Monday, August 1, 2011

Trust no one, even your kid

When there is a will, there is a way

TWO months before retiree Madam Wong (not her real name) underwent a major operation, she transferred the ownership of her double-storey house to her son, in the hope that her property would remain within the family should anything happen to her.

The surgery was successful and the 75-year-old returned to her home where she lived with her son and daughter-in-law. A year later, the relationship between mother-in-law and daughter-in-law became so strained that Madam Wong's son requested that his mother leave the house and go to live with her daughter.

The distraught mother sought the help of Rockwills Corporation Sdn Bhd to have the ownership of the house transferred to her daughter's name.

"But there was nothing we could do as the house was already in her son's name. It was sad to see the old woman clutching a bag of receipts to prove that she had paid for the house with her hard-earned money and now she's homeless," says Rockwills International group managing director Saw Leong Aun, recounting the ordeal that many people go through when they do not plan their wealth distribution properly.

This happened in life so can you imagine how much more complicated things can become in death.

Many families have been left in the lurch upon the death of the breadwinner who did not leave a will. It does not only create family feuds and a problem of inheritance but also leaves the family in dire straits especially if there are debts to be settled, taxes to be paid or loans to be serviced.

Assets that are not claimed over a period of time -- including property, EPF contributions, dividends, insurance claims, deposits in banks and wages -- eventually end up as unclaimed monies in the Accountant-General's office. Recently, Deputy Finance Minister Datuk Dr Awang Adek Hussein had said that the total amount of unclaimed monies in the country stood at RM4.53 billion.

Saw says having a will can help solve this problem otherwise the estate will be distributed according to the Distribution Act 1958 (amended in 1997), and this may not be compatible with the wishes of the deceased.

For instance, the deceased, who may not have been on good terms with his parents or siblings, may have wanted to leave his entire estate to his wife and children. But under the law, if he dies intestate (without leaving a will), his surviving parents will be entitled to a quarter of his wealth, while his wife and children will get 25 per cent and 50 per cent respectively.

Should the parents die later, the deceased's siblings can claim the parents' share.

Contrary to popular belief, Saw says writing a will is not something that only the rich should be doing.

"Everyone has something to their name whether it is a house, a car or a bank account. In fact, it is the average person who needs the will more than the super rich because they only have a limited amount of wealth which may mean the whole world to the family they leave behind.

"If they die intestate, then their assets would be frozen. Their loved ones will not have any access to whatever money until they have made the relevant application to the courts. And this can take years. How does the family survive in the meantime?"

Many Asians, especially the older generation still think it's taboo to talk about writing a will.

"When we started out 15 years ago, I remember we set up a booth at an exhibition in Batu Pahat and people would back away from our booth. They would not even pick up our brochure as they considered it taboo," recalls Low Wan Gem, CEO of Rockwills Corporation Sdn Bhd.

Now, he says, more people are warming up to the idea. He says the company usually sees a surge in people wanting to make a will following earthquakes, tsunamis or major accidents, disasters or outbreaks of infectious diseases.

"For example, during the SARS outbreak, many people called us. It is human nature for people to worry that the same fate may befall them."

Saw says there has been a 30-40 per cent increase in will writing among the public over the last 15 years.

Citing Madam Wong's case as an example, he says the advantage of having a will is that it can be re-written by the testator (person making the will) anytime he wishes as long as he is of sound mind.

"If you transfer a piece of your property to someone, you can't take it back. But if you have willed it to the person, you can always revoke your earlier will and write a new one."

Wills can also be used to keep your offspring on their toes as in the case of a wealthy businessman who was bothered by the very pampered and laid-back attitude of his sons. He told his children that although he had named them all in his earlier will, he had decided to re-write his will every year and apportion the bulk of his wealth to the most hardworking son. Now, the sons are going all out to prove their worth.

Interestingly, more than 60 per cent of Rockwills' clients comprise those aged between 30 and 55 years, with most having young children under their care.

Saw says there are even instances where people write wills before leaving for a holiday abroad while some couples travel separately to the same destination.

"They write a will just in case something happens to them during their trip," he says.

There are also those who write wills not to dispose off their estate but to leave specific instructions or messages for their loved ones.

This include expressing their love and affection for their loved ones or stating whether they want to be buried or cremated.

What's most important, Saw adds, is for the testator to keep the will in safe custody.

"Sometimes people write a will and keep it so secret that when they die no one even knows they left a will. This will cause inheritance problems."

Awareness low among Muslims
AS Muslims are governed by the faraid or Islamic law of inheritance which determines how their estate should be distributed upon their death, proper estate planning is crucial to ensure that loved ones are not left in the lurch.

"Unfortunately, only about one per cent of the 16 million Muslims in Malaysia have written their will or wasiat. The level of awareness on the need for a will is very low because they believe their estate will be governed by the faraid system upon their death, so writing a will is unnecessary," said Associate Professor Dr Siti Mashitoh Mahamood, Syariah law lecturer at University Malaya's Academy of Islamic Studies.

If a Muslim dies intestate, his property will be distributed according to the faraid system after payment of his funeral expenses and his debts. Any surplus after the distribution of his assets goes to the Baitulmal (the Muslim Treasury).

Under the faraid system, a widow with children would get one-eighth of her husband's assets. The rest of the property will be distributed among his children with the sons getting twice the portion given to the daughters.

If the man leaves a widow and a daughter, half his assets will be distributed to the daughter while his wife will receive a one-eighth portion. The rest of his assets will go to Baitulmal.

However, if the widow has no children, she only gets a quarter of his assets while the rest goes to Baitulmal.

As only the legitimate heirs of the deceased (ie his wife, sons, daughters and parents) are entitled to his assets under the faraid system, his other relatives such as his sisters, grandchildren or adopted children may not inherit anything.

Mashitoh said such situations could be avoided if Muslims plan their estate properly by writing a will or wasiat, spelling out how they would like their assets to be distributed upon their death.

"In fact, Muslims are encouraged to write a will to ensure that their loved ones who are non-heirs are taken care off. There is even a hadith narrated by Abdullah Ibn `Umar that the Prophet (p.b.u.h) said: "It is not permissible for any Muslim who has something to will to pass even two nights without having his last Will written."

In writing their will, Muslims can bequeath up to a third of their assets to anyone they wish, as long as the beneficiary is not a legitimate heir under the faraid system. The remaining two-thirds of his property will be distributed according to faraid.

Bequests can be made to relatives, friends, people in need or public welfare. A Muslim can also bequeath his assets to a non-Muslim, but not to anything or anyone who opposes Islam.

"So a Muslim convert can bequeath up to a third of his assets to his parents or siblings if he so wishes."

Mashitoh said instead of writing a will, Muslims could also use other instruments such as hibah (gifting), trust funds or wakaf (permanent dedication by a Muslim of a property for any religious, pious or charitable purpose) to distribute their assets among their loved ones.

"They can 'gift' their property to anyone they wish including their spouse, children, grandchildren, or siblings.

"For example, if a couple has an adopted child, the child will not be entitled to their property when the parents die. However, to safeguard the interest of the child, they can hibah the property to the child. But all this must be done while they are still alive and are of sound mind and good health so that it cannot be challenged later on. So, it is better to give what you want while you are still alive," she added.

Another option is to set up a trust fund for children which can be managed by parents while they are still alive and by an appointed trustee when they die.

"This is important especially if the child is a minor. The parent can determine the most qualified and suitable person to be the guardian of the child. Otherwise it will be left to the court and the guardian so appointed by the court may not be the most suitable or appropriate person to care for the child."

What you need to know about writing a will
1. A will must be in writing. It can be handwritten, typewritten or printed and it can be written in any language.

2. The testator (person making the will) must sign or affix his mark (for eg, a signature or thumbprint) at the end of the will, or place it in such a manner or position that it becomes obvious that it is intended to give effect to the writing as a will.

3. A will has to be witnessed by at least two persons present at the time of signing of the will by the testator himself, or the person signing on his behalf. Each of the witnesses shall then sign in the presence of the testator and in the presence of each other.

4. A will can be revoked before the testator's death, voluntarily or by operation of the law when certain events happen such as:

a) Marriage -- If a person is single at the time of writing his/her will, the will is automatically revoked once he/she marries.

b) Destruction -- A Will is considered revoked if it is destroyed with the intention of revoking it.

c) Writing of a new will -- a new will always supersedes other earlier wills. Therefore a will must be dated properly to avoid confusion or dispute in future.

d) Execution in writing -- the testator can declare in writing his intention to revoke his will dated on a certain day and put his signature on the piece of paper in the presence of two witnesses.

e) Conversion to Islam - once a person converts to the Muslim faith, the distribution of his estate is government by Syariah laws.
Source: Guide to PlanningYour Will Effectively

Centralised wills registration system

MUSLIMS make up 91 per cent of the 543,908 Malaysians who have written a will with AmanahRaya, the government-owned public trustee, indicating a growing awareness among the community of the importance of having a wasiat (will).
As at May, 495,758 Muslims have used the services of AmanahRaya to prepare a will, said AmanahRaya group chief operating officer Alina Hashim.

She said many Malaysians now realised the importance of writing a will and sought the services of trustees such as AmanahRaya as it helped ease the administration of their estate after their death.

"The appointment of a trustworthy guardian helps guarantee the welfare and interests of your loved ones when you are no more around, making things easier for beneficiaries," she added.

To help make estate administration easier, she said AmanahRaya had established a Wills Register or Daftar Wasiat Malaysia (DWM), which is a centralised system for the registration of Muslim and non-Muslim wills.

The register will serve as a reference centre for custodianship and updating of both Muslim and non-Muslim wills.

"With the availability of this centralised wills registration system, the families or beneficiaries of the deceased can check to see if the latter has left a will. If they have, then it makes it easier for a beneficiary to trace the custodian of the will or wasiat," she added.

AmanahRaya was originally the Department of Public Trustee and Official Administrator. The department was corporatised on Aug 1, 1995 to provide trust, legacy management and will services.

Taken from New Straits Times

Parents should not transfer the ownership of their house to their children when they are still alive.

If they do that, they will surely be living in an old folk's house.

So, just make a will. It's as simple as that.

The point is that don't transfer your property to your children's name while you are still alive.

Happy Fasting for the Muslim readers

Happy fasting for all the Muslim readers.