the spouse the beneficiary or setting up a trustee fund for the kids – where the amount given to the child is staggered over the years.
For example, the child could get 50% of his inheritance at the age of 21, another 25% when he or she turns 25 and the rest when she is 27, or when the youngest child in the family turns 21 etc.
Parents should decide at what age their children should inherit their wealth and the will can be tailored accordingly.
A person making a will also needs to appoint an executor, who is basically someone you trust who will do the running around to get hold of the assets and distribute it according to your wishes.
Appointment of trustees
Couples with young children should also appoint a trustee (who would hold those assets on trust for the young beneficiaries) and a guardian (who will take custody and is responsible for the child).
The executor, trustee and guardian can either be the same person or different people can be named for each role. It doesn't have to be a family member either. It can even be a friend or colleague but it is imperative for your sake and that of your children that the person or persons you appoint as executors, trustees and guardians should be those you totally trust.
This is because once they get hold of your money and assets, there is nothing to stop them from absconding – leaving your children high and dry.
"If the money is a small amount, perhaps he'll be a good person. But what if it is a few million ringgit? He might abscond with it and not care about your children at all," warns Chong, who recommends putting joint trustees in the will so that they can check each other.
The other option is to appoint a trustee company as executor and trustee. For a fee, they would disburse the funds and trust accordingly. This is safer than relying on the trustworthiness of an individual, says Chong who also suggests that people "re-visit" and re-write their wills every three to five years because things, people and relationships may change or those you appointed could have died.
Maybe during this time, one of the kids might have married and suddenly his mother does not like his new circumstances so she might want to change her will to exclude him, he explains.
"Or, say, the sister who is supposed to be the guardian of the children (upon the parents' death) might have converted to another religion but the parents want their children raised in their original religion."
Furthermore, five years down the line, one's financial position would probably be different – with the person having acquired more property, shares, opened up other bank accounts or made other investments etc.
The minimum age to write a will is 18. One is also never too old to write a will. The oldest person to write a will is a 101-year-old woman who did it with Rockwills, which, along with Amanah Raya and OSK-UOB, is the main provider of the service in this country.
However, a will can be challenged in court.
While you can give your money and assets to anybody including a lover, friend, colleague, even a stranger (provided you are of sound mind when you made the will, above 18 and it was witnessed by two independent witnesses who are non beneficiaries), there are still certain categories of people under the Inheritance (Family Provision) Act that you should have some provision for.
This includes the spouse, a daughter regardless of age who has not been married, a son below 21, any child who is physically or mentally disabled, and parents.
Spell out intentions
If you intentionally did not provide anything in the will for these people, it is best to spell this out clearly or state your reasons.
Examples are: 'I did not provide anything in this will to my son (name and MyKad number) because I have already given him a house when I was alive' or 'I am fully aware I am not giving anything to son (name and MyKad number) because he is financially independent.'
Another example is: 'I did not provide anything in my will for my husband because we have been separated for 15 years and I have not seen him for 15 years nor have I received any money from him during this time and I have taken care of our children on my own.'
This would safeguard the will from being contested, says Chong.
One must also take note of the fact that when you die, your parents are entitled to 25% of your assets (the spouse 25% and children 50%).
Later, if your parents die, the 25% asset they inherited from you will be automatically divided among your siblings. They will not go to your children unless your parents willed it to them or you specified in your will that upon their death, it reverts to your kids.
Furthermore, as important as a will is, it cannot supercede the beneficiaries you have named in your EPF savings and insurance policies. Therefore, it is crucial over the years to update the name on your EPF and insurance policies.
As for joint accounts, Chong says one should make sure there is a survivorship clause for the account because when one person dies, the account will be frozen until the LA is obtained.
"In the past, family members could go to the ATM and withdraw all the money but now with technology, the MyKad is linked. So the banks will automatically get information when a person dies and there will be very little time before the account is frozen."
Another salient point is to keep the will safe and to make sure it is accessible upon death. There is no point having the best written will if once you are dead, nobody knows where it is or where to look.
Other than going to a specialised will writing company or institution, one can also go to a lawyer to draw up a will.
But Chong points out that lawyers handle a host of legal matters including civil and criminal law suits, Sales and Purchase agreements and draw up contracts and as such they might not be specialists in will writing.
"If you have a heart problem, would you go to just a GP? No. You would go to a cardiologist because he is a specialist. It's the same with wills."
No comments:
Post a Comment