Wills and Administration of Estates BY GAN CHONG CHIEH & - - PowerPoint PPT Presentation

Wills and Administration of Estates

20 April 2020

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BY GAN CHONG CHIEH & PRISILLA CHONG

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20 April 2020

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BY GAN CHONG CHIEH & PRISILLA CHONG

Wills and Administration of Estates

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Prisilla Chong

• Associate in our Dispute Resolution Department
• Bachelor of Laws (Hons), Cardiff University
• Admitted to the Malaysian Bar in 2017
• General litigation, corporate and commercial

litigation, arbitration, real estate and construction litigation, will writing, probate and administration of estates

Gan Chong Chieh

• Partner in our Dispute Resolution Department
• Bachelor of Laws (Hons), University of London
• LLM in International Economic Law, East China

University of Political Science and Law (ECUPL)

• Admitted to the Malaysian Bar in 2009
• General litigation, will writing, probate and

administration, contentious probate litigation, banking litigation, debt recovery, arbitration, construction, family law, criminal law and Management Corporation and Joint Management Body disputes.

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Talk Points

• Importance and benefits of having a will
• Formalities and contents of a will
• Addressing common misconceptions
• Administration of estates

(Grant of Probate vs Grant of Letters of Administration)

• Your Will prepared by trusted lawyers

Importance and benefits of having a will

Definition of a will

• A declaration intended to have legal effect of the intentions of a

testator with respect to his property or other matters which he desires to be carried into effect after his death.

• A will includes a testament, a codicil* and appointment by will or

by writing in the nature of a will in exercise of a power and also a disposition by will or testament of guardianship, custody and tuition of any child - Sec 2(1) of the Wills Act 1959

*testamentary document to modify, alter or amend part of the original will.

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Importance and benefits of having a will

• You can leave assets to your intended beneficiaries
• You can choose your executor
• You can choose a guardian for your children and provide for them
• You can create a testamentary trust in your will
• You can revoke your will anytime if it no longer represents your

interests

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Formalities and contents of a will

Basic formalities of a will

• The maker of the will must be of sound mind with animus testandi

(intention to make a will) (Sec 3 of the Wills Act 1959)

• Must be 18 years old and above (Sec 4 of the Wills Act 1959)
• No will shall be valid unless in writing and executed in the manner

prescribed under Sec 5 of the Wills Act 1959

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Contents of a will

• Particulars of the testator (Name, NRIC and Address)
• Appointment of Executor(s)
• Contents (intention, declaration and wishes)
• Beneficiary(s)
• Date
• Signatures (testator and two witnesses)

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Appointment of executor(s)

• An executor is the person appointed to -

➢ administer the assets of the testator ➢ carry out the wishes/bequests of the testator

• An executor must be willing and capable of acting
• An executor may be appointed from the pool of beneficiaries
• Appointment of alternative executor(s) can be stated in the will

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Appointment of executor(s)

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• Maximum of 4 persons can be appointed as executors - Sec 4(1) of

the Probate and Administration Act 1959 provides that representation cannot be granted to more than 4 persons

• If there is a beneficiary who is an infant or if a life interest arises

under the will, administration shall be granted to be a trust corporation OR not less than 2 individuals as executors - Sec 4(3)

• f the Probate and Administration Act 1959

What can be disposed of by a will?

• Property or an interest in the property belonging to the testator
• r to be received by the testator - Sec 3 of the Wills Act 1959:

➢ Personal / Movable property ➢ Real / Immovable property ➢ Shareholding in a company ➢ Partnership interest ➢ Interest given under the will of another individual (provided that the gift has not lapsed)

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What cannot be disposed of by a will?

• If there are nominations in the Employee Provident Fund (EPF) and

insurance policies, payouts from EPF and insurance policies will not form part of the estate or to pay the testator’s debts. ➢ EPF - How Yew Hock (Executor of the Estate of Yee Sow Thoo, deceased) v Lembaga Kumpulan Wang Simpanan Pekerja [1996] 2 MLJ 474 - Statutory nominations will prevail over will. ➢ Insurance - Section 130 of the Financial Services Act 2013 & Schedule 10 of the Financial Services Act 2013

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Condition gift(s)

• Testator can impose condition precedents in the will.
• Beneficiary of the conditional gift will not acquire an interest in the

gift until he or she satisfies the relevant condition precedent.

• Cannot be impossible conditions

➢ Eg: to purchase property and build a house during war.

• Cannot be against public policy

➢ Eg: to deprive a parent of the control of child, to restrain a marriage, a condition forbidding enlistment (military)

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Condition gift(s)

• Cannot be uncertain/vague

➢ Eg: “a small portion of is what is left” or “one of the sons” of Mr A.

• Cannot be illegal

➢ Eg: to commit a crime or any act prohibited by law.

• Cannot be in conflict with the interest of the beneficiary(s)

➢ Eg: RM1 million to be paid absolutely to Mr X upon attaining the age of 28 years old but reduced if Mr X embraced a religious life.

• Cannot be in conflict with the gifts or provisions of the will

➢ Eg: “All my property” to Mr X and gift of residue to Mr A.

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Testamentary trust(s)

• A testamentary trust is created under a will and takes effect only

upon the death of the testator

• It is usually created to provide for the manner of distribution of all
• r part of an estate. There may be more than one testamentary

trust per will depending on the testator’s wishes.

• In general, there are two types of testamentary trusts:

➢ fixed testamentary trust; and ➢ discretionary testamentary trust.

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Testamentary trust(s)

• Benefits of having testamentary trust(s) -

➢ preserve assets ➢ trustee will retain discretion in handling the assets ➢ prevent dissipation of assets prematurely ➢ ideal if you have beneficiaries who are unable to handle a lump sum benefit responsibly

Article: FAQs on Condition Precedents and Testamentary Trusts Article : FAQs on Condition Precedents & Testamentary Trusts

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Residuary clause

• Catch-all provision
• Everything that is left in the estate after -

➢ all debts and administration expenses have been paid ➢ all specific and non-specific gifts have been disposed off

• If you do not have a residuary clause in your will, your

assets/properties not stated in the will may fall within the ambit

• f the Distribution Act 1958 (Partial intestacy - Sec 8 of the

Distribution Act 1958)

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Beneficiary(s)

• Individuals with capacity to benefit
• Examples of individuals with no capacity to benefit -

➢ individuals who predeceased the testator ➢ the attesting witnesses ➢ the husband / wife of the attesting witnesses cannot benefit (the gift is utterly null and void - Sec 9 of the Wills Act 1959)

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Mode of execution

Sec 5 of the Wills Act 1959 -

• Signature of the testator to be at the foot or end of the will
• Signature of the testator must be in the presence of 2 witnesses
• Both witnesses must sign after the signature of the testator
• Both witnesses must be present at the same time

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Addressing common misconceptions

Addressing common misconceptions

➢ A will only comes to effect upon the death of the testator ➢ A will do not need to be stamped to be valid ➢ You can amend your will by making a fresh will or by way of a codicil ➢ Not a compulsory requirement for the maker of a will to initial at every page of the will, but it is a good practice to follow ➢ Everyone can make a will (except for infants - Sec 4 of the Wills Act 1959)

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Administration of estates

Grant of Probate vs Grant of Letters of Administration

Applicable laws in Malaysia

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West Malaysia Sarawak Sabah Wills Act 1959 Wills Act 1959 Sabah Wills Ordinance Cap 158 Distribution Act 1958 Distribution Act 1958

(extended to Sarawak in 1986)

Intestate Succession Ordinance 1960 Probate and Administration Act 1959 Administration of Estates Ordinance Cap 80 Probate and Administration Ordinance Cap 109

Grant of Probate vs Grant of Letters of Administration

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Death Will Without Will Executor Grant of Probate Persons interested in the estate to apply for Grant of Letters of Administration High Court grants administration to whom it thinks fit Administration Bond Grant of Letters of Administration Distribution Order (Immovable properties)

Testacy

• An individual who passed away with a valid will
• The will takes effect upon the death of the testator
• The executor(s) appointed in the will to make an application for

Grant of Probate - ➢ Application must be made to the High Court ➢ Originating Summons + Affidavit in Support ➢ Notice of Appointment of Solicitors ➢ Affidavit of Witnesses

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Intestacy

• All persons interested in the estate (usually beneficiaries) can make an

application for Grant of Letters of Administration upon the death of a person without a will. ➢ Application must be made to the High Court ➢ Originating Summons + Affidavit in Support ➢ Notice of Appointment of Solicitors ➢ Letter of Consent / Renunciation ➢ Administration Oath ➢ Application to dispense administration bond (> RM50K) ➢ Distribution Order/Order for Sale for immovable properties

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Intestacy

• Who are the beneficiaries?

➢ Section 6 of the Distribution Act 1958 sets out the persons entitled to the estate and the manner of distribution.

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Intestacy

• Persons entitled under Section 6 of the Distribution Act 1958:

➢ Spouse ➢ Children ➢ Parents ➢ Siblings ➢ Grandparents ➢ Uncles and Aunts ➢ Great grandparents ➢ Great grand uncles and great grand aunts ➢ Bona vacantia

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Intestacy

• Manner of distribution under Section 6 of the Distribution Act 1958

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Spouse Parents Children

Whole Estate X X 1/2 1/2 X X X Whole Estate 1/3 X 2/3 X 1/3 2/3 1/4 1/4 1/2 X Whole Estate X

Remuneration

• Executor’s Commission

➢ Section 43(1) of the Probate and Administration Act 1959 - The Court may allow the executors or administrators a commission not exceeding 5% on the value of assets collected (discretionary).

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Possible Complications

• Renunciation

➢ The executor may expressly renounce his/her rights to the representation - Sec 8 Probate and Administration Act 1959 ➢ Constructive renunciation - Sec 9 Probate and Administration Act 1959 ➢ The person renouncing shall be precluded from applying for representation thereafter

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• Caveat

➢ Caveat can be entered by any person to ensure that no grant

• f representation is made.

➢ Caveat can be entered at the High Court Registry. ➢ Caveat is valid for 6 months. ➢ The procedure for caveat - Or 71 of the Rules of Court 2012

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Possible Complications

• Citation

➢ Citation to accept or refuse or to take a grant ➢ Citation is a notice issued when the executor(s) in a will delays

• r declines to apply for grant of probate.

➢ A caveat must be entered before issuing a citation. ➢ Procedure on issuing of citation - Or 71 r 42 of the Rules of Court 2012 ➢ The High Court shall have power to summon any person named as executor in any will to prove or renounce probate of the will and do any such other things concerning any will - Sec 40 of the Probate and Administration Act 1959.

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Possible Complications

Possible Challenges

• Lack of testamentary capacity

(not of sound mind, memory and understanding)

• Suspicious circumstances
• Undue influence
• Forgery/Fraud
• Removal of executor(s)

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Possible Challenges

• Lack of testamentary capacity - not of sound mind, memory and

understanding ➢ Person(s) alleging the validity of the will bears the burden of proving testamentary capacity. ➢ How to prove testamentary capacity? – The content of the will was read and the testator understood the content, the effect and the extent of the disposal of the property (Udham Singh v Indar Kaur [1971] 2 MLJ 263; Eu Boon Yeap & Ors v Ewe Kean Hoe [2008] 2 MLJ 868).

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Possible Challenges

• Lack of testamentary capacity - not of sound mind, memory and

understanding ➢ Medical report to show that the Testator suffered unsoundness of mind or lacked the mental capacity to make a will (Eu Boon Yeap & Ors v Ewe Kean Hoe [2008] 2 MLJ 868, Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 CLJ 19). ➢ Mere bodily ill-health or imperfect memory is insufficient to prove testamentary incapacity (Lee Ing Chin & Ors v Gan Yook Chin & Anor [2003] 2 CLJ 19).

• Suspicious circumstances

➢ Burden on the person(s) proving the will to dispel suspicious circumstances by showing that the will was read to the testator and the testator knew and approved the will. ➢ Examples of suspicious circumstances:- – Substantial gift to a person who prepared or was closely involved in the preparation of the will. ➢ One method of dispelling suspicious circumstances is to show that the Testator obtained independent legal advice.

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Possible Challenges

• Undue influence

➢ Person(s) alleging undue influence bears the burden of proving. ➢ The testator was coerced into executing the will in the form that it had taken, or the will was not the voluntary act of the testator (Carmel Mary Soosai v Josephine Lourdasamy Ratnavathy R. Soosai & Ors [1987] CLJ (Rep) 498).

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Possible Challenges

• Forgery/Fraud

➢ Person(s) alleging forgery bears the burden of proving. ➢ The testator’s signature on the will does not bear the true and genuine signature of the deceased and is a forgery. ➢ The allegation of forgery is most commonly raised in a situation where there are 2 wills in existence ➢ Evidence of handwriting expert to prove signature does not belong to testator.

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Possible Challenges

• Removal of executor(s)

➢ Removal of the person(s) from his office of an executor. ➢ Court is empowered to remove an executor or trustee where there is failure to act because of unfitness or incapacity to act. ➢ Primary consideration is for the interest of the beneficiaries and estate to be protected.

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Possible Challenges

• Removal of executor(s)

➢ No direct provision for removal in the Probate and Administration Act 1959. ➢ The closest would be Sec 40 of the Probate and Administration Act 1959 according to Jeffrey Tan J in Khaw Cheng Bok & Ors v Khaw Cheng Poon & Ors [1998] 3 MLJ 457 ➢ Sec 34 Probate and Administration Act 1959 - Any probate or letters of administration may be revoked or amended for any sufficient cause.

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Possible Challenges

• Removal of executor(s)

➢ Examples of sufficient cause:- – failure to render accounts or periodic accounts – failure to administer the estate – failure to call in the assets – intermeddled with the assets – active hostility towards the beneficiaries ➢ However, cases have shown that Court is slow in removing the person(s) named in the will as executor (Liong Seow Keng & Ors v Ho Soon Cheng [2015] 3 CLJ 808).

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Possible Challenges

• MWKA is launching our personalised will writing packages online
• Three different packages

➢ Essential ➢ Intermediate ➢ Comprehensive

• https://mahwengkwai.com/your-will/

52

Your Will - Prepared By Trusted Lawyers

Questions?

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Date (Day) Topic Title Speaker(s) 22 April 2020 (Wed) Introduction to Construction Adjudication in Malaysia (Mandarin) Christine Toh 24 April 2020 (Fri) Introduction to Faraid Sarah Kambali & Anis Mohd Sohaimi

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Thank you!

Notice: This presentation does not constitute legal advice and its contents should not be relied upon as such. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for legal consultation.

• MWKA is launching our personalised will writing packages online
• Three different packages

➢ Essential ➢ Intermediate ➢ Comprehensive

• https://mahwengkwai.com/your-will/

58

Your Will - Prepared By Trusted Lawyers