Part 2: Administration of Estate
In the last article (see: “Where There’s A Will There’s A Way”), we discussed about the benefits of having a Will. We also talked about how the assets of the deceased are distributed in the event he or she dies intestate.
In this article, we will discuss about how the deceased’s family members or Executor can administrate the estate, with or without a Will. In order to do so, the Executor or Administrator must obtain a Grant of Probate or Letter of Administration from Court before performing any duties. Once obtained, the Executor or Administrator will commence his or her duties in the following order:-
1. collect the deceased’s estate;
2. pay the deceased’s debts and liabilities including funeral expenses, car loan, mortgage, credit card debts (unless it is covered by debt insurance) and estate duty (if any); and
3. distribute the remainder of the estate to the beneficiaries.
The difference between Executor and Administrator
Pursuant to Section 3(1) Probate and Administration Act 1959 (“PAA”), where there is a valid Will and the Executor is named in the Will, the Grant of Probate may be granted to the said Executor. If there are several Executors named, it may be granted to all subject to a maximum of 4 persons.
However, pursuant to Section 7 of the PAA, the Executor’s right shall cease if he:
(a) survives the testator but dies before taking out the Probate; or
(b) is cited to take out Probate but does not appear to the citation*; or
(c) renounces the right as an Executor.
*Citation is a document issued by an interested party to the estate to call on the Executor(s) to perform his or her duties or to renounce the right as an Executor. For example, the deceased’s family may issue a citation to the Executor if he or she refuses to apply for the Grant of Probate.
On the other hand, the Court will appoint an Administrator to administrate the deceased’s estate if:-
(a) no Executor being named in the Will;
(b) all the Executors appointed in the Will are legally incapable of acting, or have renounced their rights;
(c) no Executor survives the testator;
(d) all the Executors have passed on before obtaining probate or completed administering all the estate of the deceased;
(e) the Executors appointed in the Will failed to extract the probate, or
(f) the deceased has passed on intestate.
Any persons interested in the estate of the deceased person, who have died intestate, may apply to become an Administrator under Section 30 of the PAA. If the deceased has a valid Will but did not name an Executor, the Court will also appoint an Administrator pursuant to Section 16 of the PAA.
Application for a Grant of Probate
The following preliminary steps are important for the Executor to satisfy prior the application for the Grant of Probate:-
(a) Obtain an extract of the death certificate from the Registrar of Births and Deaths.
(b) Ensure that the Will is valid and complied with the requirements in the Wills Act 1959.
(c) A translation (preferably in Bahasa Malaysia) to be certified by a qualified interpreter or verified by affidavit of a person qualified if the Will is in a language other than Bahasa Malaysia or English.
(d) Make certified true copies of the death certificate and the Will as the original will be deposited in Court during the hearing of the application and will not be returned.
(e) Prepare the list of assets and liabilities and the list of beneficiaries for the distribution of the estate.
An Originating Summon and an Affidavit in Support (sworn by the Executor) will be filed in Court to apply for the Grant of Probate. If the application for the Grant of Probate is made after a lapse of 3 years from the date of death, the reason for the delay must be given in the Affidavit in Support. Once the Originating Summon and the Affidavit in Support have been filed in the Court, a hearing date will be fixed for the Executor to attend Court to obtain an order for the Grant of Probate.
Letter of Administration with Will annexed
Where someone passed on with a Will but without naming an Executor or the Executor has ceased to act for reasons mentioned above, a person is entitled under Section 16 of the PAA to apply to Court for a Letter of Administration with Will annexed. Effectively, he or she will be the Administrator if the Letter of Administration with Will annexed is granted by the Court.
The Court procedure to apply for the Letter of Administration with Will annexed is almost similar to an application for Grant of Probate. The difference is that the Administrator can only extract the Letter of Administration with Will annexed if he or she furnished an Administration Bond. An Administration Bond is a security imposed on the Administrator to ensure he or she will acts legally and ethically and protects both the estate and the beneficiaries’ interest.
The criteria for an Administration Bond is that there must be two sureties, who have assets within the jurisdiction equivalent to the amount of the deceased’s estate. In the event the Administrator is not able to fulfil such criteria, he or she may apply to the Court for dispensation.
There are circumstances where the Administration Bond is not required at all. It is possible if:-
(a) The Trust Corporation has obtained administration;
(b) The deceased left no estate;
(c) The gross value of the estate does not exceed RM50,000; or
(d) The Administrator is the sole beneficiary to the whole estate.
Letter of Administration without Will annexed
When someone passed on without a Will, a person, entitled under Section 30 of the PAA, may apply for the Letter of Administration without Will annexed to be an Administrator.
The Court procedure for the application of the Letter of Administration without Will annexed is identical with the application for Letter of Administration with Will annexed. An Administration Bond is also required to be furnished although the reasons for dispensation are equally applicable herein.
However, the distribution of the assets will be governed under Section 6 of the Distribution Act 1958 as there is no Will. The manner and order of distribution is as stated in Part 1: “Where There’s A Will There’s A Way”.
Distribution under the Small Estates (Distribution) Act 1955
The alternative to a Court process is to apply at the District Land Office for the administration of the deceased’s estate under the Small Estates (Distribution) Act 1955. A “small estate” means an estate of a deceased person not exceeding RM2 million in total value (without deduction of debts) and the estate must consist wholly or partly of immovable properties. The deceased’s estate will not be a “small estate” if it does not consist of an immovable property.
Generally, a person who is claiming an interest in the deceased’s estate, whether as a beneficiary or a creditor, may lodge a petition at the District Land Office. Subsequently, a hearing will be conducted at the District Land Office. At the conclusion of the hearing, the District Land Office will make a grant for distribution and no Administration Bond is required. The distribution of the assets will still be governed by the Distribution Act 1958 since there is no Will.
One may opt for the administration of a small estate by the District Land Office over the administration of an estate under a grant from the High Court as it is more costs effective to do so.
Regardless, the Executor or Administrator must always remember that the purpose of applying for a Grant of Probate or Letter of Administration is to ensure the deceased’s final possessions are distributed justly and fairly.
By: Lee Su Ting
DISCLAIMER: This article is for general information only and should not be relied upon as legal advice and/or legal opinion. Messrs Yeoh & Joanne accepts no liability for any loss which may arise from reliance on the information contained in this article.
李淑婷律师(Lee Su Ting)
免责声明:本文仅供参考，不应作为法律建议和/或法律意见。Yeoh & Joanne律师事务所不会承担因依赖本文所含信息而产生的任何损失的责任。