Most people generally presume that their assets will automatically be distributed to the beneficiaries when they passed on. Unfortunately, this is not true because there is legal process to be followed.
Where there is a valid Will (Testacy)
When a person passes on with a valid Will, the family members try to locate and identify the deceased’s estate and the Executor named in the Will will engage a lawyer to apply for the Grant of Probate in the High Court for the estate administration of the deseased. Upon extraction of the Grant of Probate, the Executor is responsible for assembling and collecting the deceased’s estate, paying off the funeral expenses, estate administration fees, income taxes, debts and liabilities and distributing the remainder of the estate according in the Will.
It is important to note that under section 74 of the Income Tax Act 1967, the Executor must not distribute the estate unless made provisions for full or reasonable tax payment and failing which the Executor will be personally liable to pay a penalty equal to the amount of tax payable.
Where there is no Will (Intestacy)
When a person passes on without a Will, the lawful beneficiaries under the Distribution Act (as amended in 1997) 1959 or Hukum Faraid will have to appoint Administrator to administer the deceased’s estate. The duties of the Administrator are the same as duties of the Executor.
There are several jurisdictions to deal with the deceased’s estate depending on nature of the assets whether movables or immovables and the gross value of the estate in the case of intestacy.
Total value of estate more than RM2 million
Where a person dies intestacy and the gross value of his estate exceeds RM2 million, the High Court has the jurisdiction and the power to grant Letters of Administration to the administrator. All lawful beneficiaries choose one or two administrator(s) by way of renunciation of their rights to be the administrator. The High Court may order administrator(s) to provide 2 sureties for the administration bond which is equivalent to the gross value of the estate.
Total value of estate does not exceed RM2 million – wholly or partly immovables
Where a person dies and the gross value of his estate (wholly or partly immovables) does not exceed RM2 million, it is the exclusive jurisdiction of the District Land Administrator under the Small Estates (Distribution) Act 1955.
Total value of estate with wholly movable below RM600,000
Under section 17 (1) of the Public Trust Corporation Act 1995, Amanah Raya Berhad has the jurisdiction to directly administer estates and issues a Declaration containing particulars of the estate for distribution among the lawful beneficiaries.
Total value of estate with wholly movable exceeds RM600,000
In this case, the jurisdiction lies with the High Court to grant Letters of Administration.