ESTATE ADMINISTRATION IN MALAYSIA
By Brent Yap & Nik Irma Amir Nik Kamaruddin
1. Estate Administration is a process of compiling, administer and managing a deceased’s assets, in the following steps: -
1.1 Collect all the deceased’s assets;
1.2 to pay off the deceased’s debts and liabilities (if any); and
1.3 to distribute the estate in accordance to the deceased’s will or without which to distribute in accordance to the Distribution Act 1958.
GRANT OF PROBATE OR LETTER OF ADMINISTRATION?
3. When an individual pass away, the beneficiaries will be needing an instrument to administer, manage and distribute the deceased estate to the rightful beneficiaries. The first step is to find out whether the deceased left a Will (testate) or without a Will (intestate).
4. A Will is a legal document which declares the intention of the deceased as to the distribution of his or her estate and may include provisions for guardianship, custody and education provision for a child (Wills Act 1959).
5. The application for Grant of Probate and Grant Letter of Administration can be made at any time after the death of the deceased. Nevertheless, it is advised that the application be made as soon as possible or at least within three (3) months from the date of death of the deceased. This is to avoid the possibility of beneficiaries dying prior to receiving their inheritance or the risk of losing important documents which can further complicate the application process and/or the administration of the estate of the deceased.
Grant of Probate
5. If the deceased pass away testate, a Grant of Probate is needed in order for the administration and distribution of the deceased estates. The Executor (s) named in the Will must be willing, able and has the capacity to act. But before that the Executor (s) is required to file an Application to the High Court (Section 3 of the Probate and Administration Act 1958).
6. The following documents are required to be produced and submitted to the Court for the purpose of obtaining the Order for the Grant of Probate: -
6.1 the ORIGINAL death certificate;
6.2 the ORIGINAL Will;
6.3 IC of the executor (s) during the Hearing;
6.4 List and ICs copy of the beneficiaries;
6.5 list of the deceased assets together with the supporting documents;
6.6 list of liabilities of the deceased; and
6.7 any other documents required by the Court from time to time.
7. However, if the executor named in the will had predeceased the Testator or no Executor had been appointed in the Will, the person intending to be the Administrator may apply for Grant of Letter of Administration with the Will annexed at a High Court (section 16 of the Probate and Administration Act 1959).
8. To avoid confusion, do note that the information on Grant of Probate as only applicable to the non-Muslims in the Peninsular of Malaysia.
Grant Letter of Administration
8. On the other hand, if the deceased pass away intestate, the beneficiaries will need to appoint a person that is willing, able and in the capacity to be the Administrator. He or she would be the beneficiary of the deceased’s estate. Upon obtaining the Order for Grant Letter of Administration the Administrator shall proceed with the administration and distribution the deceased estate in accordance to the Distribution Act 1958.
9. In Malaysia, there are only three institutions with the authority to grant LA n namely: -
9.1 High Court of Malaya (Probate and Administration Act 1958);
9.2 AmanahRaya (Public Trust Corporation Act 1995); and
9.3 Small Estate Distribution Unit (Small Estate (Distribution) Act 1955)
10. Application for a grant of Letter of Administration to the High (section 30 of the Probate and Administration Act 1958) must be supported by the following documents: -
10.1 the ORIGINAL death certificate;
10.2 IC of the Administrator (s) during the Hearing;
10.3 List and ICs copy of the beneficiaries;
10.4 list of the deceased assets together with the supporting documents;
10.5 list of liabilities of the deceased;
10.6 administration oath if there is any minor interest;
10.7 renunciation by other beneficiaries who are entitled to be the Administrator to but not applying
10.8 any other documents required by the Court from time to time.
12. Small estate refers to the estate of the deceased consisting a wholly or partly of immovable property and not exceeding RM2,000,000.00 in total value at the time of application for summary administration (section 3 (2) of the Small Estate (Distribution) Act 1955).
13. If the estate is a small estate, the person interested in the estate shall go to the Estate Distribution Unit of the Department of the Director-General of Lands and Mines or the Land Office or the Land Office where the deceased’s immovable property is located.
14. If the deceased’s immovable properties are located in several states, beneficiaries may choose one of the relevant district or state Land Offices to submit the application to get Letters of Administration (section 4, Small Estates (Distribution) Act 1955). The Letters of Administration will be in the form of a Distribution Order.
15. If the gross estate consists of wholly or partly immovable property, for example, land, a house, which exceeds RM2,000,000.00, the person intending to be the administrator will have to obtain Letters of Administration at the High Court (section 30, Probate and Administration Act 1958). The Court shall grant administration to one or more of the persons interested in the residuary estate of the deceased, unless by reason of the insolvency of the estate or other special circumstances the Court thinks it expedient to grant administration to some other person.
16. Beneficiaries are encouraged to manage the application of Small Estate distribution by their own. However, they also have an option to engage the services of a lawyer or Amanah Raya Berhad.
Amanah Raya Berhad
17. Amanah Raya Berhad is Malaysia’s premiew trustee company wholly owned by the Government of Malaysia.
18. If the gross value of the estate is for only movable property and is less than RM600,000.00 and no person is entitled to apply for Grant of Probate or Letters of Administration, one may apply for summary administration via Amanah Raya Berhad (section 17, Public Trust Corporation Act 1995). Letters of Administration in the form of a Declaration or Order will be issued.
18. The beneficiary of the deceased or any parties with a vested interest can make the application at Amanah Raya Berhad by filing in the application form and submit it together with supporting documents for further action.
19. It should be remembered that the processing period is also dependent on the feedback and cooperation of the beneficiaries and third parties liaising with AmanahRaya
20. The following is the Amanh Raya estate administration fee structure: -
for the 1st RM25,000
for the next remaining balance up to RM225,000
for the next remaining balance up to RM250,000
for the next remaining balance up to RM500,000
for any remaining balance
21. Once the Grant of Probate or Letter of Administration is extracted, the Executor or the Administrator can collect all the deceased’s assets into his possession to settle all the deceased’s debts or liabilities. If the estate involved is a large one, it is highly advisable for the executor or administrator to advertise inviting claims (in the Government Gazette and one of the leading newspapers) against the deceased’s estate in respect of liabilities.
22. The minimum time period for persons such as the deceased’s creditors to submit their claims is two months. In cases where the deceased’s assets are insufficient to pay the debts and liabilities, the order or priority will be:-
22.1 funeral, testamentary and administration expenses;
22.2 secured creditors;
22.3 unsecured creditors.
23. After the payment of debts and liabilities, the Executor or Administrator shall distribute the remaining assets according to the terms of the will (if there is a will) or Distribution Act 1958 for non-Muslims (without a will).
22. The Order must be registered at the relevant Land Office(s) (state / district where the land title(s) is / are registered) and for the movable properties, will refer to the relevant institution(s) for example:
22.1 Vehicle grant: Road Transport Department of Malaysia (JPJ);
22.2 ASB shares: Amanah Saham Nasional Berhad (ASNB); and
22.3 Savings: related banks.
23. However, if the beneficiaries of either testate and intestate deceased unanimously agreed for the assets to be distributed otherwise, they can do so subject to Court Order.
DIFFRENCE BETWEEN WILL AND TRUST
24. Wills only will come into effect after you die, while the Trusts come in as soon as you make it. Wills is a document that directs to who will receive your property on your death and appoints a legal representative to perform your will.
25. Deciding between a Will or a Trust is a personal choice, and some experts recommend having both. A will is typically less expensive and easier to set up than a Trust, an expensive and often complex legal document.
26. Benefits of preparing a Will: -
26.1 Designate person to execute estate;
26.2 Designate beneficiaries and entitlement;
26.3 Save time and cost when applying for grant;
26.4 Can sue immediately after of testator.