Whether an individual passes away with or without a will can have significant implications for their heirs and beneficiaries. The main difference between testacy and intestacy is whether there is a valid will left by the deceased.
Testacy: Grant of Probate
Testacy refers to the situation where a person dies leaving a valid will that dictates the distribution of their assets upon death. In Malaysia, the Wills Act 1959 governs the formalities and requirements for creating a valid will. Having a valid will allows individuals to have greater control over the distribution of their assets after death. They can specify beneficiaries, allocate specific assets, and even establish trusts for minor children or charitable causes. Testacy provides the opportunity for individuals to express their wishes clearly and minimise the potential for disputes among family members. To learn more about will writing, you can click here.
The benefits of testacy are:
1. Control
Testacy allows individuals to dictate the distribution of their assets according to their wishes.
2. Avoidance of delays and disputes
Intestacy may result in delays and disputes among heirs, while a valid will can expedite the estate administration process.
3. Flexibility
Testacy provides greater flexibility in asset distribution, including provisions for non-traditional family structures and charitable giving.
Grant of Probate
If a will is present, the heirs have to apply for Grant of Probate. What is this Grant of Probate and what is the application process?
Probate is a legal process that validates the authenticity of a deceased person’s will and confirms the appointment of the executor(s) named in the will. The Grant of Probate is issued by the High Court of Malaysia. It provides the executor(s) with the authority to administer the deceased’s estate according to the terms outlined in the will.
The process of obtaining a Grant of Probate typically involves the following steps:
1. Lodgement of application
The executor(s) named in the will must lodge an application for probate with the High Court. Along with the application, they must submit the original will and other required documents, including an inventory of the deceased’s assets and liabilities.
2. Publication of notice
A notice of the application for probate must be published in a local newspaper to notify potential creditors and beneficiaries of the deceased’s estate.
3. Court hearing
The High Court will review the application and may schedule a hearing to ensure that all legal requirements have been met. If satisfied, the court will issue the Grant of Probate.
4. Administration of estate
With the Grant of Probate, the executor(s) can proceed to collect the deceased’s assets, settle debts and taxes, and distribute the estate according to the terms of the will.
The whole process might take around one – two years. As long as the Grant of Probate is not ready, the deceased’s assets remain frozen, except for non-probate assets.
Intestacy: Letter of administration
Intestacy occurs when a person dies without leaving a valid will or when the will does not dispose of all of the deceased’s property. In such cases, the Distribution Act 1958 (amended in 1997) governs the distribution of assets. However, Sabah and Sarawak may have different governing laws. Under the Distribution Act, the deceased’s assets are distributed according to a predetermined hierarchy of beneficiaries. It typically starts with the surviving spouse, children, parents, and other relatives.
The distribution of assets under intestacy is prescribed by law and may not align with the deceased’s wishes. This can sometimes lead to disputes among family members and delays in the administration of the estate. It is important to note that unmarried partners, stepchildren, and other non-blood relatives may not be entitled to inherit under intestacy laws unless specifically provided for in a will.
Letter of Administration
In the case of intestacy, a Letter of Administration from High Court is required. The Letter of Administration appoints an administrator to manage and distribute the deceased’s estate according to the laws of intestacy. It is similar to Grant of Probate but involves a lengthy process.
The process of obtaining a Letter of Administration typically involves the following steps:
1. Application by next-of-kin
The next-of-kin or eligible beneficiary must apply to the High Court for a Letter of Administration. The application must include details of the deceased’s assets, liabilities, and potential beneficiaries.
2. Bond and sureties
The administrator may need to provide a bond and sureties to ensure the proper administration of the estate.
3. Publication of notice
Similar to probate, a notice of the application for Letter of Administration must be published in a local newspaper to notify potential claimants.
4. Court Hearing
The High Court will review the application and may schedule a hearing to ensure compliance with legal requirements. If satisfied, the court will issue the Letter of Administration.
5. Administration of Estate
With the Letter of Administration, the administrator can proceed to collect assets, settle debts, and distribute the estate according to the laws of intestacy.
The whole process might take between three to seven years, sometimes even longer, to settle. The decreased’s assets remain frozen until the Letter of Administration is issued. This may land the deceased’s dependents in financial hardship.
Conclusion
While intestacy laws provide a default framework for asset distribution, having a valid will allows individuals to exercise greater control and ensure their wishes are carried out. Depending on whether a valid will is present, a Grant of Probate or Letter of Administration is required. Whether through probate or intestacy, these legal documents empower executors or administrators to manage and distribute the deceased’s estate effectively.
Seeking professional advice is advisable to navigate the complexities of estate planning and ensure that one’s assets are distributed according to their intentions. The most important thing to do before reaching the asset distribution stage is to write a will. By taking the time to draft a will, you are not only protecting your assets but also safeguarding your legacy for future generations.
How can a financial planner help you?
I will work with you to plan your estate, including will writing. We will establish your wishes and select the appropriate tools to ensure your assets will be distributed according to your wishes. Furthermore, we will find ways to make sure that your liabilities will be cleared off in the event of your demise and your assets can safely pass on to your intended recipients.
Once the process is complete, it does not mean that the will or instructions cannot be changed. If your circumstances change, we can always review your estate plan and amend it according to your wish. Do not hesitate to let me know when the situation arises.
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Disclaimer: This post is for informational purpose only. You should use judgment and conduct due diligence before taking any action or implementing any plan suggested or recommended in this article.
