Meet Ben, a businessman and a successful investor.
Apart from his businesses, Ben built himself a RM 4 million property portfolio, a RM 700,000 equity portfolio consisting of stocks, unit trusts, ETFs and a handful of index funds, RM 200,000 in cryptos, and RM 100,000 in cash. Hence, Ben has accumulated as much as RM 5 million in personal assets.
Ben’s wife is a homemaker. Together, they have two children aged 3 and 5. So in Ben’s case, is writing a will good enough to leave behind his RM 5 million assets to his wife? This is so that his family remains financially sustainable in the event of his death.
Well, if I’m Ben today, I would ask the following questions:
#1: How Long Does It Take for My Wife to Get My Assets?
The answer is at least 1 year upon death. This is because the process to fully expedite the will document includes:
a. An application to the High Court to obtain the Grant of Probate (GP).
b. Collection of assets.
c. Settlement of all outstanding debts and taxes.
d. Distribution of remaining assets to all nominated beneficiaries in the will.
In the meantime, the issue lies with my wife. Does she have money to pay for:
a. Legal fees to apply for the GP?
b. All mortgage repayments, if MRTAs on them are insufficient?
c. All other debt repayments such as car loans and credit card balances?
d. and all other household expenditures?
If I wish to prepare a fund to meet these expenses, a viable option is to set up a living trust and place cash into it. This is because cash put in a living trust would not be frozen upon death and it could be disbursed to my beneficiaries (wife) in 7 days (depending on your preferred trustee company) upon death. Therefore, I would say this is a practical approach to preparing such a fund for my family.
#2: Can My Wife Handle RM 5 Million in Assets?
Now, this is subjective.
I believe it takes a financially and emotionally wise person to handle this kind of wealth. Bequeathing RM 5 million to one who is inexperienced in handling such wealth can be more of a curse than a blessing to that person. Too often, I learnt of many cases where family members wasted inherited wealth not due to them being bad people but due to abuse and mismanagement.
If I’m Ben, my objective is to ensure that the RM 5 million would provide a large financial safety net to my wife and two children. But, this could be redundant, if the wealth bequeathed can be squandered in little time.
So, what if my intended beneficiaries are not financially savvy?
What can I do?
Well, I can consider distributing the RM 5 million in assets not in one-lump sum but in stages to my beneficiaries based on my specific purposes. They include:
a. Offer RM 15,000 a month in living expenses to my wife and two children.
b. Set aside RM 250,000 in tertiary education funds each for my two children.
c. Provide RM 300,000 in gifts for each children upon hitting a certain age.
and so on and so forth.
Hence, if I wish to ‘have a say’ in who, how much, when, and for what purposes the money is to be distributed, I would say it is ideal to set up a trust to fulfill all intended objectives. This is because my trustee would be required to follow the instructions as to how my money placed in the trust is to be managed based on the contents written in my trust deed.
In this way, I can eliminate the risk of losses due to abuse and mismanagement.
#3: Is My Will Useful if I’m TPD-ed or Critically-Ill?
The answer is no.
A will document is only effective upon one’s death.
So for example, if Ben met with an accident and survived, but was TPD-ed or be comatosed, the RM 5 million in assets will not be helpful if he fails to get access to them to pay for his household expenses and meet debt repayments. A will in this case is pretty useless because Ben is still alive.
The issue is not about having wealth but on the access of wealth in the event of an emergency.
What is the point of having RM 5 million when I cannot get access to any of it in times of an emergency?
But, if I have RM 5 million and I placed 10% of it or RM 500,000 into my trust, in an emergency, that RM 500,000 placed in the trust could be my life saviour. The money can be used to pay for my household expenses, repay debts, and as well as to meet other financial obligations. So in such situations, trust would be very useful as compared to a will document.
Will and Trust to Safeguard Financial Future
Thus if I’m Ben, I would consider both setting up a trust and writing or updating my will document to safeguard the financial future of my family. The two would be more crucial as the asset value is substantial at RM 5 million. So, if you today are handling millions in assets, it is best to engage a professional estate planner to take care of your estate planning matters.
Presently, we have a promotion, where the fees to write or update a will and its lifetime custody worth RM 1,550, would be waived in full upon successful setup of a living trust with WG Legacy. This promotion would end by 31 August 2022 and you may subscribe by booking yourself a 30-minute consultation session below:
