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

Wills and Administration of Estates BY GAN CHONG CHIEH & PRISILLA CHONG 20 April 2020 1

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Wills and Administration of Estates BY GAN CHONG CHIEH & PRISILLA CHONG 20 April 2020 3

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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. 13

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and provide for them ● You can create a testamentary trust in your will ● You can revoke your will anytime if it no longer represents your interests 14

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 16

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) 17

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 18

Appointment of executor(s) ● 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) of the Probate and Administration Act 1959 19

What can be disposed of by a will? ● Property or an interest in the property belonging to the testator or 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) 20

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 21

Condition gift(s) ● T estator 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) 22

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. 23

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 or 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 . 24

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 25 Article : FAQs on Condition Precedents & Testamentary Trusts

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 of the Distribution Act 1958 (Partial intestacy - Sec 8 of the Distribution Act 1958 ) 26

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 ) 27

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 28

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 ) 30