Case StudiesGuardianshipTrustWillNovember 20, 2023by Finex & CoEffective Estate Planning Strategies for a Young Family

Mr Tan: 

“I have an outstanding mortgage loan of RM500k. I’m married with 2 children age 3 & 6 this year and my wife is not working. We don’t have any other loan. The assets that I currently own are bank accounts, shares investment, a joint-name property with my wife. Each of us have EPF accounts and medical card which comes with RM50k life insurance.”


Estate planning is crucial for ensuring the financial security of your loved ones and the distribution of your assets according to your wishes. Mr Tan’s case presents a significant scenario that necessitates thoughtful estate planning for the well-being of his family. With an outstanding mortgage loan, two young children, and various assets, developing a robust estate plan is essential.

In this article, we would look into this case study on how young families could plan for your estates, thus, protecting the financial and emotional interests of our loved ones. The aspects to be considered are W.T.F (Will, Trust, Funding).


One Will for Each Husband and Wife

Mr Tan and his wife should each write their own Wills. This approach is more efficient for managing their estates and caring for their children in the event of dual tragedies before their children reach 18.


Beneficiaries of Assets

There are a few key considerations for Mr Tan:

First, Mr Tan and his wife jointly-owned their family home.
If Mr Tan passed away without a Will, according to the Distribution Act 1958, his share of the home ownership would be distributed among his surviving parents (1/4), his Wife (1/4) and his two children (1/2). Therefore, to ensure that his wife inherits his share fully, Mr Tan needs to specifically allocate this house to his wife in his Will.

Second, Mr Tan has two children aged 3 & 6.
It is impractical for Mr Tan to designate his two children as the main beneficiaries of all his assets. Therefore, he could name his wife as a beneficiary of his estate if he trusts her to manage the estate for their children. However, Mr Tan should also consider the possibility of a tragedy occurring to both him and his wife simultaneously. Therefore, he should name substitute beneficiaries in the event his wife does not survive him, such as the children.


Executor of his Will

Undoubtedly, Mr Tan’s wife will be the main Executor of his Will. In the event of a tragedy affecting both of them, Mr Tan should appoint another person, ideally two individuals, as Joint Substitute Executors for his estate. It’s not practical to name both his young children as Executors of his Will. Therefore, Mr Tan could either appoint his trusted siblings or friends as Substitute Executors or alternatively, he could appoint a Trustee company as the Executor in the event both Mr Tan and his wife pass away together. Of course, it would be subject to fees payable to the Trustee company.


Guardian of his Minor Children

Considering the potential occurrence of a tragedy involving both Mr Tan and his wife, Mr Tan needs to decide on a Guardian for his young children. The Guardian could be Mr Tan’s siblings, his wife’s siblings, or trusted friends. It’s important that both Mr Tan and his wife mutually agree and appoint the same Guardian in both their Wills to prevent potential conflicts in the future.


Testamentary Trust for Minor Children

To better prepare for Mr Tan’s children future and safeguard the assets left to them, Mr Tan and his wife might consider setting up a Testamentary Trust for their children. In the event of dual tragedies, Mr Tan could instruct the Executor/Trustee under his Will to distribute funds to the children in installments, such as providing RM1k to each child monthly until they reach 25 years old, with the money payable to the Guardian while the children are below 18 years old.


Funding Calculation

Mr Tan has an outstanding mortgage loan of RM500k. The funding that Mr Tan needs to prepare are:

Debts (D) – His outstanding mortgage loan of RM500k.

Administration Fee (A) – The immediate cash flow that is needed for the application of Grant of Probate legal fee, accountant fees, funeral fees, other unexpected out-of-pocket expenses. Mr Tan can set aside a 5-10% based on the estimation of his current assets value for these expenses. Assuming the property’s current market value is RM600k, the cash flow to be prepared would be RM30k.

Maintenance Fee (M) – Knowing that Mr Tan is the sole breadwinner of the family, ideally, he has to prepare at least 5 years of living expenses for his wife and two children as it would not be easy for his wife to get back to her career while suffering from financial and emotional burden. Assuming the current monthly living expenses (excluding loan instalment) for his family is RM5k, five years would be RM5k x 12 months x 5 years = RM360k.

Education Fee (E) – Additionally, if Mr Tan and his wife would like to plan for the tertiary education of their children, they can also allocate a certain amount for them. For example, the fees needed to study in private university in Malaysia would be around RM100k for 3-4 years. Mr Tan will have to prepare for both his children, the amount would be RM100k x 2 children = RM200k.

Therefore, other than setting up a Will & Testamentary Trust, Mr Tan shall also take into account the funding needed by his family when he’s no longer around to support the family. Mr Tan already has a life insurance of RM50k which is far less from the required amount that his family needed.

(RM500k + RM30k + RM360k + RM200k) – Existing RM50k = Shortfall RM1.09 million.

In this case, Mr Tan would need to add RM1.09million in insurance coverage for his family.



It’s essential to consider multiple aspects (will, trust, funding) to effectively plan for Mr Tan’s family. Seeking the assistance of a professional estate planner is advisable for comprehensive planning.


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