Estate administration in Malaysia is an important step in ensuring that the deceased estates are managed properly and the assets are distributed to the intended beneficiaries.
This article explains the step-by-step estate administration process in Malaysia and the time required.
Understanding Estate Administration Process in Malaysia
The estate administration process involves managing and distributing a deceased person according to regulations and regulatory requirements.
These requirements and compliance frameworks may differ depending on a few factors: namely the religion of the deceased, whether is there any will, and the total value of the deceased assets. This is explained in more detail below.
Key Steps in the Estate Administration Process in Malaysia
Estate administration in Malaysia usually goes through 5 steps, which are:
1st Step: Identifying the personal representative
In estate administration, a personal representative is an individual or organisation appointed to manage a deceased person's affairs.
They are responsible for administering an estate, such as applying to the authorities, paying off debts, and distributing the remaining assets to the beneficiaries according to the will or the intestacy rules.
There are two types of personal representatives in Malaysia: executors and administrators. The deceased person can appoint a qualified executor in their will. If there is no valid will or an executor is not named in the will, the related legal authority will appoint administrators.
Usually, the surviving spouse is the common personal representative. When choosing an executor, the testator (the one making the will) should choose someone who has integrity and knows the financial dealings of the deceased so that they can administer the deceased estate properly.
Alternatively, a testator can appoint trust companies that are regulated under the Trust Companies Act 1949 as the executor.
2nd Step: Identify assets and liabilities
Next, the personal representative should start the process of managing the deceased’s estate by making an inventory of the deceased's assets and liabilities. Assets include immovable and movable properties such as bank accounts, cash, cars, unit trusts, and stock accounts.
Shares in companies can form part of estate assets too. However, assets that the deceased held as trustee as part of trusts may not form part of his estate.
Liabilities include any debts owed by the deceased such as outstanding tax returns, monies owed to financial institutions, such as credit cards and mortgages, and others.
3rd step: Personal representative applies to the authorities for an order to administer
Next, the personal representative applies to the legal authority for an order to administer the deceased’s estate, ideally within 3 years from the deceased’s death.
Here, any estate plan carried out during the lifetime of the deceased plays an important role because it can affect which authority to apply.
There are usually 2 situations: the deceased leaves a will (as part of estate planning) or without a will. When there is:
Will: The personal representative can apply for:
(a) Grant of probate
By applying to the High Court of Malaya under the Probate and Administration Act 1959 for a grant of probate in Malaysia to administer the deceased’s estate. The High Court has the jurisdiction and power to give this grant.
(b) Summary administration
By applying to the Amanah Raya Berhad (ARB), ARB may administer the deceased’s estate as though a letter of administration of the estate of the deceased person has been granted to ARB. This is sometimes known as the ‘Amanah Raya letter of administration’.
However, this condition only applies if the deceased has only movable property and a total value of not more than RM 600,000.00, as stated under the Public Trust Corporation Act 1995.
Without a will- Here, the personal representatives can apply for:
(a) Small estate administration
By applying to the Land Administrator where the immovable property of the deceased’s estate is located. This only applies when the deceased left behind a small estate, which is defined under Section 3(2) of the Small Estates (Distribution) Act 1955 as:
“small estate” is defined as an estate including immovable property located in Malaysia with or without moveable property with a total value of not exceeding RM2 million
(b) Letters of administration
If the deceased left wholly or partly immovable property, such as a house with and total value of more than RM 2,000,000, then the personal representative may apply to the High Court of Malaya for a grant of letter of administration to administer the deceased’s estate.
Documents Required
The personal representative should follow the related guidelines and statutory provisions in the estate administration process. That includes preparing the following legal documents below before applying to the relevant legal authority:
Copy of the death certificate.
Valid last will of the deceased (if applicable).
List of the beneficiaries
List of assets and liabilities
Documents showing the assets, including a copy of the title deed of the property, bank statements, car, share account statements, life insurance policy statements, etc.
Documents showing the relationship between the beneficiaries, the personal representative, and the deceased
Debts, including outstanding credit cards, and mortgage statements (there is no estate duty in Malaysia).
4th step: Collecting assets and paying debts
The next step is the collection of the deceased's assets. This involves collecting the deceased's bank accounts, cash, car, real estate, personal property, and investments.
After that, the personal representative then pays off the deceased's outstanding debts from the assets. Paying off these debts ensures that the remaining assets can be correctly distributed according to the will or Malaysian inheritance laws, free of any creditor claims.
5th step: Distributing the assets
The final step will be to distribute the remaining assets and residuary estate to the beneficiaries in accordance with the wishes of the deceased person in the will if the deceased leaves a valid will. If the deceased doesn't leave any will, the distribution must follow Malaysian law, the Distribution Act 1958 for non-Muslims.
After the distribution of assets, the estate administration process in Malaysia is complete.
Time Required For Estate Administration
The estate administration process usually takes 6 to 12 months. Generally, the process can be divided into two stages, which are:
The first stage is obtaining an order to administer the estate. It can take between 3 and 6 months, depending on the legal authority.
The second stage is the administration of the deceased asset itself. The time required depends on the type and number of assets. If any land is involved, it will take longer, as the land transfer takes a few months to register.
Engaging Lawyers and Fees
It is recommended to engage a solicitor to assist you with the estate administration process in Malaysia. They can advise you on which authorities to apply to obtain the order to administer the deceased’s estate and then assist you in the application. This ensures that the estate is managed in a proper way that follows the law in Malaysia.
As for the estate administration fees in Malaysia, it usually starts from a few thousand ringgit. If you are looking for a legal firm in Kuala Lumpur or have any queries, you can contact us.
Conclusion
The estate administration process in Malaysia involves many legal steps and can be complicated. If you need help with estate administration in Malaysia, you may contact us. Our lawyers will help guide you through the process.
Frequently Asked Questions
1. What are the estate administrator’s responsibilities?
The estate administrators’ responsibility includes applying to the right legal authority for an order to administer the deceased’s estate. Then, he pays off the deceased debts before distributing the remaining assets to the beneficiaries.
2. What is the concept of estate administration?
Estate administration involves the process of the personal representative managing the deceased’s estate following the related regulatory requirements and statutory provisions. The main purpose is to pay off the estate debts and distribute the residuary estate to the entitled beneficiary.
3. What is the role of an administrator of estate in Malaysia?
The role of administrator in Malaysia includes obtaining an order for estate administration from the relevant authority. Then, he collects the deceased’s assets, pays off the debts, and distributes the remaining assets to the beneficiary according to the will or intestacy law.
4. How many administrators can be on an estate?
There is a minimum 1 administrator and a maximum 4 administrators for an estate in Malaysia
