Estate Planning: Intestacy, Wills, Wasiat, Faraid and Nomination
What this domain tests
How assets pass at death, the tools that control that transfer, and the liquidity and administrative consequences. Malaysian content dominates: the Distribution Act 1958 for non-Muslims in Peninsular Malaysia and Sarawak, the Wills Act, wasiat and faraid for Muslims, and nomination under the EPF Act and insurance law.
Core rules
- Dying without a will triggers intestacy. Non-Muslim: where the deceased leaves a spouse and children, the spouse takes one-third and the children share two-thirds. Where there is a spouse but no issue or parents, the spouse takes one-half. Administration requires letters of administration, which freezes assets for months.
- A will names an executor; probate follows. For Muslims, faraid fixes the shares of Quranic heirs, and a wasiat is limited to one-third of the estate and cannot benefit an already-entitled heir without consent of the others.
- Nomination: a trust nomination on a life policy puts the policy proceeds outside the estate; an EPF nomination makes the nominee a distributor of the savings, so the money may still be accounted for under distribution rules. Neither replaces a will.
- Estate duty was abolished in 1991, but stamp duty and real property gains tax can still arise on transfers.
Worked example
An estate of RM900,000; the deceased (non-Muslim, Peninsular Malaysia) is survived by a spouse and two children, parents predeceased, no will. Spouse receives one-third = RM300,000; the two children share two-thirds = RM600,000, so RM300,000 each. Had a valid will named the spouse as sole beneficiary, the spouse would have taken everything, but the children would receive nothing and the estate would still need probate to be released.
Traps that cost marks
- Believing an EPF nomination overrides faraid or a will - it does not.
- Ignoring the one-third cap on wasiat for Muslim clients.
- Forgetting that joint tenancy passes by survivorship and bypasses the will entirely.
- Overlooking liquidity for debts, taxes and maintenance of minor beneficiaries.