By Tan Ping Ying, CEO of Affin Hwang Trustee Bhd (AHTB)

As more Malaysians gain in affluence and accumulate more assets, wealth and estate planning have become more pertinent to discuss amongst families. Do you think we are talking enough about wealth and estate planning and is there sufficient awareness?

Compared to 10 years ago, people these days are perhaps more aware and familiar with the concept of estate planning. But overall, there is still a lack of awareness of a holistic wealth plan that is both comprehensive and dynamic.

Most individuals create an estate plan because they want to control who will receive their assets after their demise, and they want it with the least amount of administrative costs such as legal fees and taxes. But hardly anyone thinks about what would happen to them in the event of an accident or injury that renders them incapacitated.

A complete and holistic plan should encompass more than just what happens after you pass on. Sufficient awareness should be built around the concept that you should start planning as soon as you have assets to pass down to your loved ones and to provide for yourself during your incapacity; which is now, rather than hoping things will work out when the time comes.  It is not wise to let the courts to keep control of your assets and control decisions about your medical care when you no longer have the ability to take charge of your own affairs.

  • Succession Plan

According to Bloomberg, total wealth in Asia has surpassed US$22 trillion. But, the region also faces a growing problem, where only 39% of family businesses have a clear succession plan. How should family businesses approach such a conversation about succession which can be sensitive?

Succession planning can be especially complicated in family-owned and operated businesses because of the relationships and emotions involved.

The best way to overcome this sensitive topic is to involve your family in discussions on business succession planning. We would always advise our clients to be frank and open about their intended succession plan and consider the family members’ ambitions and goals in their business plans. We believe that a good succession plan should be able to balance the needs and ambitions of each family member while protecting the transfer of wealth across generations in a safe manner.

  • Passing Important Values

But beyond just transferring wealth and bequeathing assets, how can families also pass down important values to the next generation?  

Passing down important values and principles to the next generation begins by educating younger family members early on of the core values of wealth preservation and growth. This education can be best taught through examples, as more senior family members begin engaging with other members in active discussions with regards to the subject.

Furthermore, exposing younger family members to the tools of wealth and asset preservation at an early stage would also help in familiarising them to the various strategies which can be employed, thus providing them with a strong foundation to approach this subject later in life.

  • Will and Trust

Many Malaysians are unaware, but a will does not take effect in the event that one becomes incapacitated or mentally indisposed. This is because a will only goes into effect after one’s death. How can we design a more comprehensive plan that encompasses these various scenarios?

We have come across many individuals who would opt to transfer their assets after their lifetime into a dormant trust which they have set up. This is not advisable as you will not be able to ensure or “test” out the competency of your trustee, as you or your family do not have any prior relationship with your trustee.

In our opinion, a comprehensive and holistic plan comprises of a customised trust and a will. With a customised trust, you can transfer assets into the trust during your lifetime. By doing so, you can ‘test’ out the competency of the trustee and also build a relationship with your trustee to ensure smooth transition of your wealth. Your trust will contain your wishes to cater for your needs and in managing your assets if you become incapacitated or when you have passed away.

In addition, with a customised trust, you can safeguard a child or minor’s inheritance or provide for a loved one that requires special needs. Even if you feel that your beneficiary would handle the inheritance well, you may want to keep the assets in a trust to protect them from creditors, current spouses, ex-spouses and potential lawsuits. Your trustee can make distributions to the beneficiary as and when needed, and if invested well, could even help provide for future generations.

Lastly, a will should also be written so that your remaining assets can be executed properly and expeditiously without burdening your beneficiaries of the hassle of distributing your estate when there is no will.

  • Cross-Border Wealth

With increased cross-border wealth allocation and more Malaysians diversifying their investments overseas, how would investors gain from proper wealth and estate planning strategies?

It is important that investors familiarise themselves with their investments overseas and understand what would happen to their investments in the event of their incapacity or demise.

For instance, many Malaysians are unaware that some overseas investments may have inheritance tax or other taxes that may be applicable. Therefore, with proper wealth and estate planning strategies, this may be minimised or managed accordingly.

Affin Hwang Trustee Berhad (AHTB) is a Trust Company incorporated in 1990. As a member of Affin Hwang Capital, we specialise in holistic wealth and estate planning services to protect and preserve our clients’ wealth, ensuring an efficient transfer from one generation to another.  AHTB’s experienced and professionally trained team aims to provide clients with the highest standards of competence, integrity, and confidentiality.