Writing a Will: 4 Common Mistakes Malaysians Tend to Make

It’s important to safeguard the wealth we’ve accumulated, as well as the future of our dependents, by having a will. According to reports, an astonishing 80-90% of the Malaysian population do not have a written will. Many leave their five-, six-, or even seven-figure stash in bank accounts, properties, cars, shares, and other assets to “assumptions” and chance.

Even among those who have a written will, some might be outdated or impractical. With the New Year right around the corner, the time may be right for you to update your will, or to create one if you haven’t done so already.

Here are four mistakes you should avoid with this crucial document that will safeguard your assets and ensure your dependents are taken care of.

1. Failing to Update after a Change of Status

You may have written your first will when you were in your 20s or 30s and still single. But if you have married since, your previous will would have automatically been nullified.

It’s practical to review this document every three years or so, especially if your status has changed. Do you now have children or are planning on starting a family? Have you since invested in large assets such as property?

Effectively, you’d want the following developments to be reflected in your will:

• marriage or divorce;
• birth of a child;
• deaths in the family or among beneficiaries;
• purchase of large assets such as property;
• migration overseas;
• children’s migration overseas;
• change of trustees or executors.

2. Impractical Asset Distribution

Let’s say a father wishes to bequeath his RM1.2 million house equally to his wife and four children upon his passing. He believes each will be entitled to RM300,000 in home equity. The arrangement seems fair – at least on paper.

However, in practice, the method of distribution could be problematic depending on the actual dynamics of his family. For instance:

• If any of the children is a minor, the house is not transactable and cannot be sold.
• Upon the father’s death, the house will be frozen, and it might take 1-2 years for it to be transferred to the wife and children. If any of these beneficiaries pass on, the house will once again be “frozen”, and it could take another 1-2 years to “unlock” and be transferred to the other recipients.
• If one of the children passes away without a will, his or her remaining parent (the mother), spouse (wife or husband) or children (if any) will inherit a share of the house. As such, the number of co-owners of this property will increase.
• Now, imagine owning property with four others or more. All decisions have to be made unanimously. If anyone is not agreeable to a particular decision, the transaction will not be able to proceed.

These are just some potential issues that could arise pertaining to asset distribution. As such, it is crucial to be aware of the rules and regulations that will apply when it comes to estate management.

3. Mistakes in Nominating Beneficiaries

There are some who appoint a sole beneficiary for his or her estate. But what if you and this beneficiary happen to pass away at the same time?

Fights among family members over inherited property happen more often than you think. (Envato Elements pic)

There are also some who appoint their children (minors) to be beneficiaries. How do they inherit their share of the estate if they are not adults who can open bank accounts and sign legal documents?

Then there are those who appoint beneficiaries who are financially immature. Perhaps these are college-aged adults who lack real-world experience; spendthrifts who might squander the inheritance; or older folks who might be the target of scammers.

Truly, estate planning isn’t simply about transferring wealth to beneficiaries. As society continues to evolve, it is about ensuring our wealth is managed or utilised in a way that is meaningful to us and our beneficiaries.

4. Not Naming Executors, Guardians, or Trustees

You may wonder: “Who are these people, and why are they important?”

An executor carries out the wishes stipulated in your will. These include obtaining the Grant of Probate, a full settlement of outstanding debts and taxes to your creditors and the inland revenue board, and, finally, distributing all assets to your nominated beneficiaries.

A guardian takes care of your minor children. Imagine leaving behind RM1 million to your child who is a minor – someone needs to be appointed to care for his or her interest. Will it be a family member? A trusted family friend? These decisions have to be made.

Let’s say, after your death, that you want a property to be transferred to your child only when he or she turns 30. You would need to appoint a trustee to hold on to the property on your behalf.

Upon your death, the property is frozen. The executor shall “unlock” it by applying for the Grant of Probate. Then, the executor transfers the property to the appointed trustee for safekeeping. The trustee shall only transfer the property to your child when he or she turns 30.

Imagine a will with no executor, guardian, or trustee – can you imagine the chaos that will arise?

Conclusion

Writing a will can be done on your own, it’s best to engage the services of a professional who will present multiple considerations regarding execution, administration, and practical conflict management. With your will being such a crucial document, why skimp on ensuring it is done properly?

FAQs

* Q: How often should I review my will?
A: It’s practical to review this document every three years or so, especially if your status has changed.

* Q: What are the common mistakes people make when writing a will?
A: Some common mistakes include failing to update after a change of status, impractical asset distribution, mistakes in nominating beneficiaries, and not naming executors, guardians, or trustees.

* Q: Who should I appoint as my beneficiaries?
A: You should appoint beneficiaries who are financially stable, responsible, and able to manage their inheritance wisely.

* Q: What are the responsibilities of an executor?
A: An executor carries out the wishes stipulated in your will, including obtaining the Grant of Probate, settling outstanding debts and taxes, and distributing assets to your nominated beneficiaries.