FIN6133: Estate Planning

Masters in Financial Planning

Session 2
Wills and Wills Planning
Testacy vs
Intestacy
• Testacy (Testate) - A person who passes away leaving behind a will
• Wills Act 1959 (Revised 1988)
• Probate & Administration Act 1959
• Inheritance (Family Provisions Act) 1971

• Intestacy (Intestate) – Passed away without leaving behind a will

• Distribution Act 1958 (Amended 1997)
• Small Estate Distribution Act 1955

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Estate
Laws
Deceased
(Non-Muslim)

Without Will With Will

(Intestacy) (Testacy)

Small Estate Wills Act,

Distribution Distribution Act Probate &
Act (Estate < 1 mil) Admin

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Estate
Laws
Inheritance
FP

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 Instruments
• Wills
A written instrument by which an individual signifies his wishes as
to the distribution of his estate after his demise. It is “to speak
from the death” therefore it takes effect only after testator’s
death.

Governed by Wills Act 1959 (Revised 1988)

“Will" means 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
and includes a testament, a codicil and an 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 the guardianship, custody and
tuition of any child.

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Instruments
• Wills Act 1959 (Revised 1988)

“Property" includes lands, leases, rents and hereditaments

corporeal, incorporeal or personal and any individual shares
thereof and any estate, right or interest therein or in relation
thereto, moneys, shares of Government and other funds,
securities for money, charges, debts, choses in action, rights,
credits, goods and all other property whatsoever which devolves
upon the executor or administrator and any share or interest
therein and any contingent, executory or other future interest;

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 The 6 Steps of Estate Planning
Process
Conduct periodic review to Establish what the client wants for
update plan resulted from his estate and how to provide for
change of life, new objectives or loved ones and other heirs
change in tax laws

Periodic Establish
Review Objectives
Fact finding process :
1. What kind of property?
Include execution of legal 2. Who should receive
documents and transfer Plan Info the assets?
of property via use of wills Execution Gathering 3. How should the
and trusts instruments transfer to
done?
4. When should the
Develop & Analyze transfer be
Present Data done?

Prepare plan and test via a process of simulating the procedure of

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administration Analyze information and decide
whether to employ testamentary
trusts or living trusts, to use wills or
trusts and the costs attached to them

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Formalities & Legalities
A will must be:
• In Writing (Handwritten, typewritten, printed);
• In Language capable of comprehension;
• Must be Signed or Mark Affixed at end;
• Must have Two (2) Witnesses; must not be
beneficiaries or spouse of or hereby invalidates the gift;
• Made at least at age 18 or 21 (in Sabah)
• Sound mind & Independent choice
• Revocation by:

• Later will e
• Marriag
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• Destructi
on
• Conversi
on to
Islam

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Contents -
Will
CLAUSES NOTES
Opening Clause Testator’s identity, domicile and date of
will.
Revocation Clause Revoking all previous wills
Appointment of Naming an individual or institution to
Executor/ Trustee administer and/ or hold in trust for
the benefit of the beneficiaries
Appointment of Guardian Custody of children below the age of 21

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Contents -
Will CLAUSES NOTES
Assets Distribution Listing of assets to be distributed and
how and in what way to be distributed
Residuary To dispose off any assets not specifically
stated in the will
Funeral The wishes of the testator on
funeral wishes
Attestation It states that the proper formalities
has been adhered to and the Will has
been properly executed

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Testac
y In the event of the passing of the testator, the
executors first responsibility is to get a
confirmation that the Will is valid and enforceable
by law
 This is regulated by the Probate and Administration
Act 1959 and detailed procedure will be found in
Rules of the High Court 1980
 The High Court is empowered by this Act to issue a
Grant of Probate
 This Grant of Probate will be used to deal with the
estate by the executor

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Types of
Will
• Individual Will

• Privileged Will (Section 26 of Wills Act 1959)

• Member of Armed Forces in active service
• Mariners or seamen (Including Navy personnel) being at sea
• The will can be either in writing or word of mouth
• Need not comply with the formalities of the making a Will as long as it
shows the intention of the testator that the instructions are to be
acted upon

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Types of Will
• Mutual Will
• Made by two or more persons following an agreement
between the parties to make such will and not to revoke
them without the consent of the other
• Reciprocal benefits, two separate wills but with similar
clauses
• Though revocable, but is liable for breach of contract or
trust

• Joint Wills
• Two or more persons stating their last wishes in one
document
• Takes effect as two separate wills
• Confidentiality lost 14
Inheritance (Family Provision) Act 1971
• For “dependents” of the deceased to apply to the court to
“vary” the Will for their maintenance, as the Testator has not
provided sufficiently for them.

• The person entitled for such applications are:

• Spouse of the deceased
• The daughter who is unmarried or who is, by reason of some mental or
physical disability, incapable of maintaining herself;
• An infant son; and
• A son who is, by reason of some mental or physical disability, incapable
of maintaining himself;

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 Intestacy

• Distribution Act 1958 (Amended 1997)

• Small Estate (Distribution Act) 1955

• Amanah Raya Berhad (Public Trust Corporation Act 1955 - Section 15)

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Distribution
Act
Intestate Leaving Surviving Entitled Distribution
Spouse Only Spouse 100%
Spouse & Parent(s) Spouse 1/2
Parent(s) 1/2
Issue(s) only Issue(s) 100%
Parent(s) Only Parent(s) 100%
Spouse & Issue(s) only Spouse 1/3
Issue(s) 2/3
Issue(s) & Parent(s) Issue(s) 2/3
Parent(s) 1/3
Spouse, Issue(s) & Parent(s) Spouse 1/4
Issue(s) 1/2
Parent(s) 1/4

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Distribution
Act
If there are no surviving spouse, issue or parent at the
point of death of an intestate, then the following
distribution in order of priority:
1. Brother(s) and Sister(s)
2. Grandparent(s)
3. Uncle(s) and Aunt(s)
4. Great-grandparent(s)
5. Great-uncle(s) and great-aunt(s)
6. Government

Issue: Includes children and descendants of the children (which would

take in place of their parents)

Parents: Natural father or mother of a child or lawful father or mother of a

child under the Adoption Act 18
Tutorial
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• Describe any FIVE (5) conditions that must be met for a Will to
be valid in the court of law.

• Under the Distribution Act 1958 (Revision 1997) in the event

of Intestacy, the living spouse, surviving parent(s) and issue(s)
will inherit the deceased’s estate. Define the term “issue(s)”
and “parent(s)” according to the interpretations in the Act.

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Tutorial
3• Using the table below, fill in the correct entitlement in
accordance to the Distribution Act (You may reproduce the table,
and provide answers in fraction or percentages rounded to the
nearest TWO decimals)
Intestate Leaving Surviving Entitled Distribution
Spouse Only Spouse
Spouse & Parent(s) Spouse
Parent(s)
Issue(s) only Issue(s)
Parent(s) Only Parent(s)
Spouse & Issue(s) only Spouse
Issue(s)
Issue(s) & Parent(s) Issue(s)
Parent(s)
Spouse, Issue(s) & Parent(s) Spouse
Issue(s)
Parent(s)
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Questions & Review

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