Today, the #1 purpose to form a trust is to ensure accessibility and continuity of administration of assets entrusted in the event of:
- Death
- Disability
- Disease, both physical and mental such as dementia.
The assets entrusted may include:
- Cash
- Real estate
- Shares of private limited companies (Sdn Bhd).
- Shares of public listed companies.
- Insurance policies.
- Vehicles.
- Other collectibles.
Let’s use cash as an example.
Supposedly, one has RM 2 million in cash. He holds RM 1 million under his bank accounts and places the other RM 1 million into a living trust. In the event of an occurrence of major life events such as death, disability or disease, he shall lose the access and ability to manage the RM 1 million in his bank accounts.
But, as for the RM 1 million in his living trust, the money could be distributed to meet immediate expenses as follows:
- Medical costs: including nursing and caretaking expenses.
- Debt payments: including mortgages, car loans, business loans … etc.
- Legal fees: application of Grant of Probate (GP) from the High Court.
- Living costs: for both beneficiaries and himself if he is still alive.
As such, by placing money into a living trust, he could:
- Reduce the financial burden on his loved ones and himself.
- Retain his personal and business assets.
But, what about a will document?
Wouldn’t a will document be helpful to life events as mentioned above?
First, a will document takes effect only after one passes away. It is not useful for him or his beneficiaries if he is disabled or diagnosed with an illness as he is still alive. From the above example, the person’s RM 1 million would be inaccessible and his cash can be transferred into the Registrar of Unclaimed Monies if he did not make a transaction of his bank accounts for more than 7 years.
Second, if he passes on, it will take 18-24 months to process a will document. In the meantime, financial commitments such as mortgages, car loans, credit card loans, … etc would need to be serviced or settled upon. His beneficiaries would need to foot in these bills with their own monies (or his insurance proceeds) for the purpose of retaining these estates as the will document is being expedited.
Hence, having a will document written is a great start to one’s estate planning. I believe one should consider having a trust to make the estate plan complete.
For a start, you can begin by filling up your details below to book yourself a 30- minute consultation session. Our promise to you is: “You shall walk away with at least one key idea to secure your family’s financial future.”
