Wednesday, February 1

Ask and We WILL Answer

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THE BORNEO POST with the expert help of Rockwills Trustee Bhd, the leading specialist in estate planning having pioneered wills and trust 27 years ago, is publishing a regular Q&A column on estate planning. It will feature questions which readers have in mind but don’t know who to ask:

 

Question 1: I have read that there was a person in the US who wrote something very interesting in his will. He says that he will give triple the amount of money based on the income declared by his daughter as an encouragement for her to work harder after he has passed away. I find it very interesting. I wonder if such can be done in Malaysia as well?

Answer: Yes, you can do it the same way in your Malaysia will too. will laws in Malaysia allow you to include conditions for your beneficiaries to be fulfilled before inheriting.

Such conditions or instructions are commonly included in what is known as a testamentary trust (a trust set up after death). It also acts as an instruction to your trustee to fulfil on the distribution of your estate.

A will without testamentary trust will distribute your assets directly to your beneficiaries in one lump sum while testamentary trust will preserve your assets and give your trustee control in handling your assets until certain conditions or instructions you set have been fulfilled.

A testamentary trust should always be set up based on an objective. Some are set up with an objective to motivate a beneficiary to do or achieve something in their life. What you have encountered is a good example of a very brilliant parent who rewards his child for his hard work.

Nevertheless, before we even think of rewarding them, we should cover their basic needs as the first step in estate planning, especially if they are still minors. One needs to consider whether there are sufficient funds being set aside.

The amount should be sufficient for our children’s needs such as maintenance, education, and especially medical expenses.

Inflation should also be considered. One of the biggest mistakes parents make is underestimating the needs of their children. If your planning requires more funds, you can always consider using an insurance policy to supplement your fund.

Consult an experienced estate planner who can provide practical recommendations and steps to be taken to make sure that all your instructions are clear, practical and can be carried out by the executor. It should not be taken lightly as it affects your loved ones and whether you leave a legacy of love for them or a legacy of hate between them.

 

Question 2: I want to give my house to my children but one of them are already living in my house with their family. So, I’m thinking whether I can have an option for them to buy out the house, then the proceeds to be given to my other children. Is that possible?

Answer: Yes, you can include the instructions in your will to sell your property to any of your children and the proceeds of sale of this property shall be given to your other children. However, you will need to be prepared for situations where your children may not be interested in buying out your property, or them being hesitant or indecisive.

These may eventually cause uncertainties and delays in passing down your assets to your loved ones.

Hence, we would suggest you consider the following: Firstly, set a duration for this option to buy out within a certain time from the date of your passing. It should not be too long that it would cause your children to sleep on the option, or too short until they do not even have the time to get the necessary loans. You can even lay down the priority for which child to buy over the property too.

Next, in the event if all your children are not interested in buying the property after the given time frame, you can instruct in your will to sell your property to any interested party from the public and the proceeds to be distributed to your children.

Lastly, in the event the property remains unsold for a certain period, the property shall be distributed to one or more of your children as you think fit.

Alternatively, you can consider treating this property as a family house and retaining it over generations to come for use by your children and their descendants.

We advise you to engage an experienced estate planner to help you in planning a will that would properly reflect your wishes and intentions as above.

 

This Q&A Column in published as a joint public service and educational initiative with Rockwills Trustee Bhd. Please email your questions related to estate planning to bizhive@theborneopost.com or Rockwills’ training and business development assistant general manager Sam Chan (samchan@rockwills.com).