Question:
“Hi Lawyer Yeo, I have a question regarding inheritance laws in Malaysia and would like to seek your advice.”
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“My father had recently passed away and left a copy of his will to us. After reading his will, we found that he had appointed a local trustee firm as the sole executor of his estate.”
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“We subsequently reached out to the trustee company and were informed that they could assist us in applying for the Grant of Probate from the High Court of Malaya. Nevertheless, they also told us that they would impose an “administration fee” for the purpose of administering my father’s estate.”
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“Given that my father’s estate consists of only two immovable properties, and all the beneficiaries are competent adults capable of managing his estate, is it legal for the executor to impose this so-called administration fee?”
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“If we are not happy with my father’s decision, can we apply to change the executor? We hope you can answer our questions. Thank you!”
Answer:
1. An executor is the person entrusted by the testator to carry out the provisions of his will. In respect to the duties/ responsibilities of an executor in Malaysia, we have explained it in detail in our previous article.
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2 Then it is legal for a trustee company who acting as the executor to impose/ collect an administration fee from the deceased’s estate? The answer is yes. The executor is indeed entitled to do so.
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3. Practically, when appointing a trustee company or Amanah Raya as the executor, they would insert several clauses in the will granting them the right to charge administration fees.
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4. In some cases, they would also arrange for the testator to sign separate agreement/ consent forms so to obtain the testator’s express consent for their fees. Usually, their administration fees will be calculated proportionally based on the estimated value of the deceased’s estate.
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5. Hence, before executing a will, it is important for the testator needs to consider whether there is really a need for him to appoint a trustee company as his executor. If all of his beneficiaries are adults and the instructions in his Will are very simple, then the optimal choice is to select one or two of his beneficiaries as the executors. Choosing a third party as the executor would inevitably make the whole matter more complicated and lead to unnecessary expenses.
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6. Except in cases where the beneficiary is a minor or the testator intends to create a trust fund for special purposes, such as charity, then appointing a trustee company or a third party as the executor will be a feasible choice. However, before appointing a trustee company as the executor, it is crucial for the testator to have a clear understanding of the administrative fees chargeable, and the administrative procedures that will be involved in the future.
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7. That being said. If the beneficiaries are being dissatisfied with the executor named in the Will, can they change or replace the executor?
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8. The answer is affirmative. However, the process can be exceedingly challenging because changing the executor would inevitably go against the wishes of the deceased. Typically, the courts are hesitant to grant such changes unless the applicants can present sufficient cause to change the executors in accordance with Section 34 of the Probate and Administration Act 1959.
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9. Therefore, the legal burden to change the executor lies with the applicants/ beneficiaries of the will. Generally, the court will only agree to the application if the executor has serious misbehavior that has severely affected the beneficiaries’ rights in the estate of a deceased.
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See:
- Damanyanti Kantilal Doshi & Ors v Jigarlal Kantilal Doshi & Ors [1998] 4 MLJ 268
- Phua Chui Har v. Amanah Raya Berhad [2002] MLJU 512
- Ligar Fernandez v Eric Claude Cooke [2002] 5 MLJ 177
- Mak Chee Chong v Rockwills Trustee Berhad [2016] 10 MLJ 124
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10. The legal process of changing the executor will also incur legal fees and would inevitably delay the entire estate administration process for a period of time.
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11. Hence, while a will remains a powerful tool for estate planning, it’s imperative for the testator to evaluate whether it is necessary for him/her to appoint a third-party executor or establish a testamentary trust in his will.
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12. If needed, the testator should consider obtaining a second opinion from a lawyer or a professional will writer. Spending a modest sum in obtaining consultation is a prudent step to streamline the inheritance process and prevent potential complications in the future.
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The above are the inheritance laws governing will in Malaysia that we would want to share with you today. Should you have further inquiries for this matter, please do contact us: https://wa.link/q3kmv5
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