What is the purpose of estate planning? How do you prevent the risk of your assets being frozen for years?! Learn what is the estate planning process and estate planning tools.


Estate Planning

Estate planning is the process of managing and administering the assets of an individual through the accumulation, conservation, and distribution phases of life in an effective and efficient manner according to the wishes of the owner.

What is an Estate?

An estate is all the property and property rights of an individual. This is after deducting all debts.

Assets – Debts = Estate


  • Movable Assets: Cash, pensions, investment, shares, cars, jewelry, life insurance
  • Immovable Assets: Real estate, land, buildings


Estate Administration Process

Estate administration involves 2 steps:-

  1. Transfer of Estate
  2. Distribution of Estate

Transfer of Estate

Transfer of estate can be done through the following ways:-

  • Testate: valid will with intentions legally spelled out in your last will and testament; OR
    Intestate: no valid will; OR
    Partially Intestate: Only some assets covered by a valid will.
  • Statutory Law: EPF, Insurance, Unit Trust, PRS,¬†pensions, SOCSO
  • Contract: Insurance policy assignment, buy-sell agreement, joint accounts, trusts, power of attorney

Distribution of Estate

  • Executor/administrator has a duty to distribute the assets.
  • Creditors have FIRST priority before distribution to beneficiaries except in certain scenarios.

Estate Distribution Costs

  • First RM25,000: 4.0% estate value
  • Next RM225,000: 3.0% estate value
  • Next RM250,000: 2.0% estate value
  • Next RM500,000: 1.0% estate value
  • Remaining balance: 0.5% estate value


Why is Estate Planning Important?

When a person passes away, ALL of the person’s assets will be frozen!

Estate planning helps address the estate distribution to be according to a person’s wishes in case of death, incapacitated, comatose, or missing.

Grant of Probate (GP)

  • Original death certificate.
  • Original will.
  • List of all Assets and Liabilities together with relevant documents.
  • NRIC copy of executor(s)
  • NRIC copy of witnesses
  • NRIC copy of beneficiaries

Grant of Letter of Administration (LA)

  • Original death certificate
  • List of all Assets and Liabilities together with relevant documents.
  • NRIC copy of applicants
  • NRIC copy of beneficiaries

If No Valid Will Exists

  • Non-muslims: Distribution Act 1958 (Amended 1997)
  • Muslims: Faraid distribution

Distribution Act 1958

Spouse only100%
Parent(s) only100%
Issue only100%
Spouse & Parent(s) only1/21/2
Spouse & Issue only1/32/3
Parent(s) & Issue only1/32/3
Spouse, Parent(s) & Issue1/41/41/2

Applies only for Non-Muslims in West Malaysia and Sarawak only

Muslim Estate

  1. Funeral expenses
  2. Probate expenses
  3. Zakat and religious obligations
  4. Taxes and debts
  5. Allocation of common acquired property (harta sepencarian) to spouse
  6. Distribution by will (if any)
  7. Distribution to legal heirs under Faraid

Faraid Distribution

  • Forced Heirship: Each heir’s portion is determined by rules stated in Faraid. It cannot be increased or reduced unless willingly agreed upon by ALL heirs.
  • Faraid heirs MUST be Muslim, related by blood and marriage (excludes adopted children, step children and illegitimate children).
  • Marriage must by according to Islamic and Malaysian marriage laws.
  • If there are no Faraid heirs, public treasury (Baitumal) will be entitled.

Heirs Ranks

  • Primary: Husband, wife, father, mother, son, daughter
  • Substitute: Grandfather, grandmother, son’s son, son’s daughter
  • Secondary: Full sibling, uterine siblings, consanguine sibling
  • Tertiary: Full uncle, consanguine uncle


Estate Planning Process

The estate plan needs to be done at reasonable cost with minimal tax impact and is able to withstand any legal challenges.

Estate Planning Benefits

  1. Reduces possibility of future disharmony by identifying potential conflicts, especially pre-informing heirs.
  2. Resolves difficulty in dividing property for distribution.
  3. Provides for minors and children with special needs.
  4. Provides for aging parents.

Estate Planning Tools

  • Will writing
  • Nomination
  • Assignment
  • Trust
  • Hibah
  • Power of attorney
  • Buy-sell agreement
  • Harta sepencarian
  • Offshore company
  • Offshore trust
  • Family foundation



Q: What is co-ownership?
A: Co-ownership can be under the following concepts:-

  • Tenancy in common: Deceased’s interest passes to his/her estate.
  • Joint tenancy: Deceased’s interest passes to the surviving co-owners.

Q: Is there a difference between legal vs equitable ownership?
A: Yes there is a difference between both types of ownership:-

  • Legal Title: Legal ownership along with rights to control the property is transferred.
  • Equitable Title: Person has right to use, enjoy and benefit BUT does not own the property.

Q: What happens if two or more persons die in circumstances where it is uncertain which of them survives the other?
A: The Presumption of Survivorship in Regard to Claim to Property (paragraph 2) states that for all purposes affecting the title, it is presumed to have occurred in order of seniority and accordingly younger shall be deemed to have survived the elder.


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