Planning for the unexpected (Part 2)

Leong Aun

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Rockwills Corp Sdn Bhd chairman Johari Low and Rockwills International Group managing director Saw Leong Aun talk about the ins and outs of writing a will and planning your estate.


Personal Wealth: Have you encountered individuals who wished to put alternative investments in their will, i.e.  bitcoins?

Johari Low: So far, we have not had any clients go into bitcoins. But we have customers who go into wine and art and so on. Essentially, the products don't change. What we are doing is providing the legal side, that is, specifying who is the executor or legal representative that will have access to those assets.

The main structure of the product does not change, but the contents of the will evolve over time because of the changing circumstances. It also evolves because of court cases, legal precedents, and so on.


We have seen more people planning for elderly care in developed countries. How about Malaysia?

Yes. Not the children [who plan to] provide care for their elderly [dependents], but the elderly rich providing care for themselves. In this case, if the elderly person has an illness like Alzheimer's and can't operate his own bank account, somebody needs to do it for him. If he is forward thinking enough, he will plan for this before it happens. He can do a trust, where a professional firm like ours is appointed. We step in, get the money from the insurance company and follow his instructions.


There is a dynasty trust in the US created to pass on wealth from one generation to the next without incurring a transfer tax. This trust can theoretically last for more than 100 years. Is there a similar kind of trust in Malaysia?

Yes, we have that [at Rockwills]. We call it 3G Family Biz Trust. That means you pass your assets straight down over three generations. The trust remains intact, so you don't dismantle the assets or fragmentise it. Otherwise, you may have one beneficiary who inherits it and another who is not interested. Or maybe one is running the inherited business but the other one says 'I'm not interested and will let you buy over my share'. Or even the other beneficiary saying he doesn't want the assets and files for liquidation. So, that's how things break apart. This [type of trust] prevents them from doing so.

Leong Aun

There are many who argue that simple forms of estate planning, such as will writing, can be done for little or no fee. Lawyers argue that they charge a lower fee. Others believe they can draw up a simple will just by downloading a template from the Internet and get it certified by the relevant parties. What type of value-add can companies like Rockwills provide for estate planning?

Saw Leong Aun: People who come to our public seminar find that their will has been done very badly. Some haven't even appointed an executor, or the will was done and signed with only one independent witness when two are required. Thus, the will is invalid.

In our case, we have a software system into which we have input 300 residual clauses. These are all legal clauses that have been checked by our panel of lawyers. Our lawyers are engaged by big law firms and they review these clauses to make sure they comply with Malaysian laws and are not ambiguous.

We have 30 in-house legal advisers. Some of them used to be lawyers, but they stop practising and joined us. Some of them are law graduates and passed their Certificate in Legal Practice (CLP), but don't want to practise law. With their instructions and our software system, your will can be generated in a day. 

The other thing is we are a licensed trust company. People often appoint Rockwills as their trustee. Most of the time, people have a headache when it comes to appointing an executor. Normally, I appoint my wife. But what about a substitute executor? If both of you travel and for some reason don't come back, you will have no executor. Some wives read newspaper reports and worry that their husband will remarry or get cheated by other people, so they immediately appoint us as the main executor and trustee. We are a licensed trustee governed by law.


What are the costs involved when using wills and trusts?

For will writing, it is from as low as RM380 to RM18,000. For our trusts, it is from RM1,000 to RM18,000. Our prices are fixed because we are registered as a franchise company. Under the Franchise Act 1998, you have to fix your fees and register your scale of fees with the Registrar of Franchise.

Ultimately, the price does not depend on how rich the person is; it depends on how detailed the will and trust are. Some people want to make it very comprehensive, but we have really rich clients that do a RM1,000 will.

This is dangerous. Some of them have only one child, and this is the worst. If they don't plan and the child goes with them, what happens to the whole estate? They can put in a substitute clause in their will or trust, so they know very clearly that no matter what happens, the assets will go to the right people. But this makes the will longer and requires a higher price.

It still comes to a particular person and what kind of planning he wants to do. For example, most of our clients are in their mid-thirties to fifties. These are people with young children and families. In their wills, they want to appoint a guardian for their children in case something happens to them.

When we talk about guardians, it is a tough job. They have to take care of the young children. At night, they may be sick and you have to drive them all the way to the clinic. It is like a full-time babysitter's job, so we also recommend that they give the guardian an allowance.

Let's say a person dies at an old age and his children are already 30 or 40 years old. The will is still valid, but the guardian doesn't have to act. Whatever allowances provided for the guardian go back to the children or the other beneficiaries. This is how you make the will comprehensive, and it gets longer by adding all these clauses.

To make a will very complete, we also have a residual clause. This takes care of any additional assets accumulated and is not specifically mentioned in the will a person made earlier. 


What is your advice to a person or family doing estate planning? What are the steps they can take in planning their estate? 

Do it as soon as possible. Why? Just like insurance, there is an age limit. The law says you can write a will if you are 18 years old and above. But then it comes down to your mental age. If you are not mentally sound, you cannot do it.

Secondly, the will is effective upon death. We have a residual clause to take care of future accumulated assets. This means you don't need to rewrite it 10 years later and it is still valid. So even if people do it earlier, it is okay. They can change it later.

Then of course, we will ask them what their future plans are. Let's say it is to give all their children a university education. You must then make sure you provide certain instructions for your executor to hold the money. You may not want to give them everything until they complete their education and only get the money a year or two after they have finished their studies. That is why we ask them to discuss their goals and visions – so that we can help them plan their wills and trusts.


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