Property Division in Malaysia When There’s No Will
There is often a belief among Malaysians that a last will and testament should only be prepared when you’re older, or if you face a terminal illness.
This shouldn’t be the case, as preparing a will can really make things much easier for your loved ones should anything happen to you suddenly.
In the case that something does happen, and you leave no will, then your assets will be divided according to the law. If you’re a non-Muslim in Malaysia without a will, your properties and monies will be distributed according to the Distribution Act 1958.
What is the Distribution Act 1958?
In Malaysia, the Distribution Act 1958 is the act that will determine to whom your assets will go in the absence of your will, and the portion in which they will receive it.
Many people mistakenly believe that all their assets will automatically pass on to their spouse or children in its entirety if they pass on without a will.
This is not true, as Malaysian law also takes into consideration other relatives that are alive as well.
If you leave a last will and testament, it will give you more control over who receives what and in what amounts. It sets conditions for certain people in your lives to receive your assets, and you can also provide for any underaged children you may have.
If you leave no will, then you will have no control over who in your family gets what amounts and the conditions in which they will inherit. There is no mention of any personal conditions for the recipient to inherit your properties or money.
For example, if you want to make sure that your parents who are still alive, will transfer your current house in its entirety into your child’s name when they turn 18, this won’t be guaranteed under the Malaysian Distribution Act, as your children, parents and spouse are all be entitled to different percentages of your home.
Source:xFrame
What Happens When You Pass Without a Will?
The first thing that will happen is that all your assets will be frozen. This means they cannot be transferred in terms of ownership or consumed for the time being.
Your family members will then have to determine if you have left a will. If there is none, your estate ( all your assets and monies) will be considered ‘Intestate’, and will now be subjected to the Malaysian Intestacy Law. Here’s a step by step of what will need to happen next:
Step One: Appointing an Administrator
Your family will then have to appoint an Administrator. This is someone who will be responsible for administering your assets.
According to the Intestate law in Malaysia, any one who has an interest in your asset can be appointed as an administrator. Usually this is a family member that stands to inherit, and is agreed to by the rest of the family. In some cases, debtors can also apply to be the administrator.
The appointed administrator will then file for a Grant of Letters of Administration to the courts, with the help of a lawyer.
This is done before he or she will be officially allowed to administer your assets. The rest of your family will have to agree to the administrator’s appointment by signing the Renunciation of Administration letter in the presence of a Magistrate or Commissioner for Oaths.
Step Two: Funeral Expenses & Debts
Before your assets are divided among your surviving family members, the law states that priority has to be given to settling funeral expenses and to any outstanding debts.
Only after these expenses will the balance of the estate be divided according to the Distribution Act 1958 for Peninsula Malaysia and Sarawak, and the Intestate Succession Ordinance for Sabah.
Step Three: Asset Distribution
Here’s the part that’s especially important, which is how your assets will be divided to your family members.
If you only have surviving parents, without children or spouse, your parents get 100% of your assets.
If only your spouse is alive, and you don’t have children or surviving parents, your spouse gets 100%
If only your children are around, without your parents or spouse, your children get 100% of all your assets.
If both your spouse and children are around, but you have no surviving parents, your spouse gets ⅓ and your children ⅔ ( divided equally among all children)
If your parents and children are around, but not your spouse, the division is the same as above. Your parents get ⅓ and your children ⅔.
If all three are still around; your parents, spouse and children, the division is as follows. Parents ¼, spouse ¼ and children ½,
If only your spouse and parents are around, and you have no children, your spouse gets ½ and your parents get ½.
If you have no surviving parents, spouse or children, then your assets will be distributed in equal share to the following in order of priority
Firstly, on trust for brothers and sisters
Secondly, for grandparents,
Thirdly, on trust for uncles and aunts
Fourthly, for the great grandparents
Fifthly, on trust for great grand uncles and great grand aunts
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If no living relatives of yours can be located, then all your assets will become the property of the state, i.e. the government.
It is important to note here that your assets will not include your EPF, insurance policies and the like that have their own system of inheritance.
How Long Will This Take and What are the Charges Like?
If you pass away intestate, the process of unfreezing and distributing your assets could take from 2-5 years, as opposed to only 6-9 months if there is a will.
Although in both cases, you’ll have to appoint legal representation, the costs are higher when applying for a Grant of Letters of Administration as opposed to a Grant of Probate when there’s a will.
This is because Letters of Administration will require things like an administration bond, and two sureties that the assets will be administered properly. Sureties are third parties that will act as guarantors, and will have to provide an administration bond that is the same gross value as the deceased’s estate. Meaning that the two sureties will also have to own assets at least equivalent in value to the properties of the deceased.
Furthermore, additional costs will be necessary as court orders are required for transfer of property.
Source: xFrame
Therefore, as can be seen here, the preparation of a will is something that will definitely make life easier and smoother for those loved ones you leave behind. Speak to our consultants to see how you can arrange for your own will today,
