What happens to your property if you die without a will in Malaysia

Without a will, the distribution of inheritance to surviving family members could take 2 to 5 years depending on the complexity of the case. Also, if there is a financial recession, this can significantly affect the value of your estates. For time-sensitive assets like stock holdings, the value might depreciate by the time legal ownership is transferred to your family members. 

Most of us know that we should write a will, yet we just never seem to actually do so. There are myriad of reasons –  you can’t find the time to do it; you think we are too young to have one; you feel that your assets are too little to be significant while some of us just don’t want to think about death.

Hence, it comes a no surprise that as of February 2016, there are estates worth RM60 billion left unclaimed by surviving family members of deceased Malaysians since Independence Day (1957). This number has grown from RM40 billion back in 2007. “Estates” here refers to your worldly possessions and consist of moveable property such as cash and immovable property such as land and houses.

The current scenario affirms the importance of writing a will; a valid will state the assets, executors and beneficiaries, making it so much easier for your wealth to be distributed justly and seamlessly upon your death.

Now, before we dive deeper into the topic, let’s first understand the meaning of these frequently used legal terms:

• Intestacy Law – the law that decides how assets are transferred and creditors are satisfied if a person passes on without leaving a will.
• Administrator – a person appointed by the family/court to administer the estate of a deceased person who left no will.
• Sureties – usually mean guarantors.
• Executor/Wasi – a person appointed by a will-maker to execute the terms of a will.
• Movable Assets – computer, jewellery, vehicles, artworks and etc.
• Immovable Assets – real estates/property.
• Quranic Heirs – heirs who are entitled to get a prescribed share from the heritable property.
• Beneficiaries – the descendants that will receive the inheritance.
• Issues – usually mean children.

READ: Must you declare your rental income to LHDN & what are the tax incentives available for landlords?

What happens to your possessions if you die without a will Malaysia?

Should you pass away without leaving a will, your death will be classed as “intestate”. In other words, an intestate succession means you have died without leaving instructions about who should receive how much of your estate(s). This includes your savings in all of your bank accounts, properties, and any other assets that you own at the time of your death.

What it doesn’t include is your EPF monies or insurance policies as the monies will go to whoever you have nominated in your respective EPF account and insurance policies as they are governed under a different act (set of laws passed by parliament).

When this happens, the intestacy laws will determine how your estates are distributed. In Malaysia, Muslims and non-Muslims are governed under different sets of inheritance laws. Below are the details:

What is the law of inheritance in Islam?

1) Your estates will be frozen until the case is settled.

2) Your family needs to apply for the Faraid Certificate from the Shariah Court, which will contain information on the value of the estate, the names of the eligible beneficiaries and the proportions of each of the beneficiaries. This process will usually take 5 working days.

3) Then, all the Quranic Heirs (Ashabul Furud) must have a mutual agreement to choose the same Administrator. It needs to be in written form and verified by the Magistrate / Commissioner for Oaths.

4) Your wealth will be distributed based on Shariah Law. The process of wealth distribution is the same as when you have a legal Wasiat (equivalent to will). The priority will be given to the provisions of your funeral expenses followed by the payment of outstanding debts including zakat, uncompleted hajj, and Nazar (solemn pledge).

Only after these payments have been made can the remainder of your estates be distributed among your beneficiaries according to the Faraid (Islamic inheritance law). Take a look at the chart below to learn more about how much of your beneficiaries are legally entitled to according to the Faraid.

5) If the beneficiaries are below 18 years old or are disabled, their share will be deposited in the Trust Account at AmanahRaya and may be claimed when they reach the age of 18 or the age agreed in the Deed of Trust.

6) If you don’t have a surviving family member and none is claiming your estates, it will all be given to the Baitumal (Islamic financial institute).

7) Before distributing your wealth, your beneficiaries will have to apply to the High Court for Letters of Administration (LA).  Depending on the estate’s or asset ’s value, they can also apply for the LA at the District Land Administrator office or Amanah Rakyat Berhad. On top of that, the Administrator will need to find 2 sureties who can guarantee the same value of assets as yours. This generally takes about 6 to 9 months.

8) These sureties have a duty to ensure that your estates will be properly distributed and the accounts properly rendered. In case the administrator runs away with your monies, the sureties will be required to pay the lost amount to the rightful beneficiaries.

9) Sureties are not required if the gross value of your estates is RM600,000 and lower. Your wealth will be distributed by:

NOTE: The High Court is responsible for all kinds of asset distribution valued above RM2 million as per under the Probate and Administration Act 1959.

10) Additionally, no sureties are needed if a trust corporation is appointed as the administrator; or if the administrator is the sole beneficiary.

MORE: What is Real Property Gains Tax (RPGT) in Malaysia & How to calculate it?

What happens if a non-Muslim property owner dies without a will in Malaysia?

1) Your Estates will be frozen until the case is settled.

2) Your surviving family members must appoint an Administrator. This decision needs consent from all family members involved by signing the Renunciation of Administration letter, to be witnessed by the Magistrate / Commissioner for Oaths.

3) The process of wealth distribution is the same as when you have a valid will. The priority will be given to the provision of your funeral expenses. Then, the provision shall be made to the creditors/outstanding debts. Lastly, the balance of your estates will go to the beneficiaries based on Distribution Act 1958 (amended in 1997) for West Malaysia and Sarawak, while the Intestate Succession Ordinance 1968 is used for Sabah.

4) The court may appoint a guardian for your children who are still minors (children below 18 years old, who may or may not be to your preference. This doesn’t mean that they will have total control of your wealth, however. The guardian will still need to obtain the court’s approval each time he/she intends to withdraw or use your money for the cost of raising and educating your children.

5) Before distributing your wealth, your beneficiaries will have to apply to the High Court for Letters of Administration (LA). Depending on the assets’ value, they can also apply for the LA at the District Land Administrator office or Amanah Rakyat Berhad. On top of that, the Administrator will need to find 2 sureties who can guarantee the same value of assets as yours. This generally takes about 6 to 9 months.

6) These sureties have a duty to ensure that your estates will be properly distributed and the accounts properly rendered. In case the administrator runs away with your monies (greedy bish), the sureties will have to bear the responsibilities of refunding the loss.

7) Sureties are not needed if your estates have a gross value of less than or equal to RM600,000. Your wealth will be distributed by:

Do I need a will if I don’t own anything?

This is usually one of the reasons why people don’t write a will. You too can choose that route if you’re happy with the law dictating where your possessions would go.

Sure, maybe you only have RM500 in your bank account now, and you’re renting a room, have no car, no savings, no children whatsoever – so you don’t see the point of doing it. But what most people don’t know is that a will is not only about distributing your wealth, it can also be about other things.

Probably you have a collection of CDs that you wanted to give to your best friend, those plants that you wanted to give to your mother and that pile of clothes you want to donate when you pass into the hands of God – leaving a will might be the only way they can get these cherished earthly possessions of yours.

In your will, you can designate who will be your Executor/Wasi, the person with authority to make sure that all your possessions (no matter the value) end up in the right hands. It’s like your last wish and also a good closure for your loved ones.

Think about it. No one says it needs to be complicated.

So should you leave a will?

No doubt, this is a morbid topic to talk about. However, the concept is similar to having a life or medical insurance, which is to be prepared for the worse. Don’t think about it as you inviting bad juju, you are just being practical about death and it will offer you a peace of mind knowing that your wealth will

If you decide not to leave a will now, be sure to revisit the issue as your circumstances evolve; you might have children, gain more wealth, develop health problems or just reach a later stage in life. It will offer you a peace of mind knowing that your wealth will be distributed accordingly upon your death.

And if you are already planning to do so but haven’t acted on it, there are many banks and trust management companies that offer will writing services. You can also go through Amanah Raya Berhad to write your will. Finally, if you choose to go through an estate planning attorney when writing your will, do make sure you engage one who specialises in the field to avoid future problems.

If you enjoyed this guide, read this next: What to do if your ‘new’ property has defects & 4 other must-knows about Defect Liability Period (DLP)

*This article was repurposed from “What Happens To Your Assets If You “GO Without Leaving a Will?“, first published on Loanstreet.com.my | Edited by Reena Kaur Bhatt