Banyan Consulting
We provide multi-disciplinary consultancy services including:-
Principal : Chai Yong (Mr)
He possesses Bachelor of Engineering (Honours) degree from the Civil Engineering Department of the University of Malaya, British Computer Society (Part 1), Master of Business Administration (High Honours) from the Oklahoma City University, USA, Bachelor of Laws (Honours) and Master of Laws from the University of London, Certificate of Legal Practice, Certified Financial Planner and elected Associate Member of the Malaysian Institute of Arbitration.
He ever worked for a few multi-national firms such as Chiyoda Corporation, Japan, Hong Fok Corporation, Dragages et Travaux France, Multiplex Australia. His experience ranges from construction and project management of refinery plant, chemical plant, high rise buildings, township projects, housing projects, hotels, industrial building, commercial and residential buildings.
In legal practice, he involved both in litigation/arbitration and conveyancing. He particularly specializes in Construction Law and Law of Succession.
Please use the Google Translator at the left side of this webpage to translate to your language, if you wish.
Wealth Management Advisory
There are in general, three (3) ways to bequeath your estate to your successors i.e. (1) will (2) trust and (3) foundation.
Comparisons between Will, Trust and Foundation
| Will | Trust | Foundation | |
| Characteristics | Testator during his life time through a will makes arrangement on how to distribute his estates according to his will. Will takes effect after the Testator passes away. | Settlor vests his properties with the Trustee. Instruct the Trustee on how to administer his properties including distribution or gain from investment be distributed to the beneficiaries. There is fiduciary duty between the Trustee and the Beneficiaries. Takes effect when the documentation is completed. | The Founder puts his properties in a Foundation, via the Council Members and Officer administers his properties, distributes the gain of his properties to the Beneficiaries. Arrangement during life time. Takes effect after completion of documentation. |
| Property control | Testator cannot control his properties. The Executor distributes the Testator's properties according to his will. Will will take effect after the Testator pass away | The Trustee is a legal owner of the Property. The Settlor may reserve his right. | The Council Members administer the properties. The Founder could reserve the right of control. |
| Confidentiality | Not strictly confidential. | Strictly confidential. | Strictly confidential. |
| Rights of Beneficiaries. | Rank behind the creditors. | The Trustee owes a fiduciary duty to the Beneficiaries. | Council Members has no fiduciary duty to the Beneficiaries. |
| Distribution to Beneficiaries | After the Executor settles the liabilities. | According to terms and conditions of the Trust. | According to the Charter. |
| Protection against Creditor | Not available. | 2 years after establishment of Trust (S11(3)(a)LTA). | 2 years after establishment of Foundation (S58(4)(b)LFA). |
| Avoid foreign country succession rules | Cannot | Can | Can |
| Cost | Low. | High. Have to pay trust administration fee annually. | High. But lower than Trust. Have to pay management fee to the Secretary annually. |
Will Writing
What is a will?
A will is a declaration of a person's intentions concerning the disposition and devolution of his property after his death.
The person making a will, sets down how he wishes his property to be disposed after his death and states the names of the persons (the executors) who are to attend to its distribution.
A will has no legal effect until the death of the testator i.e. the person who makes the will.
A will must be in writing.
A person must have reached an age of majority i.e. 18 years old to make a will (S4 Will Act 1959).
There is full freedom of testation in will, except under Muslim law testamentary disposition may not exceed one-third (1/3) of the estate of the deceased. One way out for a Muslim to dispose of fully his estates as his wish is to write a trust subject to some limitation.
The law allows non-Muslims unfettered right to dispose of their property; however the court can intervene, in spite of the testator's expressed wishes, on how to dispose of his property by providing certain people who may or may not be catered for in the will or by declaring that leaving property with certain conditions attached is contrary to public policy and should be disallowed.
Comparisons between Having a Will and Without Will
| Testacy (with a will) | Intestacy (without a will) |
| 1. Vesting of deceased's estate. The estate vests in the executor upon death. The will enable the
Executor to handle the deceased's affairs subject to production of Grant of Probate if and when required. |
1. The deceased's estate does not vest in the administration until after Letter of Administration has been obtained. |
| 2. The Executor has the right to carry on with the deceased's affair subject to the validation of their actions by extraction of probate and provisions of the will. |
2. There is no such right. The Administrator duty is to call in the assets and distribute. |
| 3. The Testator has the right and free hand to choose his beneficiaries and their shares subject only to leaving reasonable provisions for dependants. |
3. As there is no will, succession to the estate is determined by the provisions of the laws on intestate succession. |
| 4. No surety is required for administration of estate. | 4. Two (2) sureties are required, each guarantees the gross value of the estate. |
| 5. By and large, no need to prove the deceased's religion, custom. |
5. These have to be proved, causing delay in extracting Letter of Administration. |
| 6. A Beneficiary's rights are determinable. A will contains specific devices, bequeaths etc and therefore such rights are assignable. |
6. A Beneficiary's right are not determinable, making it impossible to assign any specific gift. |
| 7. In most instances, production of will and death certificate are sufficient to call in assets and have them vested in the Executor. |
7. It is not possible to call in assets as holders of such assets will want a proper discharge and this can be done once Letter of Administration has been extracted. |
| 8. The Executor may give valid receipt of discharge, even before Grant of Probate extraction. |
8. An Administrator cannot give valid receipt of discharge before extraction of Letter of Administration. |
Three (3) main reasons that you should consider writing a will:-
1. Without a will, when a person passed away, the legal estate i.e. parents, spouse and issues (children and grandchildren) need to elect an Administrator. The election of Administrator could be a difficult process if the family members cannot agree with each other on who the Administrator is. This will delay the application for Letter of Administration.
2. In the case of intestacy, you need to have two (2) sureties (guarantors) each guarantees the gross value of the estate. If the estate worth one million Ringgit Malaysia, it is not easy to find a surety.
3. The application of Letter of Administration normally will take 3 to 5 years.
As a comparison, if a person died with a will, the application for Grant of Probate will take about six (6) months. No surety is required. The distribution of estate is by the Executor according to the will once the Grant of Probate is issued by the Court.
Note: The concept of will discussed here is based on Malaysian laws. (Malaysian will).
Trust
A trust is another way of wealth protection.
Compared with will (testamentary trust), trust is more confidential. The content of will will be disclosed once a testator passed away and the executor applies for a Grant of Probate. The identity of beneficiary will not be revealed in a trust.
The assets held under a trust will not be frozen when a settlor passed away.
To create a trust, because of the annual administration fee charged by a trustee corporation, you need to have assets worth more than Ringgit Malaysia 500,000-00.
The assets held under a trust can be movable and immovable such as lands.
To write a Trust, you need to appoint a Public Trustee. the reasons being:-
a. a Public Trustee has perpetual existence. The manager in charge may come and go, but the entity responsible for administration of trust is still there.
b. a Public Trustee has the professionalism and experience
c. a Public Trustee is independent and impartial
d. a Public Trustee is accountable.
Type of Trust available (based on RHB's Private Trust Services. Banyan Consulting is an agent of RHB Private Trust Services)
1. Private Purpose Trust
Private purpose Trust is a multiple purposes trust allowing for investment, charitable gifts, maintenance and educational needs.
Multiple type of assets that are free from encumbrances can be settled into a private purpose trust.
It is suitable to cater for successive generation to benefit.
2. Asset Distribution Trust
Asset distribution trust is used mainly for distribution of assets upon death or total or permanent disability (TPD) of the Settlor to prevent delay.
It can avoid Syariah distribution.
It is creditor proof after 5 years. The trust must be irrevocable trust.
The public trustee does not manage the trust property.
The assets must be unencumbered.
3. Investment Trust
Investment Trust provides for continuous steady income to the Settlor (during his lifetime) and the beneficiary during the trust period.
It can be used to maintain lifestyle needs, to finance education expenses and the living expenses.
RHB Asset Management Sdn Bhd is a licensed asset management company regulated by the Securities Commission of Malaysia.
Investment done can be local or offshore or a combination of both.
A minimum of RM500,00 is required for the fund.
4. Insurance Trust
Insurance Trust will allow the Settlor to give the insurance proceeds to anyone or organization. It create a trust for persons other than those under S 166 Insurance Act.
The Settlor can have multiple level of beneficiaries. He can control the distribution of the insurance money.
It states any legal condition to the income to be enjoyed.
The Settlor can have staggered payment to the beneficiaries.
It consolidates multiple insurance policies into the trust.
It can avoid Syariah distribution for the proceeds (Financial planning for Muslim)
Any insurance can be put under Insurance Trust, save Personal Accident and Medicard.
For Takaful, if it can be assigned, it can be put under Insurance Trust.
Foreign insurance policies that can be assigned can be put under Insurance Trust, depending on the parent insurance company policy.
5. Estate Administration Trust
Estate Administration Trust will allow the beneficiary to utilize the insurance proceeds as funeral expenses, testamentary expenses, executor/administrator fee and payment to outstanding debt.
The Insured must be the sole beneficiary.
Life policy only with minimum sum assured of RM80,000.
Any balance will be distributed to the deceased estate.
6. Charitable Trust
Charitable trust can be set up for the relief of poverty, advancement of education or religion or other purposes beneficial to the community.
As most charitable trusts may last a long time, the ideal choice of trustee would be a public trustee which has the advantage of perpetual exitence.
Charitable trust can exist in perpetual, unlike private trust (limited to 80 years).
7. Business Succession Trust
Only for partnership company and private limited company. See Business Continuous Agreement.
Business Succession Trust guarantees sale of share of partnership at a full and fair value.
It provides smooth transfer of partner's interest at death or disability with the implementation of trust deed.
Business Succession Trust ensures that non-liquid stock is converted to liquid income, providing a fund for the benefit of the deceased's family.
Foundation (Labuan)
A foundation is a separate legal entity established by a founder to hold assets, management of which would benefit classes of persons on contractual basis (not fiduciary basis). It could be used for both charitable and non-charitable purposes.
Non-charitable purposes include personal wealth management. It offers a choice other than will and trust.
Labuan Foundation is governed by the Labuan Foundation Act 2010.
As it is a separate legal entity, it can become a shareholder in a companies, execute agreement, have legal dealing etc.
To reduce risks, it may conduct business activities vide a holding company or a partnership company.
Its business activities must be related to its objective like asset management.
A Labuan Foundation is essentially an investment holding vehicle and by definition conducts only investment holding activities. Such activities are defined in Section 2 of the Labuan Business Activity Tax Act 1990. Section 9 of the same Act stipulates that all Labuan non-trading companies are not subject to tax.
Labuan Foundation consists of the following:-
1. Registered office
A Labuan Foundation must be registered with Labuan Financial Services Authority (FSA) and have a registered office in Labuan.
2. Charter
The Charter stipulates the name of the foundation, objectives, beneficiaries, duration, secretary’s name and address etc.
3. Articles
The Articles stipulates how to distribute the assets or gain on the assets to its beneficiaries, how to identify the surviving beneficiaries when the foundation is dissolved, the minimum value of the assets below which no distribution to its beneficiaries etc.
4. The foundation entity structure
A Labuan Foundation consists of a founder, council members, officers, secretary, supervisory persons and beneficiaries.
5. Assets
Assets that are injected into a Labuan Foundation are belonged to the foundation. They are used to meet its stipulated objectives. The asset must be a foreign asset. If it is a Malaysian asset, it must be for charitable foundation or approved by Labuan FSA.
6. Currency
The currency used in a Labuan Foundation must be a currency other than Ringgit Malaysia. If the foundation needs to use Ringgit Malaysia, it must be approved first.
7. Accounting record
Account record must be kept in the registered office in Labuan or other Labuan addresses.
At any time, the council members, officers, supervisory persons may inspect the accounting record.
8. Dissolution
A Labuan Foundation can be dissolved upon passing of a resolution by the officer on 3 grounds i.e. (i) that the foundation is established for a definite period of time and that period has expired (ii) that the purposes of the foundation have been fulfilled or become incapable of fulfillment (iii) the charter requires dissolution.
After dissolution, the remaining asset will be transferred to its beneficiaries.
Advantages
1. A foundation is a separate legal entity that can execute agreement and does lawful dealing like transfer etc.
2. It keeps the creditor out of reach (must be established at least 2 years earlier).
3. It cannot be forcefully liquidated to fulfill a claim like divorce.
4. It can freely distribute its assets.
5. It can be not perpetual (by default it is perpetual). A duration can be set in the Charter.
6. It is confidential and anonymous. It is not a public record like sendirian berhad companies or public companies. Only a certain group of persons can have access to the details of the foundation.
7. It is subject to Labuan financial system. Non-trading company pay no tax. For trading company, the tax rate is 3%.
8. Distribution of asset to beneficiary attracts no tax. However, the beneficiary must fulfill its obligation under the income tax.
9. No foreign exchange control.
10. No withholding tax, capital gain tax, inheritance tax.
11. All offshore business documents have no stamp duty.
Important Articles
1. Why must you make a will - Malaysian Perspective
Contact Us Now!
For will writing, please contact
Banyan Consulting
email: banyan88@gmail.com
handphone: 6012-7116955
Glossaries
Testator : The person who make a will.
Executor : The person appointed by the Testator to execute his will. An Executor has to apply for a Grant of Probate before distribution of the Testator's estate.
Administrator : The person elected by those entitled to the Intestate's estate. He will apply for a Letter of Administration before distribution of the Intestate's estate.
Beneficiary : The person named under a will who is entitled to the Testator's estate. A beneficiary is entitled to the legal interest of the Testator's estate.
Guardian: The person who is responsible for the maintenance of a minor (under 21 years old) until the minor reaches age of majority.
Trustee: The person who is vested with the beneficial interest of the Testator's estate. He may have the power to insure, sell and deal with the estate for the benefits of the beneficiary.
Grant of Probate : A sealed Court document issued after the Executor applies to the Court annexing the will. The Executor may base on a Grant of Probate to distribute the Testator's estate.
Letter of Administration : A sealed Court document issued after the Administrator applies to the Court via a lawyer. The Administrator may base on Letter of Administration to distribute the Intestate's estate.
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Disclaimer
The content of this website is for general knowledge only. The reader must consult his lawyer before taking any action. We shall not be held any responsibility should you suffer any loss and damage if your action is based on this website.
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