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

Examples:

  • 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