The only thing that is predictable about life is its unpredictability.
Life is filled with unexpected events. Many a times, we get surprised by it in good way while other time, not so positive way. Despite its uncertainties, however, there’s a common joke in the financial industry that says, “Only 2 things are certain in life, Death, and Taxes”.
It is so true, don’t you agree?
Ted is a father to 2 children, his son, Danny is 7-year-old, while his eldest daughter is 5-year-old. His wife, Maya is a full-time housemaker who gives her all to the family, just like Ted. Ted’s parents are in their 70’s, and he has a brother and a sister who are in their early 40’s.
During a business trip, Ted suffered in a major accident and while he was at the brink of death, he couldn’t help but think about his wife and his lovely children, he was not sure how his assets will be inherited by his family, and concerned a lot of other thing regarding his family survivorship. Unfortunately, Ted didn’t survive the catastrophic event.
Ted did not die leaving behind a valid Will. His young family is now without its breadwinner. Maya will have to rely on her own savings, as well as the assets that are left behind by Ted to get through this difficult period as she ponders her path to raise the two children.
There’s many benefits and WHYs to why we should write a Will, more so when we have children who are still dependent on us.
Simpler Estate Administration Process
At the point of his death, Ted’s estate would be frozen, and Maya would not have access to it, until a court order (Letter of Administration) is granted to a competent estate administrator. In addition to Maya, Ted’s parents, siblings, including his creditors are qualified to apply with High Court to become the Administrator of Ted’s estate, and all these interested parties will have to agree and renounce their right if Maya were to be the administrator. Also, before the court gives the Letter of Administration out, an estate administration bond, guaranteed by two person who have assets that is matching to the gross estate value (before minus liability) is required, who should Maya look for to do this, and who would agree to this? This process could easily take 1-2 years.
Had Ted have written a Will, the estate administration process would be different in a good way. The estate administration process for a Testacy (die with a Will) case is that ONLY the executor of the Will can apply for Grant of Probate from High Court. In this case, the estate administration bond is also not required. This process usually takes a much shorter time, for instance, within 6 – 12 months.
Maya would probably gain access to Ted’s estate in a much shorter time. This could make or break the family since their breadwinner is no longer around to bring food on the table.
You Decide Who to Be Your Executor
Without a Will, many other people not named Maya could make their case to be appointed as the Administrator of Ted’s estate. The estate administrator will hold a very huge responsibility and control over the estate during the whole process. It ought to be someone who is competent. Someone who has the best interest of his family his children close to heart.
Had Ted known of this earlier, he would have want to ensure the trusted, and competent person be handling his children future. In fact, had he have written a Will, he could have appointed Maya, but because Maya is a fulltime housemaker who may not have the time or ability to handle the complicated process while still healing from losing her husband, Ted could also appoint a corporate trustee to be his executor. Appointing a Corporate Trustee ensure that the executor will not predecease him, and also having a peace of mind that things will be handled the right way accordingly to his wishes.
Appoint Guardian for Minor Children
After Ted’s demise, Maya would be the sole legal guardian to his son and daughter. Ted could have also appointed other people, for instance, his sister to be a guardian to help out with Maya. Many times, people only associate with writing a Will to distributing our assets, but we overlook the fact that we can also appoint Guardian for our child who are under 18-year-old via a Will too. Imagine Maya pass away with Ted, who is there to be guardian for the children? Is this person the person Ted would have wanted? There’s also a possibility that Maya could pass away later; the same vulnerability will still be true. Also, what if years later, Maya remarries and have another family with another man?
Power to Appoint Beneficiaries
Dying without a Will means Ted’s estate will be distributed according to the Distribution Act 1958 (Amendment 1997), instead of according to his wishes. Beneficiaries who are entitled to the inheritance under the Act, would be:
Maybe Ted would like to provide care for his parents too, but maybe not a quarter of everything. Also, if 1/4 of his house which Maya and the children are calling home belongs to his parents. If his parents pass away subsequently, Ted’s sister and brother could become the part-owner to this house too. Is this what Ted would have wanted?
When we write a Will, we can then have full control and power to decide what goes to who. We can also determined when should the inheritance be passed on, or how it should be passed on. Since Ted didn’t have a Will, Maya would not know what he has; but she would have some clue had he written a Will.
Power to Create Testamentary Trust with WILL
Ted’s children are still minor. Whatever inheritance they are entitled to, would be held on trust by the trustee until they are 18-year-old. As they turned 18-year-old, they would then have full control to the inheritance. However, how would a teenager who has just finished secondary school be able to handle his and her inheritance? Are they mature enough? Will the money be exhausted due to spindrift behavior?
A more pertinent question, how can Ted ensure there’s something for his children when they are 18-year-old? Could the wife mismanaged or fell victim to scam? After paying off Ted’s debts, how much is left for his family?
If Ted had written a Will, chances are an analysis on the potential estate net worth would have been assessed to ensure that his estate would not be insolvent. Sometimes, when a person dies and there’s nothing left to be inherited, is because the assets are worth RM 1mil, but the liabilities are worth RM 1.2mil (for example). In this case, the estate is said to be insolvent (bankrupt). Hence, there’s nothing left to be given to the family.
The above is the 5 reason why writing a Will when we are still able will benefit us, and our loved one. If you have any questions, or unsure of where to start, you can always have a chat with us. We have advised many Malaysian on how to be financially responsible person.