Rockwills has evolved with the times and growing demands of those who want to undertake estate planning. 

THE tragic events in the past two years, from the disappearance of Malaysia Airlines flight MH370 and the Sewol ferry disaster in South Korea to the Nepal earthquake last month, have spurred greater demand for estate planning tools.

"We have experienced more than 20% growth in our conventional will writing and trust business over the last two years, while growth for the last five years is about 17%. [The disasters] have made people realise that life is fragile, [and think] 'I may not be here tomorrow'. These events have raised a lot of awareness," says Rockwill Corp Sdn Bhd chairman Johari Low.

Rockwills, set up in 1995, was the first company to provide professional will-writing and will-custody services in the country. Today, it is the largest company of its kind in Malaysia, having written over 160,000 wills and holding up to RM2 billion worth of assets under trust. 

In response to the tragedies that have involving missing persons, Rockwills now has a "disappearance clause" in its trusts to determine how and when the assets should be distributed if a person goes missing and is presumed dead.

Prior to this, Low says, the assets mentioned in a will could only be distributed after a death certificate had been obtained.

"You have a will because you want to pass your assets on when death occurs. But what happens if you disappear and your family members can't obtain a death certificate? 

"This disappearance clause covers this circumstance. When a person is deemed to have disappeared, certain assets can be transferred after a certain period of time.  Otherwise, your family members have to apply to court and it could take a long time. In the meantime, what do the children live on?" he asks.

In comparison, a trust can take effect if it is triggered by such conditions as individuals having disappeared for a specific number of days or months. By having such a clause, beneficiaries will not have to wait for a death certificate to be issued, as in the case of a will.

Apart from the disasters, there have been widely publicised reports of family disputes arising from differences over their inheritance and business estate. As a result, some parties have seen their businesses sold off at a low price or treated unfairly by a third party. Low says this has increased awareness, particularly among business owners and high net worth individuals (HNWIs).

"Another factor is the Chinese soap operas on the TVB channel, which are very popular among the Chinese. There is a series that focuses on disputes over the family inheritance. It shows how the lawyer advises them and what strategies each family member uses."

While the awareness of wills has increased, the level of importance placed on creating trusts is still low compared with other countries in the region. "When it comes to wills, I think the awareness in Malaysia is very high compared with the region. This is because of Rockwills. We have done a fairly good job educating the public," says Low.

"But in terms of trusts, I think we are behind Singapore, Hong Kong and Australia. The reason for this is that we have fewer HNWIs, who are more familiar with wills and trusts and the need for them. But the man in the street either has no idea or has a very hazy idea about such things."

As a planning tool for preserving wealth for future generations, estate planning lags behind more familiar products such as unit trusts and insurance. Saw Leong Aun, group managing director of Rockwills International Group, attributes this challenge in part to the reach of its franchisees, also known as estate planners.

"Now, people don't just discuss what unit trusts and insurance are, they talk about which one to buy. Although we have been around for 20 years, and the awareness level in the major cities of Peninsular Malaysia is now as high as 50%, it is only 20% to 30% in smaller towns," he says.

"Next is reach. If you look at insurance, there are so many companies. And there are about 80,000 to 100,000 agents throughout the country. Even the unit trust industry has more than 50,000 agents. Looking at estate planning, our franchisees number only about 3,000. The reach is still not there yet, and this is also why the awareness can't grow very fast. We will continue to do more promotions and educational activities to overcome this challenge."

Low says an informal company survey shows that about 90% of Malaysians who are eligible to write a will have not done so, a slight decrease from 95% previously. "While we observe that more people want to do it, they don't take action. This is human nature. When you talk about death and preparing for death, nobody likes to do it."

The following is an excerpt from the two-hour long interview.

Personal Wealth: What are the new trends in estate planning?

Johari Low: Globalisation [has made people] concerned about diversification. After you have built up a certain amount of wealth, you don't want to leave it all in one basket. Maybe you want to diversify into currencies or properties.

For example, when you had a lot of surplus money in the past, you might have bought a lot of properties here. But now, you may buy seven properties here and three overseas. In case something happens, the downside [in one location] will be compensated for by the upside [in another].

This has become easier to do. It has also driven the need for estate planning differently. [For example,] in some countries, they have inheritance tax. Many people don't realise it, but it has implications for what they do. If they buy a property in the UK, they have to pay 40% inheritance tax when they die. This 40% is not on the gain, but on the capital.

Nowadays, the younger generation has spread around the globe. They study overseas and they get married [and continue] living there, so your beneficiaries may be in the US or the UK. This also has tax implications. Even though all your assets are here, they are subject to the tax there. So, estate planning also involves planning how to mitigate this.

Because the younger generation is going overseas, some of them marry people of other races and nationalities. This sometimes leads to a culture clash. In fact, there are some statistics saying that the divorce rate has gone up. When divorce [happens], the spouse usually sues for half of the assets. So, the inheritor [of the estate] can get caught. These are the trends that are driving estate planning, especially for HNWIs.

In the light of globalisation, how has Rockwills met the changing demands of Malaysians?

This is a very complex subject, and we have to help them put it all together. Let's say you have some assets in Malaysia and some overseas. You will need to plan for the instruments in Malaysia according to Malaysian law. If the asset is in the UK or Hong Kong, you have to plan for the instruments according to the law there. In this case, we have our contacts worldwide and we will organise [to have this structured properly].

For estate planning, we may want to come up with a structure that makes things easier, such as being more tax efficient and to meet certain objectives. Otherwise you may have a will here and a will there; you will end up with several wills. The structure we create will put all the assets in one structure and cover everything. There is no one size fits all. We have to see what they want and tailor it [to suit].

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on May 11 - 17, 2015.

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