About Wills & Nomination
The Concept of death
Martin Heidegger in his famous work, Being and Time, brilliantly established the idea of being towards death. He asserted that death is ultimate, unpredictable and definite. A Will, in the eyes of the ordinary, is often associated with death. Hence, it is not uncommon for some to purse their lips when they hear the words ‘write your Will’ as Death is taboo in certain cultures.
What if, a Will is a method to prepare a person towards their final fate? Death will always be ultimate, but with a Will, we have the choice to set forth our last wishes and have those wishes carried out.
What is a Will?
A Will, or in other words, a testament, is a legal document where one can describe the manner in which they desire to have their properties or assets distributed after their death. A Will is bound to be respected and upheld by law, and if executed properly, cannot be superseded unless revoked by the person who wrote the Will, also known as the testator.
In Malaysia, Wills are governed by the statutory laws. Such as Wills Act 1959, or Distribution Act 1958 in Peninsular Malaysia (West Malaysia) & Sarawak. As for Muslims, Syariah Law presides over followers of Islam’s rights. Wasiah is a different mechanism that serves equivalent purpose of a Will for Muslims.
Defined in the 1959 act, a Will is a declaration intended to have legal effect of the intentions of a testator with respect to his property or other matters to be carried into effect upon his death.
‘Property or other matters’ refers to the estate of the testator. It can include lands, leases, rents, shares, moneys, funds, charges, debts, rights, goods, custody. The list is not exhaustive.
Who can Write a Will?
In short, a person of sound mind, and not under the age of majority.
The age of majority is 18 years old according to the Age of Majority Act 1971. In the 1959 Wills Act, it is established that ‘No Will made by any person under the age of majority shall be valid.’ Thus, the general legal age to write a Will in Malaysia is 18 years old and above.
However, Wills Act 1959 only applies to Peninsular Malaysia including the Federal Territory of Kuala Lumpur. Although the legal age to write a will is also 18 years old for the state of Sarawak, under Sabah Wills Ordinance Cap 158, citizens need to be 21 years old and above to attain the right to write Will.
Formalities of a Will
Simply put, a written Will requires the testator to be of sound mind and above the age of majority, his or her signature on the Will, and at least 2 witnesses. The 2 witnesses must be present at the time the testator signs the Will but they need not know the contents of the Will. Both witnesses to the signing of the Will cannot be the beneficiary under the Will. A witness however can be an executor of the Will.
An executor is appointed by the testator to make sure that the Will is executed according to his or her last wishes. Responsibilities of an executor includes, locate the Will, apply for grant of probate to attain authority to distribute estates, sign relevant documents for transferring assets and so forth. The testator is entitled to appoint any adult aged 18 years or above to be his or her executor. Alternatively, a trust company can also be appointed to act as the testator’s executor and trustee.
Where to get a Will Written?
It is common to get one’s Will written with the help of a lawyer specialized in the field. However, certain Banks, Trust management companies and Will writing service providers offer such services as well.
Malaysia laws do not require one to have his or her Will written with the help of professionals. It is possible to DIY one’s Will if it fulfills the requirements set down in the law, to be considered as valid and legally binding. There are templates that can be found in internet if one wants to save money. Nonetheless, a DIY Will can always be challenged upon death of the testator, unless one is well versed with the law. The technicalities of law are always best handled by the trained.
Why Write a Will?
The importance of a written Will can never be stressed enough. Having a written Will speeds up estate administration. It saves not only time, but costs, and spare surviving family members from further agony.
There might be various negative impacts if one dies intestate, which means dying without a Will. When one dies intestate, his or her property will be distributed according to the provisions laid down in Section 6 of the Distribution Act 1958 (Peninsular Malaysia/Sarawak). The court will then appoint an administrator to administer the estates. This process is both costly, protracted and is painfully detrimental in times of grief.
Provisions in legislations is convoluted by extreme technicalities, certain assets experience depreciation in value when waiting to be administered, emotional distress may arise amongst surviving family members due to competition for assets.
A will is not a thing just for the rich. It should be everyone’s responsibility to arrange distribution of their estates when they passed on. A written Will is the only way to have the assets distributed based on the testator’s wishes.
It is cardinal to note that, without a Will, the entirety of the estate may go to the State when the court determines that there are no eligible heirs under intestacy laws.
Nomination for Employees Provident Fund (EPF/KWSP)
The concept of Nomination is a mechanism that is strongly encouraged for EPFs/CPFs and insurance policies to expediate the distribution process. A nomination means appointing an institution or individual to receive and administer savings in the event of one’s demise.
EPF manages the savings and retirement plans for private sector workers in Malaysia. Every Malaysian citizen that works in the private sector obtains mandatory EPF membership. As EPF is governed under a complete different set of laws, unless one named a nominee, savings in the EPF are not subjected to the terms and clauses stated in a Will. A nominee for a Muslim member is equivalent to an administrator who is appointed to distribute a member’s EPF savings to the rightful beneficiary upon the member’s death in accordance with Syariah Law. In contrary, a non-Muslim member’s nominee is the actual rightful beneficiary who receive the savings when the member passed on.
Nomination for Insurance Policies
There is a Nomination framework for Insurance policies. Insurers can disburse the insurance proceeds for policies with nomination swiftly and smoothly without sighting the Grant of Probate or Letter Administration. The nomination for insurance policies is done via prescribed forms from the insurers.
In Malaysia, the nominee of a Muslim policy owner receives the policy moneys only as an executor and the distribution must be done according to Syariah Laws. On the other hand, Non-Muslim’s insurance policies nomination is governed by the Financial Services Act 2013.
There are 2 types of Nomination:
In the case of a non-Muslim policy owner, a trust will be created in favor of the nominee if the nominee is the spouse or child of the policy owner, or if the nominee is the policy owner’s parent (if there is no living spouse or child at the time of such nomination). A trust policy does not form part of the estate. As such, it cannot be used to pay off creditors or loans. This protects the beneficiaries by allowing them to claim full sum of the proceeds. Schedule 10, Paragraph 5(2) of the Financial Services Act 2013 states that the nominee in a trust policy can be the spouse, the children, or the parents. However, this is only applicable if the policy is taken in good faith and with no intention to defraud creditors. A trust policy does not apply in the case of a Muslim policy owner in Malaysia. The nominee of a Muslim policy owner takes the policy moneys only as an executor and must distribute the moneys in accordance with Islamic laws.
A Non-Trust policy applies if the nominee is someone other than a spouse, children and/or parent. A non-trust policy in Malaysia will still be considered as part of policy owner’s estate and be subjected to claims from creditors and loans. The nominee of such a policy can only take on the role as an executor of the proceeds and shall distribute it according to the will, or if there is no will, the applicable laws of distribution. Note that parents are non-trust nominees if there is a surviving spouse and/or children at time of nomination. Muslims are automatically non-trust nominees.
When there is no nomination, the policy owner’s surviving loved ones will have to obtain a Grant of Probate or Letter of Administration. Insurers may, at its discretion, make payment to a claimant without requiring the Grant of Probate or Letters of Administration or Distribution Order, under certain circumstances. While making a nomination is not compulsory, the framework provides policyowners an affordable legal means of distributing the policy proceeds to their intended beneficiaries.
(*When a trust policy has been created, policyowner loses all rights to the ownership of the policy. He cannot revoke such a nomination, vary or surrender the policy, or assign or pledge the policy as security, without the written consent of the trustee.)
Aim to Leave Well
For fear of death, individuals have qualms about writing their Wills. Time is ticking, and tomorrow is always a mystery. A will is not necessarily associated with death, it can be associated with living, to have our legacies live on.
