Merge by RHB | Plan now to avoid a mess before it’s too late

Plan now to avoid a mess before it’s too late

Over the last year, we’ve seen how uncertain things can get. No one anticipated that a pandemic would affect the entire global population, both in terms of loss of life and income. Covid-19 is in its third wave and although a few potential vaccines have been discovered, it will take some time before we’ll have access to them. And what if another pandemic occurs a few years from now? Even if it’s not Covid-19, the world is so interconnected today that any contagious disease will spread, fast.

Of course, no one wants to think about death, but the truth is, it’s really only a matter of time and is part of the natural cycle.

The best we can do under these circumstances is be prepared. It’s never too early to start planning your estate, and its best to do it when we’re still sound of mind and body.

Estate planning is not only for the rich

The term “estate planning” brings to mind multi-million-ringgit properties, but in fact, the word “estate” refers to anything you own that can be passed on to your beneficiaries. This misunderstanding that estate planning is only for the wealthy is probably what leads to a lot of people simply forgoing estate planning and leaving everything up to the law.

Malaysia has a total population of about 32.6 million, according to 2019 estimates¹. Roughly 10% (3.26 million) of this is above the age of 60, which can be categorised as high-risk.

Of the total population 51% (16.62 million) is above 18 years old, which makes them eligible for estate planning services. From this category, 89% (14.8 million) have yet to plan their estate.

Estate planning involves drafting a will and if needed, setting up a trust for your beneficiaries.

Under civil law, estate inheritance is governed by a number of statutes and regulations. Inheritance is defined by the Distribution Act 1958 and the Inheritance (Family Provision) Act 1971, both of which lay out the conditions of inheritance.

If an individual dies without a will, the estate is divided between surviving family members according to legal precedents under what is known as “dying intestate” (died without a will). Since independence, there has been RM70 billion worth of unclaimed estates².

Under intestacy, your loved ones will not be able to transfer properties which are registered in your name or dispose of your shares. Worse still, they will face difficulties in withdrawing monies from your bank accounts at a time when they need it most.

We can easily avoid any complications through a professionally drafted will and trust. Estate planning isn’t just planning our own future, but the futures of our loved ones.

The cost involved is actually minimal – as low as RM450 – and is definitely worth it. It’s really easy to set up as well, as virtual meetings with a professional estate planner can be arranged. You’ll only need to meet them face-to-face when signing documents.

How estate planning can benefit you

It is crucial to take matters into our own hands and choose someone we trust to take charge of our estate in the event of death or in case we become mentally incapacitated. Without a plan, your family could face the burden of a court battle, creditor expenses, and even not have any say over who becomes the legal guardian of your children.

By stating our wishes, we remove any uncertainty or costly legal disputes that may arise. This is especially important when there is property involved, which is difficult to divide as its financial value is locked in the asset itself. Your estate planner can advise you on the best way to plan your estate according to your needs.

Here are some important benefits gained from efficient estate planning:

Choose who to inherit your assets
Most families will have some things to leave behind, whether is a family home, investment portfolio, or even cherished possessions such as family heirlooms. There are many things that can be categorised as inheritable assets. You know your family best, so it’s only logical that you decide who gets what. Stating a clear intent also helps to avoid any messy disputes, which can cause strain in relationships.

Override intestacy
The problem with not having a will and leaving everything up to the law is that things can, and will, get messy. The intestacy statute is a blanket one, and will very likely not divide your assets with your – and your loved ones’ – best interests at heart.
Protect your family
What’s going to happen to the kids after you are gone? Drafting a will, which is part of estate planning, will designate how each child under 18 will be taken care of and what items in your estate will be inherited once they come of age. You can also make a provision in your will on who takes care of your kids.

Choose your Executor and Trustee
In your will, you can choose who you would like to handle your estate (the executor). This is a position of great responsibility, giving the person the power to pay your debts and expenses, and even the ability to liquidate your assets and divide up the cash proceeds. An executor appointed in your will should be a qualified professional who has the knowledge, experience and commitment, a party whom you can trust to independently carry out your wishes upon your demise.

Avoid probate by setting up a private trust
Probate is the court-supervised process of authenticating your will (if you made one), assessing the value of your assets, paying off any remaining bills and taxes, and then distributing whatever is left of your assets to who the court deems to be your rightful heirs. This process can take a considerable amount of time and can be very stressful for your family.

Protect your assets from unforeseen creditors by setting up a private trust
It’s very important to ensure your assets stay protected from any lawsuit that might occur in the future. This is helpful especially if you work in an industry that often encounters litigation, such as real estate.

Hold your assets in private
Setting up a private trust is a great way to keep your assets away from parties intending to cause you harm or loss, as well as help in efficient tax planning.

Choose someone to make crucial decisions for you
Should you become incapacitated or unable to manage your own finances for whatever reason; you will need someone to make decisions on your behalf such as including but not limited to living expenses for your dependents, education expenses for your children, medical expenses for yourself or your dependents.

Asset preservation
Proper estate planning will help ensure that your assets go to your children and grandchildren rather than your spouse’s new husband, wife, and other new family members.

We’re here to help

RHB Banking Group via its subsidiary RHB Trustees Berhad (RHBT) offers you peace of mind, through Will Writing (Islamic and Conventional) - all under one roof. Not only do we help you draft your will, we also provide Lifetime Will Custody and Professional Executor Services.

A Will Custodian ensures your will is securely stored and easily retrieved when the need arises and a Professional Executor ensures your estate is professionally, and objectively, managed.

RHBT also provides Private Trustee Services to manage, protect and transfer your wealth to future generations by helping you to set up your Private Trust and Insurance Trust.

Talk to your Personal Wealth Banker or Relationship Manager at any RHB Bank branch for more information to help you take care of your loved ones.

Visit your nearest RHB branch
contact us at 03-9206 1188

¹Department of Statistics Malaysia (DOSM), Population by Age Group, Sex and Ethic Group, 2010-2019e.
²Harian Metro article Harta RM70 billion Tergantung, Ekhwan Haque Faiziul Haque, Jan 12, 2020.