If you are a high net worth Malaysian and are thinking of estate planning, then you have come to the right place. Estate planning is not just for specific groups of people. It is for everyone in the country. As complex as it looks, estate planning isn’t exactly the most difficult thing to handle in your lifetime.
Estate planning may be long-winded and meticulous for some people depending on how many properties and assets you have. The whole process of court proceedings may scare some people as well. It’s understandable some people feel this way but, in reality, it isn’t exactly the most difficult thing to do. Here’s what you can do about estate planning in Malaysia if you are a high net worth.
Before moving forward, “high net worth” in Malaysia does not mean you have a few hundred grands in your bank accounts and asset/property values. According to Smart Investor, in order to be considered a high net worth individual in Malaysia, you must have rm1 million in monies, assets, and properties in total. It can be for individuals or for joint accounts (eg: spousal).
Gather all properties and assets you have
This is the first step in estate planning for you. You may have multiple assets, multiple properties, multiple priceless heirlooms, etc. However, when you have passed away, these things will not straightaway go to the people you want. Or the amount of money you wish to transfer to the person may not be the amount you intended to be.
Take your time in gathering all of these assets and properties first. List all of them down somewhere first. At the same time, if there are legal documents that comes with the properties and assets, by all means gather them together as well.
Prepare a will and validate it
Your next course of action will be to prepare a will and have it validated by a certified lawyer. In the will, include all the assets and properties that you own and have the supporting documents attached.
I should also mention here that you do not just include your assets and properties in your wills. You can also include what to do with your pets and heirlooms when you are no longer around. People normally divide up who gets what in their wills for their properties and assets. It’s the same thing with your pets and other priceless heirlooms.
A will also include how much the beneficiaries will get. For example:
| Total assets in money: RM2mil |
| Beneficiaries get:
Wife: 40% Son: 25% Daughter: 25% Mistress: 10% |
If you do not have the beneficiaries breakdown listed down like that, then the Malaysian High Court will distribute it for you in the way “they see fit”. The Malaysian High Court will distribute your assets according to the Distribution Act 1958.
Choosing the right trustee
This is exceedingly important, just as important as having a will in place. Choosing a trustee is important because this person is entrusted in carrying out your last wishes for your properties and assets. A trustee is someone who makes sure that your assets and properties are truly transferred to the beneficiaries’ hands. This individual should be someone who you really trust in carrying out such duties.
A trustee is not to be confused with an executor. An executor is someone appointed by the Malaysian High Court to gather all your properties and assets and also to locate any debts you have. If you have any debts, the executor will take money from your assets and properties and pay it off. Only then will the executor distribute the assets to your beneficiaries.
Paying for estate taxes
For now, in Malaysia, you do not need to pay inheritance taxes or estate taxes. Many years ago, Malaysians will need to pay for inheritance taxes as there was an inheritance tax law implemented in Malaysia. Under the Estate Duty Enactment 1941 and other similar estate duty legislations in Sabah and Sarawak, Malaysians are to pay that estate tax.
However, that law was repealed on 1st November 1991 and was replaced by the Finance Act 1992. For this very reason, there is no inheritance tax in Malaysia for inheriting your parents’ properties and assets currently.
Bottom Line
Estate planning for high-net-worth individuals is not the most complicated thing to do. It may seem long-winded but it’s nothing short of simplicity. You’ll just need to be meticulous with all the assets and properties you have within Malaysia and outside of the country.
Should you need any help with estate planning as a high-net-worth individual in Malaysia, feel free to reach out to us for help. We will be more than happy to help you with it.
