Estate Planning in Malaysia: Will vs Trust vs Family Office

Ultimate Guide to Estate Planning in Malaysia: Wills, Trusts, and Family Offices

estate planning

Why Estate Planning is Important

In Malaysia, an estimated 80% of Malaysians do not possess valid wills leading to potential family disputes and complications.

Estate planning is particularly important for several reasons:

  • Preventing Family Disputes: The lack of clear estate planning can lead to severe family conflicts, sometimes resulting in legal battles and even violence.
  • Ensuring Financial Stability: Proper estate planning can ensure that your loved ones are financially secure and that your assets are distributed in a way that aligns with your wishes.
  • Protecting Assets from Creditors: Effective estate planning can help safeguard your assets from creditors, ensuring that your wealth is preserved for your heirs.

Real-Life Examples Highlighting the Importance of Estate Planning in Malaysia

Conflicts over inheritance frequently arise due to inadequate estate planning, affecting everyone from small families to ultra-rich households. Notable cases include:

Negative Example:

  • In Sibu, Malaysia, Ngu Ming Wei was jailed and fined for assaulting his sister over an inheritance dispute. The conflict arose from disagreements about the distribution of their family’s land. This case highlights how lack of proper estate planning and clear wills can lead to violent family disputes (The Star).
  • Ariff Peter, a former businessman and musician from Malaysia, found himself living in his car for two years to repay a RM1 million debt. His financial troubles began after a failed cryptocurrency investment, where his partners vanished with the funds, leaving him to face the consequences. Despite the hardships, Ariff persevered, working tirelessly to pay back his creditors. His story highlights the uncertainty for business owners. Luckily, Ariff is single; imagine if he had children and a wife. Next time, we’ll discuss ring-fencing for business to protect asset from creditor. (asiaone)
  • Taib Mahmud, former Sarawak governor, passed away, triggering a legal battle over his estate. His second wife, Raghad Kurdi, and his children from his first marriage are entangled in disputes over his substantial assets, including shares in a public-listed company. As an ultra-rich individual, this high-profile case underscores the potential for family conflicts in the absence of clear estate planning and the importance of family office services.( SCMP)
  • The legal battle within Lim Goh Tong’s family over the Genting Group’s inheritance underscores the importance of international knowledge in managing trusts. With assets spread across Malaysia, Singapore, the US, and China, understanding international laws is crucial for effective succession planning and avoiding disputes. This case highlights the complexities and legal challenges of managing a global business empire. ( The True Net )

 

Positive Examples:

  • Philanthropic and Succession Planning: Tan Sri Lee Shin Cheng’s careful succession planning for his sons to take over his business empire and his legacy donation to UTAR Hospital through Yayasan Tan Sri Lee Shin Cheng illustrate the positive impact of strategic estate planning. Proper estate planning can include philanthropic goals, ensuring that wealth benefits charitable causes and facilitates business continuity and family succession. These stories highlight the benefits of early and comprehensive estate planning. (utar) and (ioigroup)
  • Public Bank Founder’s Legacy: In honor of the late Tan Sri Dr. Teh Hong Piow, his youngest daughter Diona Teh Li Shian donated RM143 million to Tung Shin Hospital and RM200,000 each to several other charities. This act of philanthropy demonstrates the lasting impact of effective estate planning in preserving and extending a legacy of generosity. (edge).

 

Additional Importance and Potential Benefits of Estate Planning

Initiative Calls in Estate Planning There have been calls for more initiatives in estate planning to prevent issues such as the freezing of assets and to ensure that dependents can access their inheritance promptly. This includes educational efforts and legislative changes to simplify the estate planning process. This could include a favourable 15% tax rate for family office investments exceeding RM20 million.(thestar)

The purpose of this blog post is to help you understand the differences and benefits of each estate planning tool by comparing wills, trusts, and family offices, providing clarity on each option’s advantages and disadvantages. As you can see, the absence of proper estate planning can lead to significant conflicts and complications. Therefore, it is essential to consider tools like private trusts and offshore trusts, in addition to wills and family offices, to ensure your assets are protected and your wishes are honored.

 

Comparing Key Estate Planning Tools: Wills, Trusts, and Family Offices

 

Wills

  • Definition and Purpose: A will is a legal document that sets forth your wishes regarding the distribution of your property and the care of any minor children.
  • Advantages:
    • Legal recognition and ease of enforcement.
    • Flexibility in asset distribution.
  • Disadvantages:
    • Probate process and associated costs.
    • Public disclosure of the will’s contents.
  • Suitable For: Straightforward estate situations with clear directives for asset distribution.

 

Trusts

  • Definition and Purpose: A fiduciary arrangement that allows a third party, or trustee, to hold assets on behalf of beneficiaries.
  • Types of Trusts: Living trust, testamentary trust, offshore trust.
  • Advantages:
    • Asset protection and privacy.
    • Potential tax benefits.
    • Flexibility in managing and distributing assets.
    • Offshore Trust: Offers enhanced privacy, international asset protection, and potential tax benefits due to being governed by the laws of another country.
  • Disadvantages:
    • Setup and maintenance costs.
    • Complexity in management.
    • Offshore Trust: Additional legal and compliance complexities due to multiple jurisdictions.
  • Suitable For: Complex estates, asset protection, privacy concerns, international asset management, and planning for incapacitation.

 

Family Offices

  • Definition and Purpose: A private wealth management advisory firm that serves ultra-high-net-worth families, providing a range of services including estate planning, tax services, and investment management.
  • Advantages:
    • Comprehensive and personalized estate planning.
    • Professional management of assets.
    • Family governance and legacy planning.
  • Disadvantages:
    • High setup and operational costs.
    • Typically suitable for high-net-worth families.
  • Suitable For: Very wealthy families needing a holistic approach to wealth management and succession planning.

Sign Up here to learn more about Estate planning

 

Which Estate Planning Tool is Right for You? Compare Fees, Net-Worth Requirements, and Expert Support

Now that you understand the advantages and disadvantages of each key estate planning tool, we’ve created a comparison to help you choose the right option based on fees, net-worth requirements, and the expert support provided by each service.

 

ServiceTeam MembersNumber of ProfessionalsTypical Fees (MYR)Who Normally Needs It
Will and Estate Planning FirmWill Drafting Expert, Legal Advisor, Estate Planner, Tax Advisor, Financial Planner4-5RM500 – 50,000 one-time feeIndividuals with straightforward to complex estates; high net worth individuals (RM 1 million and above); those needing detailed asset protection strategies and guardianship appointments
Private TrustTrustee, Trust Administrator, Legal Advisor, Financial Advisor, Tax Advisor5RM10,000 – 50,000 per yearHigh net worth individuals (RM 5 million and above); families wanting to avoid probate; those needing long-term asset management and protection
Offshore TrustTrustee, Trust Administrator, Legal Advisor, Financial Advisor, Tax Advisor, Compliance Officer, Asset Protection Specialist7RM20,000 – 100,000 per yearIndividuals with offshore property or investments; those seeking tax benefits and asset protection in multiple jurisdictions; ultra-high net worth individuals (RM 10 million and above) 
Family OfficeCEO/Director, CFO, Investment Manager, Legal Counsel, Tax Advisor, Philanthropy Advisor, Family Governance Advisor, Administrative Staff, Personal Assistants, Estate Manager10+RM100,000 – 500,000 per yearUltra-high net worth families (RM 50 million and above); those requiring comprehensive wealth management, lifestyle management, and legacy planning

 

Start Estate Planning Now

Taking the first step in estate planning is crucial to ensuring your assets are protected and your wishes are honored. Don’t wait until it’s too late—start planning today to avoid future complications and conflicts.

FIAM, in collaboration with Timeless Family Office, is offering a complimentary 30-minute consultation to help you get started. For further assistance or to schedule your consultation, click the button below or fill out the form below

Unlock the potential of your offshore trust and secure your family’s financial legacy with a complimentary 30-minute consultation valued at RM500

Unlock the pathway to securing your family’s financial future with our complimentary consultation on offshore trust planning. As specialists in wealth preservation, we recognize the individuality of each family, confronting distinct challenges and aspirations.

In your complimentary consultation, we’ll explore your specific requirements and objectives, presenting tailored strategies to protect your assets and facilitate a smooth transfer of wealth to future generations through offshore trusts.

Schedule your free consultation today and embark on the journey to safeguarding your family’s inheritance and financial legacy with offshore trusts.

Please enable JavaScript in your browser to complete this form.
Edit Template

Comments are closed.