Personal Financial Planning: Is it too early to Create a Will?

Personal Financial Planning: Is it too early to Create a Will?

Wills are often associated with old age. The younger generation often feel that they have much time to think about this personal financial planning method. However, it’s better to make a will as soon as possible. It would specify what happens to your assets and belongings after you die. The probate process can be long and tedious without a will following the Distribution Act 1958.

According to the Wills Act 1959 (Revised 1988), wills apply to non-Muslims as Muslims are subjected to the Shariah laws which may differ from state to state. Instead of having a will, Muslims would prepare a wasiat and may subjected to faraid.

Why should you create a will?

According to Section 2 of the Wills Act 1959, a will is “a declaration intended to have the legal effect of the intentions of a testator with respect to his property or other matters which he desires to be carried into effect after his death and includes a testament, a codicil and an appointment by will or by writing in the nature of a will in exercise of a power and also a disposition by will or testament of the guardianship, custody, and tuition of any child.”

It’s essential to create a will when one begins accumulating assets (e.g., buying cars, jewelry, incurring debts, expanding investments). It also creates a consolidated list of your material possessions. In addition to that, having a will helps you select your beneficiaries and how your assets will be distributed.

Without a will, the asset distribution will follow the Distribution Act 1958 and may not be following your wishes. It may cause disagreements among family members or beneficiaries about who should be appointed and who gets what.

Furthermore, without an enforcable will, it may take a longer time as one’s next-of-kin may need to seek the intervention of either the High Court of Malaya or the High Court of Sabah and Sarawak to appoint an Administrator. The selection of an Administrator requires the agreement of all surviving beneficiaries.

For non-Muslim natives of Sabah and Sarawak, the process would also require the involvement of local native leaders such as the Penghulu, Pemanca, or Temenggongs as well as the local authorities. The process often takes a longer time as one’s next-of-kin may need to manually search for assets and properties before initiating the application for the administration  of estate process.

Requirements for creating a will

Requirements for creating a will under the Wills Act 1959 (Revised 1988) include:

  • At least 18 years old at the time of will writing (Section 4)
  • Having a sound mind with animus testandi or intention to create a will (Section 3).
  • No will shall be valid unless it’s in writing and executed in the manner hereinafter mentioned (Section 5(1)).

For a will to be valid, it must satisfy two conditions:

(1) It is in writing; and

(2) It is executed in a manner prescribed in section 5(2) of the Wills Act 1959.

Also, the will shall contain:

  • Specifics of the testator (Name, NRIC, and Address)
  • Appointment of Executor(s)
  • Contents (intention, declaration, and wishes)
  • Beneficiary(s)
  • Date of creation
  • Signatures (from the testator and two witnesses)

The will remains valid unless it’s replaced or purposefully destroyed. Also, it’s automatically revoked if you convert to Islam. Another thing to remember, the beneficiary(s) can’t be appointed as a witness.

Things to remember about creating a will

Wills need to be developed, revised, or updated following major milestones like engagements, marriages, divorce, and having a new child. It’s also essential to distinguish administrators from the beneficiaries (or recipients).

Some financial instruments allow you to designate a nominee. These include insurance plans and EPF (Employees Provident Fund or Kumpulan Wang Simpanan Pekerja). Nominees are not necessarily beneficiaries; they can be administrators. The will can provide instruction on how the money or assets will be distributed.

As for nominations provided by insurance providers and EPF, make sure to register the nominee(s). If the plans don’t have any records, your insurance or EPF will be distributed according to the will. After naming the beneficiary(s), don’t forget to choose an executor. The executor’s task is to ensure that everything in your will is carried out correctly.

Wills are essential as part of personal financial planning. You can start creating it as young as 18 years old. The real need comes following significant life milestones and assets acquisition.

If you feel unsure about will writing, consult a legal or trained professional. However, it would be best to remember that not all lawyers have the expertise in will writing. You can appoint a trusted company to handle the task professionally for the executor role.

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