Probate & Letter of AdministrationAugust 15, 2023by Finex & CoHow can I assert ownership of belongings in the event of my parents’ passing without a will?

It is customary for many elderly individuals to avoid creating a Will due to considering it a taboo. Nevertheless, opting not to draft a Will could potentially create more difficulties for your family members rather than being of assistance to them.

Let’s have a general run through on how Wills work. When your parents pass away with a Will being written beforehand, things will be proceed must smoother compared to without a Will. Their assets such as properties, bank accounts, investments and so on will be distributed to the beneficiaries which are usually their closet kin such as spouse and children. Everything will be much easier if your parents have no debts as if they have debts then the priority to clear the debts comes first.

What occurs if your parents did not create a Will? What is the outcome in that scenario?

In the event that your parents did not leave behind a Will, the Malaysian Government will take possession of your parents’ assets until either you or another lawful beneficiary steps forward to assert ownership. This process entails initiating a petition through the Court. Upon submission, the Court will issue a Letter of Administration (in cases without a Will) instead of a Grant of Probate (in cases with a Will). This document serves as evidence of the Court’s authorization for the rightful beneficiary to manage the deceased individual’s estate.

What’s Next?

The Administrator will need to locate all the assets left behind by the deceased, which can be a time-consuming process due to the lack of guidance regarding the nature and location of these assets. Once all the assets are identified, the Administrator will be responsible for settling any outstanding debts and unpaid taxes using the assets of the deceased. After the complete clearance of debts, the remaining assets will be divided following the guidelines of the Distribution Act 1958. (It’s important to note that there are variations in asset distribution between West Malaysia, East Malaysia, Muslims, and Non-Muslims.)

In the case of West Malaysia’s Non-Muslim population, the conventional approach involves prioritizing distribution among immediate family members. If a living spouse is present, they will receive a portion first. Subsequently, the children will equally share the next portion. Notably, relatives beyond the immediate family will not receive any portion from the deceased’s assets. Please refer to the distribution chart as below.

Distribution Act 1958 - Conventional for non-Muslims - Image via Loanstreet
What if no one steps forward to claim the assets?
A similar occurrence has taken place in Malaysia previously. As of 2020, an article from Utusan Malaysia reported that assets valued between RM70 billion to RM90 billion within the country were subjected to freezing. This pertains to situations where the deceased individual has no living family members whatsoever. The Malaysian government can classify these assets as unclaimed only after exhaustive efforts have been made to locate immediate family members or legal beneficiaries. But what if your own family is unable to trace certain assets? Wouldn’t it signify their loss in being unable to benefit from those assets?
Conclusion
Do you lean towards your family experiencing an effortless acquisition of your assets, or would you opt for them enduring an extended period before gaining access to what you’ve left behind? This is the question I urge you to contemplate if you decide against creating a Will.

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Edrian Chin Yik Rong - Legal Advisor of Finex & Co Legacy Advisory
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Chua Pei Shan - Legal Advisor of Finex & Co Legacy Advisory
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