[VIDEO] Writing a will: When your worries don't die with you.
PUBLISHED 17 JULY 2019
As a young professional subjected to an unforgiving economy, writing a will may be the last thing on your mind – if you don't own a house, three cars and a rare reptile, then why write a will?
On RUMIT's last episode for the season, Rajen Devadason, licensed financial planner and CEO of RD Wealth Management, explains the ins and outs of writing your will – and why it's always important to have one.
FULL TRANSCRIPT
JAZMIN SIEH | Presenter
And so, she has finally figured out how to do her income tax. Still trying to get a loan for her car. Let’s not forget insurance. She lived happily ever–
Do you ever think about what happens when you die? See, I haven’t lived long enough. Yet, I feel like I’ve already left traces of myself everywhere. What’s a girl to do when she’s A) broke, and B) has nothing to give out? If I don’t have my will, what happens to all of my mess? Honestly–
CRYSTAL
Ayoyo, this is very pantang one, you know! You’re not supposed to talk about [your] will when you belum mati! We all very pantang about this! No no no no. You know!
JAZMIN
Is it too soon?
[INTRO MUSIC]
“EPISODE #6: WILL”
RAJEN DEVADASON | Financial Planner, CEO of RD Wealth Management
Longevity risk, which is something that we consider in retirement planning, is that you live longer than your money lasts. And so you have no problems if you run out of breath before your cash runs out. But if it happens the other way around, not so good.
[MUSIC]
RAJEN
I would suggest that people use wills in a positive way. But it’s a very powerful thing. It is not just the distribution of stuff, like the phone, like the camera. More importantly, it is the distribution of assets – financial assets and physical assets. Like as you accumulate a house, a car, etc. etc. The picture that I want is for you to be able to take [and] grasp what you’ve got today and to place it somewhere intelligently in the future.
Usually people would say, “I got nothing, I don’t need to write a will.” But that’s not true. Overtime, people have a tendency to accumulate assets. You always have something, even if it’s an old bicycle. Now, if you don’t say anything, the people left after you’re gone would just say, “We’ll throw it away or whatever.” Eventually, as you make the transition throughout your 20s, from just your stuff stuff to who gets my wealth? Who gets the money in my bank account? Who gets the money in my EPF? Who gets the money from my insurance policy?
You have to be aware of a very critical point. If in your will you have specified certain beneficiaries, but your life insurance policy has a different set of beneficiaries, and your EPF account has a different set of beneficiaries – the EPF and insurance listings take precedence over what’s in the will. So the biggest issue with regards to the stuff that is around is that people don’t think about it.
So if you die with a will, the distribution is done through Grant of Probate. Which is a much quicker legal document that you can get. It can be done in like 2-6 months or whatsoever. If you die without a will, then you can’t go for a Grant of Probate. You have to go and apply for a Letter of Administration. But I’ve heard horror stories of Letters of Administration that take a year, two years, three years or longer. And all this is very, very stressful.
Can you imagine? People are dealing with enormous amounts of grief. What if you’re the breadwinner? And you have control of everything. And then you’re suddenly gone. And you family has…? [They] eventually will gain access to assets but have no money.
If a person dies without a will, then in most cases in Malaysia, the Malaysian Distribution Act kicks in. And if you keep running through the various categories, ultimately the Malaysian government takes your stuff. Not because it wants your assets – it’s simply that if you got no one, and you haven’t specified anyone, and they can’t find some distant cousin some place, then where’s the money going to go?
JAZMIN
As of 2018, more than RM66 billion worth of inheritance in Malaysia remains unclaimed. I’m going to say that one more time– RM66 billion. I can’t even compute those numbers! My cucu’s cicit’s cucu and her best friends could be living it up with that kind of money!
Just imagine– everything you’ve accumulated, gone. Your phone, your diary (with all your secrets in it), your bantal busuk!
Wait, ini semua aset ke?
RAJEN
If you’re talking about what matters to you, [then] you decide. What do I consider valuable? Then I’ve got to ask myself, “Who knows my intentions better? Me or, in the absence of a will, the Malaysian government?”.
In the case of Muslims in Malaysia – under the wasiat, you have a lot of flexibility, but only up to 1/3 of your assets. Everything else is very much controlled on a family basis. For non-muslims, you can give anything to anyone. In a will, you have plenty of flexibility. And now I’m specifically talking about a general will that doesn’t apply to Muslims.
Usually, all you need to do is to take care of the key physical and key financial assets. And everything else can fall by the wayside. The way that you make sure that nothing falls by the wayside is to have a clause at the very end of the will called the Residual Distribution Clause. What it effectively says is, “And for everything else not mentioned in this will, please give it to _____.”
Once you take care of that, you’re in pretty much good shape.
RAJEN
When you are writing your will, use clear language. So let’s say, down the road, you do get married. Specifically, you want to give RM20,000 to your father, RM20,000 to your mother, and you want to give everything else to your husband who is now your widower. Specify that and literally say, “And everything leftover I give to ____ with no exception.” And that way, you take care of your camera, your weird bicycle, your guinea pigs, or whatever else you may have.
Get it done. But before you get it done, spend a little bit of time just to sit down by yourself and think, “What have I got? Who do I care for? Who do I want to get stuff to?”
If you really don’t like someone, don’t leave them zero. For instance, a husband really really doesn’t want to leave anything to his wife. Under the Malaysian Distribution Act, the wife will get certain assets – but here if you’re saying, “No I don’t want there to be any possibility of there being some kind of conflict, I don’t want her to bring it up in court etc.”, I would specify, “And to this wife of mine, as much as you like, I leave RM1 and not a penny more.” Something like that.
You just have to understand that if you want to live responsibly, then you need to figure out a way to be able to die responsibly as well. And that’s where the will comes in. It allows you to actually extend your hand from the grave to place assets precisely where you want them to go.
[END]
CREDITS
