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| Wealth Preservation |
| Ditulis oleh Nor Azmi Omar | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sabtu, 07 Oktober 2006 03:29 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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There are no translations available. Financial planning extends to what happens to our property and assets upon death. As death is a certainty, it is wise to always be prepared. Otherwise, not only are you going to endure psychological problems, you will be further burdened with financial problems. Estate Planning is the process of making proper arrangements for the Protection, Preservation and Provision of a person's total assets for the benefit of his/her family and loved ones. Advantages of Leaving a Will Upon the death of an estate owner, all his/her assets are deemed by law to be frozen. If an estate owner leaves a Will, his/her estate will be distributed according to the instructions written in that Will. For Muslims, they can write a Will but can only give away one third of his/her total assets to non-heirs. Without a Will Without a legally binding Will, your loved ones, especially your children, could be left financially insecure. They (you included, in the case of a husband’s death) could be burdened with a complex, drawn-out legal battle and administrative red tape. The law will decide who the beneficiaries would be and no one would have the authority to deal with a deceased person’s estate until the court has appointed an administrator. One of the legal complications involves applying for the Letters of Administration/Probate where the court requires two sureties to stand as guarantors for security of the administration of the estate. The surety would be bonded to the amount equivalent to the gross value of the estate. This process is usually long and tedious, especially if nobody wants to take up the surety. In West Malaysia, if there is no will, the person’s assets are governed by the Distribution Act 1958. The act, however, does not apply to Muslims who are governed by the Islamic rules of succession Making a will The general rule is that any person, above the age 18 (Age of Majority Act 1971), of sound mind and who has possessions to dispose of, can make a will. A will does not take effect until the death of the testator. It takes effect as if it had been executed immediately before the death of the testator. Where a testator makes a will and then marries, his will or part thereof is revoked by the marriage and becomes inoperative. However, a will made in contemplation of a particular marriage that takes place in due course, even in a first, second or subsequent marriages of a person practicing polygamy will not be revoked. Property Disposable by Will Lands and buildings A testator may dispose of any freehold property (and house which is solely owned). If the testator sells the property after making a will, the beneficiary named will not receive the property because at the time of the testator’s death, the property no longer belongs to the deceased testator. Where the property is in joint ownership, e.g. property bought by a husband and wife jointly as co-proprietors, a testator can dispose the undivided share in a will (sections 92(2)(d) and 343(1)(c) National Land Code 1965). The holder of a leasehold property can dispose of the property, like freehold property. If the lease is assigned, then it requires the consent of the freehold owner of the leased property. Temporary Occupation Licenses (TOL) in respect of state land, mining land and reserved land issued by state authority under section 66 of the National Land Code 1965 are not capable of assignment. Every such license terminates on the death of the person or dissolution of the body, for the time being entitled to the benefit thereof. Specific gifts Specific gifts are gifts that are specifically described. This should be differentiated with general legacy where the gifts do not refer to any specific or particular object. Properties abroad A will disposing of a property (both movables and immovable) that is situated abroad, is generally governed by the law of the country in which the property is situated. The general rule is that a will must conform to the laws of the country where it was made or where the persons making the will was living permanently or where (in the case of wills made in foreign countries) the testator was a citizen. A will of items such as land and homes, mortgages, leaseholds, interest in freeholds, and even debentures representing proceeds of sale of freehold that are situated in another country, will be construed according to the laws of that country. Property Disposable by Will Shares Members of a company have a right to transfer their shares to whoever they like, unless the articles of the company provide otherwise. In the case of a private company, the articles must restrict transfer. In the case of a public company, there is normally no restriction if a stock exchange quotation is given. Therefore, subject to any restrictions placed upon the disposal of shares by a company, any shares can be disposed of in a will. Life assurance policies A life assurance policy, which has been taken on one’s life and benefit, forms part of the estate. Upon death, if the benefit of the policy passes to the deceased, then it forms part of the estate. If the policy has been assigned or taken out for the benefit of another person, then the payment of the premiums is a transfer for value, but the policy itself does not form part of the estate of the person whose life is assured. Where a policy of insurance is effected by the assured on the assured life for the benefit of the spouse or children, a trust is created in favour of the beneficiaries. The money is payable under such a policy, as long as any of the objects of the trust remains unperformed. The money is not part of the insured’s estate or subject to the insured’s debts. Trust property A will which devises or bequests the testator’s property does not convey the property of which he is merely a trustee. Testacy and Intestacy (non-Muslims)
Distribution of Non-Muslim Estates
Succession of Estates for Muslims Under Islamic law, where the deceased dies intestate and leaves no lawful next of kin, his movable property reverts to Bait-al-Mal (funds of the Majlis Ugama) and if there is land it escheats to the state land authority. Muslim law prohibits succession of a deceased Muslim’s intestate property to a non-Muslim. Where a Muslim convert dies, leaving his spouse, children, parents and siblings who are non-Muslims, they are not entitled to inherit all the deceased property. The property is reverted to Baitul Mal and the immovable property reverted to the state land authority. These results can only be overcome by the convert making a gift inter vivos [Hyperlink to gifts inter vivos in table below] or by making a will (disposing not more than one-third of the estate) to his non-Muslim next-of kin. Testacy Under Muslim Law The formal attestation and execution of a Muslim will is determined by the provisions of the Wills Act 1959. Failure or inattention to these formalities may render a will invalid. The testamentary powers of disposition of property in a Muslim will are governed by Islamic law. The general principle of Muslim law is that testamentary disposition may not exceed one-third of the deceased’s estate. Where a Muslim leaves to a stranger by will a house exceeding one-third of the value of the deceased estate and the heirs do not consent, the bequest would be void. It is also unlawful for a Muslim to make a bequest to benefit an object opposed to Islam as a religion. Thus, where a Muslim makes a will for building a Hindu temple, such a request would also be void. The National Council for Muslim Religious Affairs, Malaysia has issued a fatwa to the effect that nominees of funds in the Employees Provident Fund, Post Office Savings Banks, Banks, Insurance companies and Co-operative Societies take on the role of the administrator of an estate. Such a person can receive the money of the deceased from sources stated above to be divided among the persons who are entitled according to the law of inheritance. Under Muslim law, a wakaf or trust may be created with the custodian or trustee having rights in perpetuity. There are however, statutory restrictions imposed by statute. Most Malay Reservation Enactments prohibit the transfer of any Malay Reservation land to any person other than a Malay. No Malay state land included in a Malay Reservation can be sold, leased or otherwise disposed of to any person who is not a Malay. In Peninsular Malaysia, other than Penang and Malacca, the law applicable to intestacy of a Muslim estate is the Muslim law including Malay custom. The validity of a will made by a Muslim is determined by the provisions of the Wills Act 1959 but the testamentary powers of disposition of property in the will of a person professing the religion of Islam are governed by Islamic law. The will of a Muslim that attempts to prefer one heir by giving him a larger share of the estate than he is entitled to by Muslim law is wholly invalid without the consent of the other heirs. Though a Muslim may bequeath one-third of his estate by will, his heirs must consent to the disposition according to Islamic law. If not, the one-third forms part of the estate that will be dealt with according to Islamic law. The remaining two-thirds will be disposed of according to the principles of Islamic law, including any recognised law or custom. In all other states in Peninsular Malaysia, Islamic rules of inheritance on intestacy are followed. A widow is entitled to a special share in the deceased husband’s estate, as her share in harta sepencarian (except in Selangor), unless provision has been made for her inter vivos, such as registering lands in her name. Where the deceased leaves no children, the widow is entitled to a quarter of the residue but if there are children, the widow is entitle to only one-eighth of the residual property. Under the respective state laws, Shariah courts are given power to hear and determine actions and proceedings relating to the division of and claims to harta sepencarian, and to determine the persons and their entitlement to the shares of the estate of a deceased Muslim. They have the power to order the division of any assets acquired during the marriage after taking into consideration the extent of contribution by the other party in looking after the welfare of the family and the general well being of the home, and all the needs of the children. Faraid (Arabic term meaning religious obligations) allocates the shares of the property of the intestate to different heirs according to individual circumstances. Intestate property comprises the residue of the deceased property after disposal of the legal one-third, if there is a will and after payment of the funeral expenses and debts of the deceased. The heirs are determined in accordance with Islamic law. Further degrees of relationship are excluded by closer degrees of relationship. Servants, persons proved guilty of murder of the deceased and persons of different faith are excluded from becoming heirs. The following twelve relations are entitled to inherit according to individual circumstances: the husband, wife, father, grandfather, mother, grandmother, daughter, son’s daughter, a full sister, a sister by the same father as the deceased, a brother by the same mother as the deceased and a sister as the same brother as the deceased. If all categories of relations are living at the time of death, only three (i.e. father, son and husband) of the fifteen categories of male heirs and five (daughters, son’s daughter, mother, wife and full sister) of the ten categories of female heirs are entitled to various shares in the intestate property. The rest belonging to further degrees of relationship are excluded by heirs of closer degrees of relationship. A widower is entitled to half of his wife’s if they have no children. If they have children, he will be entitled to a one-quarter share. The remainder is divided among his children. Males always inherit a double portion of the females’ share. In the case of widowers or widows without any children, the brothers and sisters of the deceased would be entitled to a certain share as provided under the Islamic law. In the case of a wife inheriting from her husband, a Muslim widow is entitled to a one-eighth share of the estate if they have children. Otherwise, she will get one quarter. If there is more than one widow, their shares are divided equally. Husbands and wives inherit from each other subject to the following two conditions:
Distribution of Muslim Estates
Gifts A gift is a voluntary transfer of an interest in property by the owner (the donor) to another (the donee) without any consideration or compensation. The lack of consideration distinguishes a gift from a transfer by contract or sale. To be legally effective, the subject matter must be delivered to the donee. The donor must also be competent and have the intention to make the gift, and the gift must be accepted by the donee. Although real and personal properties may be the subject of gifts, the law relating to gifts is primarily concerned with personal property. Real property transfers, whether by sale or gift are accompanied by the execution and delivery of the deed to the transferee. Types of Gift
Glossary of Terms
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