Posted 10 Jan 2025, by Sam Ng

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“Do you need to leave a Will?”

This question is often shrugged off and ignored for reasons that death is such a remote event at that moment and not having a will does not have any consequences on the person himself/herself.

When the unexpected occurs, it is the surviving family who will bear the brunt of intestate death.

Family Dispute

Assets owned by a person will become frozen estates after the person died. Consequently, ownership transfer of these frozen estates must comply with national law and follow the process outlined in the Act.

Without a Will, all the deceased’s estate will be distributed according to the Distribution Act 1958 (applicable to West Malaysia and Sarawak) or Intestate Succession Ordinance 1960 (applicable to Sabah).

In cases when the entitled beneficiaries seek to take advantage of the situation, family relationships can turn unpleasant.

I’ll give an example. Alex owned a house which he and his wife contributed to the mortgage payment together. He envisioned building his future in the house together with his wife.

When Alex passed away without a will, Alex’s wife would not inherit the house alone.

Under Distribution Act 1958, Alex’s surviving parents and wife are the rightful beneficiaries to the house!

Alex’s parents have the right to claim a portion of the house’s ownership even though it could be against Alex’s intention. Alex’s wife could feel this outcome is deeply unfair to her, potentially leading to a conflict with Alex's parents.

Big Families Face More Complications

For big families, the Distribution Act 1958 could create additional complications.

Under the provisions of this Act, the beneficiaries entitled to inherit the deceased’s estate include the spouse, parents and issue. ‘Issue’ refers to the deceased’s children.

In cases where the children have passed away, their descendants (in other words, the deceased’s grandchildren) will be entitled.

And as shocking as it may seem, ‘issue’ also includes the illegitimate descendants.

Figure Credit: Max Wealth Education Sdn Bhd

All beneficiaries must be present at the hearing for the estate distribution to be completed. And all beneficiaries will have undivided share of the deceased’s estate.

For big families, getting everyone under one roof is nearly impossible.

And with so many beneficiaries, the estate ownership could become so fragmented that the shares are too small to motivate all beneficiaries to come forward.

In many cases like this, the inheritance ends up in the unclaimed category.

Figure from TheSun.my: Unclaimed inheritance amounted to RM 78 billion in 2023

A Potential Issue When Applying for Letter of Administration

When a person died without leaving a will, the family will need to apply for Letter of Administration with the High Court to distribute the deceased’s estate. Note 1

One challenge in this process is that the High Court will require the deceased’s family to obtain 2 sureties who can provide an administration bond where the equivalent gross value of the estate is guaranteed.

The primary purpose is to ensure the deceased’s outstanding liabilities will be fully settled without dispute.

The sureties will be putting their assets at risk, it is like acting as a guarantor for a debt.

One can only imagine how difficult it is to find someone willing to act as a surety.

In Conclusion

Family value is such a strong element in Malaysian culture.

As we strive to ensure the financial wellbeing of the family, the topic of inheritance should also be addressed.

Writing a will is usually the first step for many in starting this important conversation.

While this piece is not meant to cover the different situations when a person died intestate in a comprehensive manner, I hope it gets you reflecting on your own estate planning.

Thank you for reading!

Note 1: Unless the estate is less than RM 600,000 (estate with movable properties only) or less than RM 2,000,000 (estate with at least one immovable property), the family can file for summary administration without going to High Court.