Question

Hi, my name is Alex. I’m married to Amy and together, we live in a condominium unit in Kuala Lumpur, which we had bought three years ago. As I write, we have no children. Here, my question is, ‘What will happen to our property, if one of us passes on in the future without a will? Will Amy inherit my portion of our home, if I’m the one who passes away first?’ 


Answer

If Alex passes on, the condominium unit shall be frozen. If Alex had purchased a mortgage reducing term assurance (MRTA) policy, where its sum assured covers their outstanding mortgage in full, this is great. Its beneficiaries shall inherit the condominium debt-free. But, if Alex’s policy covers solely his portion of debt, in this case, the total mortgage on the condominium will be reduced, requiring his wife to continue servicing its mortgage. Hence, the questions are: 


1. What are the sum assured of the MRTA policies bought by Alex and Amy? 

2. Can Amy make full payments in relation to the property after Alex’s passing? 


Will Amy inherit Alex’s portion and thus, owning the condominium in full? 

The answer is nope if Alex’s parents are still alive. Based on the Distribution Act 1958, Alex’s portion of the condominium shall be inherited under the ratio: 


1. Alex’s Spouse = Amy (50%)

2. Alex’s Parents = Alex’s Father (25%) and Alex’s Mother (25%)


As a result, the full ownership of the condominium would be as follow: 


1. Amy = 75% (50% – her original portion + 25% – which is ½ of Alex’s Portion)

2. Alex’s Father = 12.5% (which is ¼ of Alex’s Portion) 

3. Alex’s Mother = 12.5% (which is ¼ of Alex’s Portion) 


In essence, the condominium shall be jointly owned by Amy and Alex’s parents, who are Amy’s in-laws. Of which, they will lead to more questions below: 


Question 1: To Sell or Not to Sell? 

Let’s say, Amy intends to sell off the condominium sometime in the future. The sale would not happen, if one of Alex’s parents disagrees with the disposal. Also, if they agree to sell the property, but they cannot agree on its sale price of the property, the disposal could not proceed. Thus, it can be frustrating. 


Question 2: What If One of Alex’s Parents Passes On? 

Let’s say, Alex’s father is the one who passes on, the next questions would be: 


‘Did he write himself a will before he passes on?’ 

‘ What if he passes on without a valid will?’ 


In this case, the 12.5% property ownership held on by Alex’s father will then be further distributed to Alex’s grandparents (if any is still alive), Alex’s mother and Alex’s siblings (if any) in accordance with the Distribution Act 1958. 

To put it simply, let’s say, Alex has two siblings namely, Aaron and Amelia. Thus, if Alex’s father passed on, the 12.5% shall then be distributed to: 


1. Alex’s Mother = 6.25% (which is 50% of the 12.5% held by Alex’s Father)

2. Aaron = 3.125% (½ of the 50% of the 12.5% held by Alex’s Father)

3. Amelia = 3.125% (½ of the 50% of the 12.5% held by Alex’s Father)


Upon the passing of Alex’s father, the new property ownership would be: 


1. Amy = 75% 

2. Alex’s Mother = 18.75%

3. Alex’s Brother (Aaron) = 3.125% 

4. Alex’s Sister (Amelia) = 3.125% 


Thus, the condominium will have more jointowners. 

It could be harder to make decisions on the condominium for more jointowners will contribute more opinions as their objectives are different from each other. 


Question 3: Who Expedites the Transfer of Property Ownership? 

Coming back to Alex. 

If he passes on, Amy, his wife could apply to the High Court to administer Alex’s estates. This will involve an application of the Letter of Administration (LA) with the assistance of Amy’s lawyer and efforts to convince two individuals (must be residents in Malaysia) to be sureties when submitting the LA to the High Court. 

The sureties must own assets within the jurisdiction that have either equivalent or more than the deceased’s estates as security when administering the estates of the deceased. Hence, if Alex’s estates are valued at RM 1 million, Amy would need to convince two individuals who have more than RM 1 million in assets to be sureties. That is no easy task. 

The process of obtaining the LA would take 6-9 months or even more, if there is any delay in between. 

Subsequently, after obtaining the LA, Amy shall collect Alex’s estates, pay off his outstanding debts or taxes (if any) and finally, end her duties by distributing the remainder of Alex’s estates (including the ownership of the condominium) with the ratio stated in accordance with the Distribution Act 1958. Hence, the entire process shall take 1-2 years to complete (if there are no delays in between). 


If I Jointly Own a Property Today … 

I would write a will. 

And, I would get my jointowners to write their wills too. 

If I’m Alex, I’ll nominate Amy to inherit my portion of the condominium. Hence, this enables Amy to own full possession of the condominium unit. In addition, I encourage Amy to write a will or to do estate planning together as a couple. For instance, both Alex and Amy could name each other as the executors of the will documents. The process of writing a will is simple and is pretty cost-effective. 

This adds financial certainty to both Alex and Amy because it would ensure that the estate administration process is expedited smoothly. 

For a start, you may consider the services of a qualified estate planner, who are well-versed in will writing and trust formation services. You may start by filling up the details below to book a 30-minute consultation session so that you can brainstorm ideas on this to find out how you could plan your estates efficiently today. 


Jocelline Chee
Jocelline Chee

As a Full-time Senior Professional Estate Planner, Jocelline seeks to understand every client’s unique asset holdings and legacy wishes, before recommending a suitable Will and/or Trust structure to meet their needs. She is well-equipped to point out various blindspots in Legacy Planning, that her clients may have. With Jocelline, you can be assured that your legacy planning journey will feel more like having an open-hearted coffee session with a trusted friend, as compared to a formal and awkward session with an equipped advisor.

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