SUCCESSION PLANNING 1 February 2013 Jeremiah R. Gurusamy

1. SUCCESSION PLANNING 1 February 2013 Jeremiah R. Gurusamy

2. Creating A Trust • Appointing Attorneys under a Power of Attorney • Writing your Last Will & Testament • Financial Planning – Business Trust • Tax Structures • Trust Corporations • Insurance / EPF

3. Creating A Trust Concept of Legal & Beneficial Ownership Elements of a Valid Express Private Trust • 3 Capacity Requirements • - Settlor, Beneficiary, Trustee

4. 3 Certainties • Certainty of Intention to create a Trust (Settlor’s intention – clear language) • Certainty of Subject Matter (Property/Assets precisely defined) • Certainty of Beneficiaries (who are the categories/ identities of beneficiaries & their share entitlements)

5. Principles of Drafting to be observed • Rule against Perpetuities • Rule against Inalienability • Against public policy • Incompletely Constituted Trust

6. Dealing with Trust Property Minors – below 18 years not allowed to hold Land Trust Deed Settlor, Trustee and Beneficiary Concept of Legal and Beneficial Interest Endorsement on Title – Holding as Trustee for the Beneficiaries

7. Appointing an Attorney Power of Attorney Act 1949 (Applies to West Malaysia only) Authentication of PA Authentication Clause Valuable Consideration Stamping of PA Deposit of PA Payment of Registration Fees Revocation of PA

8. Financial Planning • Unit Trust/ Shares/ Property • Business Trust • Tax Structures -High Net worth Individuals / Tax Planning

9. Trust Corporations Perpetual Successions / Professional Custodians • Insurance Life Policies / Nominated Beneficiaries • EPF savings Nominated Beneficiaries

10. EPF Monies & Insurance Policy Monies Deceased made nomination under EPF Act 1991 or Insurance Act 1996 • Nominees entitled to the monies • Check accuracy of information

11. EPF Monies & Insurance Policy Monies • Nomination revoked: • upon death of the nominee during the lifetime of member/policy owner • by written notice of revocation by member/policy owner • by subsequent nomination by member/policy owner during his lifetime

12. EPF Monies • EPF Nomination • Made under Employees Provident Fund Act 1991and Regulations made thereunder • Prescribed form of nomination • Nominee(s) shall be entitled to deceased’s EPF monies regardless of what is stated in the deceased’s Will

13. EPF Nomination is revoked as follows: • Upon death of nominee during the lifetime of the EPF member • By written notice of revocation made by the EPF member, in the prescribed form • By subsequent nomination made by the EPF member during his/her life time, in the prescribed form. The later nomination will supercede the earlier • Regulations 6 & 7 of the Employees Provident Fund Regulations 1991

14. Life Insurance Policy Monies • Nomination • Nomination under a life insurance policy under Insurance Act 1996 • Nominee(s) shall be entitled to deceased’s insurance policy monies and insurer shall pay policy monies upon receipt of claim by nominee and the claim is accompanied by proof of death of the policy holder • Section 165(1) of the Insurance Act 1996

15. Insurance Policy Nomination • A nomination by a non-Muslim policy owner creates a trust in favour of the nominee, of the policy monies payable upon the death of the policy owner if: • The nominee is his/her spouse or child; or • Where there is no spouse or child living at the time of nomination, the nominee is his/her parent • Section 166(1) of the Insurance Act

16. Payment of such policy monies shall not form part of the estate of the deceased-policy owner or be subject to his/her debts • Section 166(2) of the Insurance Act • However, a creditor may apply to court for a declaration that Section 166, wholly or partly, is inapplicable to any particular policy on the ground that the premium(a) under that policy was/were paid to defraud the creditor • Section 166(5) of the Insurance Act

17. Such nomination is revoked as follows: • Upon death of nominee during the lifetime of the policy owner • By written notice given by the policy owner • By subsequent nomination made by the policy owner during his/her life time Note: Nomination shall not be revoked by a Will or by any other act, event or means (Sections 164(1) & (2) of the Insurance Act)

18. Policy owner shall NOT deal with policy to which Section 166(1) of the Insurance Act applies: • by revoking a nomination under the policy; • by varying or surrendering the policy; or • by pledging the policy as security; WITHOUT the written consent of the trustee (Section 166(4) of the Insurance Act)

19. WILLS & LAST TESTAMENT Jeremiah R. Gurusamy

20. WILLS Relevant Legislation • Wills Act 1959 • Wills Ordinance 1953 • Probate And Administration Act 1959 • Trustee Act 1949 • Guardianship Act 1961 • Inheritance (Family Provision) Act 1971

21. WILLS – Administration of Estate (Intestacy) Relevant Legislation • Distribution Act 1958 • Intestate Succession Ordinance 1960 • Small Estate (Distribution) Act 1955

22. WILLS • Wills Act 1959 • What is a Will A document where a person states his/her intentions as who and how his/her estate should be administered and distributed after his /her death. May include provisions for guardianship, custody and tuition of children

23. DEFINITIONS • Definition of “Will” • Section 2(1) of Wills Act • Definition of “Property” • Section 2(1) of Wills Act • Will must be in writing unless it is privileged will • Sections 5(1) & 26(4) of Wills Act • A Will need not be stamped

24. The Testator • The person making the Will • Must be at least 18 years of age • Capacity - of sound mind • Unless soldier in military service or mariner or seaman at sea • Sections 3 & 26(4) of Wills Act • Executor (if male)/Executrix (if female) • The person named in the Will by the Testator to administer and distribute the estate • Need not be a beneficiary

25. Beneficiary(ies) • The person(s) who inherit(s) or benefit(s) under the Will • If there is/are minor beneficiary(ies) named in the Will, the Testator must name at least 2 executor(s)/executrix(ices) • There is NO particular form required or prescribed by the Wills Act

26. WILLS ACT • Generally, if a Testator marries or remarries, his/her Will shall be revoked by the marriage and becomes null and void • See Section 12 of Wills Act for exception • e.g., a Will expressed to be made in contemplation of a marriage is NOT revoked by solemnisation of the marriage contemplated

27. Generally, certain family members who are dependants of the deceased, who have been left out of the Will, MAY apply for reasonable maintenance out of the deceased’s estate INHERITANCE (FAMILY PROVISION) ACT, 1971 • There are provisions in the IFP Act empowering the Court to order payment out of a deceased’s net estate to make reasonable provision for the maintenance of dependents, if the court on such an application being made, is of the opinion that the disposition of the deceased’s estate effected by his will, or the law relating to intestacy, or the combination of his will and that law, is not such as to make such reasonable provision for such dependant’s maintenance

28. Contents of a Will • Name, identity card/passport/identification document number/particulars and address of the Testator • Name(s), identity card(s)/passport(s)/ identification document(s) number(s)/ particulars and address of the Executor(s)/ Executrix(ies) • State whether Executor-Executrix is also to act as trustee(s) • Name(s), identity card(s)/passport(s)/ identification document(s) number(s)/ particulars and address of the Beneficiary(ies)

29. Particulars of assets and properties to be distributed, and how and to whom the same is to be distributed • Proportion of each Beneficiary’s share in each and every asset and property • Specific gifts • General gifts • Residuary estate • Power of Executor/Executrix or Trustee(s) to manage and deal with estate’s assets and properties • E.g., to dispose, to postpone disposal, to invest, to use cash for minor-beneficiary(ies), etc.

30. Witnessing a Will • Testator must sign at the foot or end of the Will (Section 5(2) of Wills Act) • Must be witnessed by AT LEAST 2 witnesses present at the same time • Witnesses MUST NOT be Beneficiaries under the Will OR husband/wife of any Beneficiary (Sections 5(2) & 6 of Wills Act) • Witnesses MUST also sign as witnesses in the presence of the Testator

31. Witness need not read or see contents of the Will – need merely to witness the Testator sign the Will voluntarily • An Executor/Executrix who is NOT a Beneficiary or husband/wife of any Beneficiary MAY witness the Will • A Will shall NOT be invalidated by reason of incompetency of any attesting witness • Section 8 of Wills Act • Any gift to an attesting witness or husband/wife of an attesting witness is to be null and void • Section 9 of Wills Act

32. WILLS • Document where a person states his intention as to how to distribute his estate and who to administer the estate after his death. • Definition of Will and property – section 2 WA

33. General Features 1. Must be in writing, and can be in any language cf privileged wills - soldiers, airmen and sailors. Section 26 WA - oral / writing 2.Testator, Executor, Executrix, Beneficiaries 3. Minor beneficiaries – below 18 years, at least 2 executors

34. General Features 4. A Will need not be stamped 5. If testator marries or re-marries, his or her Will will be revoked by the marriage, null and void. - section 12 WA

35. Witnessing A Will 1. Testator must sign at the foot or end of the Will (section 5(2) WA) 2. Witnessed by at least 2 persons present at the same time, who are not beneficiaries AND not husband/wife of any beneficiaries 3. Any gift to an attesting witness or husband/wife of an attesting witness is to be null and void (section 9 WA)

36. Changing of Will 1. A testator may change his/her Will at any time. 2. A will should be rewritten if need to change. The fresh Will automatically supercede the previous Will.

37. EPF Monies/Insurance Policy Monies 1. Deceased made nomination under EPF Act or Insurance Act 2. Nominees entitled to the monies

38. EPF Monies/Insurance Policy Monies 3. EPF/insurance nomination revoked: • upon death of the nominee during the lifetime of member/policy owner; • by written notice of revocation by member/policy owner; • by subsequent nomination by member/policy owner during his lifetime.

39. Thank You Jeremiah R. Gurusamy Partner Arianti Dipendra Jeremiah 48-2, 2nd Floor, Jalan Medan Setia 2, Plaza Damansara, Damansara Heights 50490 Kuala Lumpur Tel: 603-2095 6505 Fax: 603-2095 7505 E-Mail: jeremiah@adjlex.com