notes ch 8

A definite plan for the administration and An essential part of retirement planning disposition of one’s property during one’s and has two components lifetime and at one’s death. vBuild your estate through savings, It involves both handling your property while you are alive and dealing with what happens to investments, & insurance that property after your death. vTransfer your estate as you wish at death ESTATE PLANNING Newer lifestyles means If unmarried make sure If married include different challenges, which beneficiaries have spouse and children in means plan early and get information about your estate planning process expert help estate that they will need

PROCESS OF ESTATE PLANNING Develop a Comprehensive Estate Plan ӿ Match the comprehensive plan to the Establish the Client/Planner Relationship desires and the financial status of the ӿ Division of Tasks – Lawyer leads in Estate Planning client ӿ Goals of client should be realistic 01ӿ Legal documents can require lawyer 04 ӿ Plan should support a realistic outcome ӿ Plan should provide for potential Collect Information contingencies ӿ Financial Statements, Tax Filings, Asset Titles ӿ Family and Family Histories (health of 05 Implement the plan ӿ Usually plan has some immediate parents, children with special needs) steps or short term goals that put client on a “successful” path 02ӿ Insurance policies 06 Set Specific Review Periods for Plan ӿ Legal documents (Powers of Attorney, Health Directives, Wills, Trusts) ӿ Circumstances change overtime and plan must be adjusted to meet ӿ Other items such as prior gifting, annuity the changes that alter the outlook contracts, lawsuits pending 03Determine Clients Financial Status ӿ Examine assets, cash flow, liabilities, insurance coverage, future liabilities (children's education for example) and living standard ӿ Analyze information

ESTATE Healthcare PLANNING power of INSTRUMENTS attorney Durable Letter of power of intent attorney Will/trust Example of Estate ≈ Savings account and current account in a commercial bank ≈ Tabung Haji, KWSP, Insurance, Takaful, ASB, and other unit trusts ≈ House, Land ≈ Shares (listed and non-listed, cooperative shares) Other valuable asset under the name of the deceased; jewellery

OBJECTIVES TYPES OF ESTATE × To ensure that the maximum value of the wealth All Malaysian, Muslim or non- is distributed to his/her dependents according to Muslim, when he/she passed away, his genuine wishes. his/her estate will be handled by one of the three agency × This means that you desire a minimum leakage of your estate to the government and others in the forms of taxes and administrative charges. IMPORTANCE Harta Pusaka Ringkas Harta Pusaka Kecil • Current assets which is • Current assets and fixed assets which allows you to choose who gets what. valued less than RM 600,000 is valued less than RM 600,000 affords you the chance to name your • Amanah Raya Berhad • Pejabat Pesaka Kecil children’s guardian in the event of your early death. Harta Pusaka Besar reduces taxes on what you leave behind. • Current assets and fixed assets which minimizes the chances of family strife and is valued more than RM 600,000 ugly legal battles. • High Court

A Will is a document where a Features Definition › Include information on the person states his intentions as to WILL appointment of an Executor who will execute the will, the how his estate is to be beneficiary(s) to the will and administered and distributed allocation of assets to the named after his death and who is to beneficiaries. administer it. › The appointment of guardian for minor beneficiaries • Neither a contract nor an agreement › Revocation of earlier wills › Donation of organs • Only take effect upon › Direction for burials the demise of the testator. Characteristics Injunction • For Muslims he or she can only distribute 1/3 of his or her estate through a will and another 2/3 will be distributed through faraid • For non Muslim he or she can distribute all his or her estate through a will

ӿ In writing Requirment Attained the age of 18 (Peninsular Malaysia & Sarawak) ӿ Sign Of Valid Will or 21 in Sabah ӿ At least 2 or more • A minor who is below 18 cannot make a will. Sound mind witnesses Acting on his own free will and without coercion ӿ Sound mind • A person who wants to make a will should make on his ӿ Not be under the age of own free will and without any forcing from another party majority Validity of wills Who can WILL make a Will? × Important tool of estate planning Anyone who owns property Why need × Helps in expedite the legal process involved in • Whether \"personal property\" such as cash, stocks, jewelry a Will estate administration or furniture × Enables a person to choose and appoint his or her According to Faraidh own executor and trustee • Or \"real property\" such as land and/or a house × Provide an opportunity for the testator to give and • Only 1/3 of the whole estate may be given away to non beneficiaries • The balance must be distributed in make allocations for any special needs of their loved ones accordance with the Faraidh × Enables a person to bestow gifts to non-family members or non heirs incl. charities and religious organizations

SIMPLE WILL TYPES OF PROCESS TO WILL A will that leaves everything to the WRITE A spouse; also called an I love you will WILL TRADITIONAL MARITAL SHARE WILL A will in which the grantor leaves one-half of » Establish one’s wealth distribution objectives prior to nominating the adjusted gross estate to the spouse beneficiaries and the estate allocation EXEMPTION TRUST WILL » Analyze and evaluate one’s state of assets A will in which everything passes to the by compiling all the related documentations such as insurance policies, spouse except the exemption certificate of unit trusts and others STATED DOLLAR AMOUNT WILL » Nominate beneficiaries and allocate assets A will that allows you to pass on to your spouse for them as per one’s wealth distribution any amount that satisfies your family objectives objectives » Appoint a trustworthy executor with the capability to execute the Will in a reliable manner » Get assistance from a trustworthy will writer to assist in writing the will » Ensure that the Will is kept in a safe place and inform the executor on his or her appointment as executor as well as the location where the will is to be kept

HOW TO UPDATE v The family changes A WILL? •As a result of a birth, adoption, marriage, divorce or death; REVOCATION OF WILL v Substantial changes occur in the amount or kind of property ◊ Marriage owned ◊ Destruction •e.g. Testator want to add his ◊ Unsound Mind other property ◊ Convert to Islam ◊ Dies Early v Tax laws change ◊ Revoke the wills •Whether tax is increase or ◊ Illegal wills decrease so a will need to be updated v Residence changes •From one state to another •e.g. The testator move from Malaysia to Singapore v The designated executor, guardian or trustee can no longer serve •e.g. They don’t want to be a trustee or guardian anymore

DUTIES OF EXECUTOR DUTIES OF THE GUARDIAN ӿ To identify the assets and beneficiaries of the estate. × Responsible in taking care of the necessities and affairs of the ӿ To collect and realize the deceased’s assets minor children of the deceased ӿ To pay the deceased’s funeral and Testator. testamentary expenses as well as debts due × The assets belonging to the minor and owing to other parties children and/or the maintenance ӿ To distribute legacies for their needs would be ӿ To complete the administration and channeled by the Executor and distribute the residuary estate Trustee to the guardian. ӿ Duties of Trustee ӿ To manage the assets to which they said × Any parent who has parental beneficiary is entitled to, for the benefit of responsibility for his/her child the beneficiary. may appoint one or more ӿ Be responsible in managing a trust created individuals to be the child’s by the testator in his will. guardian(s) ӿ The executor and trustee can be the same person

LEGALITY OF WILLS IN ISLAM MATRIMONIAL According to al-Baqarah: 180, wills is an obligation in PROPERTY RIGHT Islam. After mawarith verse legal of wills will be › Jumhur Fuqaha' : Wills is recommended › Fuqaha' Tabi' in: Wills is an obligation to Islam › Daud Al-Zahiri: wills is compulsory to parents relatives who had not received an inheritance. › For Jumhur Fuqaha' the law of wills change according to circumstances PILLARS OF WILLS