Malaysia -
What To Do With A Deceased’s Estate Upon His/Her Death?
Legal News & Analysis - Asia
Pacific - Malaysia - Construction & Real Estate
Ng Lyn Ee, Shearn Delamore
& Co
nglynee@shearndelamore.com
1 April, 2020
How does an executor or
administrator obtain the power to deal with a deceased’s estate?
After a person passes, the first
step is to find out whether the deceased left a will. Depending on the
existence of a will and the size of the estate, there are several different
ways to obtain power to deal with the estate of the deceased:
With will
- When there is a valid will and
an executor has been named in the will, the executor should apply for the
Grant of Probate of the will (section 3 of the Probate and Administration
Act 1959 (“PAA 1959”)).
- If there is a valid will, but
either the executor named in the will had predeceased the testator or no
executor had been appointed in the will, the person intending to be the
administrator may apply for grant of Letters of Administration with the
will annexed at a High Court (section 16 of the PAA 1959).The Court grants
Letters of Administration to such person as the Court deems fit to
administer, in the following order: a universal or residuary legatee;
1. a personal representative of a
deceased universal or residuary legatee;
2. such person or persons, being
beneficiaries under the will, as would have been entitled
to a grant of Letters of Administration if the deceased had
died intestate;
3. a legatee having a beneficial
interest; and
4. a creditor of the deceased.
Without will
iv. If a person dies intestate, the
person intending to be the administrator may apply for grant of Letters of
Administration (section 30 of the PAA 1959). Depending on the size of the
estate, there are different ways to obtain the Letters of Administration:
- If the gross estate consists of
wholly or partly immovable property, for example, land, a house, which
exceeds RM2 million, the person intending to be the administrator will
have to obtain Letters of Administration at the High Court (section 30,
PAA 1959). The Court shall grant administration to one or more of the
persons interested in the residuary estate of the deceased, unless by
reason of the insolvency of the estate or other special circumstances the
Court thinks it expedient to grant administration to some other person (s.
30, PAA 1959);
- If the estate is a small
estate, the person interested in the estate shall go to the Estate
Distribution Unit of the Department of the Director-General of Lands and
Mines (“JKPTG”) or the Land Office to get Letters of Administration
(section 4, Small Estates (Distribution) Act 1955 (“SEDA 1955”)). The Letters
of Administration will be in the form of a Distribution Order.
small estate refers to the estate of
a deceased person consisting (section 3(2), SEDA 1955):
A. wholly or partly of immovable
property; and
B. not exceeding RM2,000,000 in total value at the time of application
for summary administration; or
v. If the gross value of the estate
is for only movable property and is less than RM600,000, and no person is
entitled to apply for Grant of Probate or Letters of Administration, one may
apply for summary administration via Amanah Raya Berhad (section 17, Public
Trust Corporation Act 1995). Letters of Administration in the form of a
Declaration or Order will be issued.
What is the next step after the
Court has granted the Probate or Letters of Administration?
After the Court has granted the
Probate or Letters of Administration, the personal representative (that is, the
executor or the administrator) will have to do the following:
- collect all the deceased’s
assets;
- pay off the deceased’s debts and
liabilities (if any); and
- distribute the estate in
accordance with the deceased’s will if there is one, otherwise to
distribute the estate in accordance with the Distribution Act 1958.
How does the personal representative
transfer the immovable property from the estate of the deceased to the
beneficiary or a third-party purchaser?
The first step is for the personal
representative to register the vesting of the property forming part of the
estate of the deceased to himself as representative at the land office (section
346, National Land Code 1965). The land office will endorse on the
respective title deed that the property is vested in the personal
representative “as representative”.
The second step depends on whether
the deceased died leaving a will or intestate. If there is a valid will, the
personal representative can transfer the property to the beneficiaries through
presentation of the memorandum of transfer at the land office.
By contrast, if the deceased has
died intestate, the personal representative will need to obtain the requisite
order under section 60 of the PAA 1959 from the High Court sanctioning the
transfer before the presentation of the transfer can take place at the land
office.
If, instead of being transferred to
a beneficiary, the property is to be sold to a third party purchaser, an order
of the High Court under section 60 of the PAA 1959 sanctioning the sale has to
be obtained before the presentation of the transfer can take place at the land
office.
How much is the stamp duty for the
transfer of the property from the estate of the deceased to the beneficiary and
the third-party purchaser?
The stamp duty for the transfer of
the property to the beneficiary, regardless of whether the deceased has left a
will, is RM10 (Item 32(i), First Schedule, Stamp Act 1949).
By contrast, the stamp duty for the
transfer of the property to the third party purchaser is the full ad valorem
stamp duty ad valorem [Item 32(a), First Schedule, SA 1949 (as amended by the
Finance Act 2018 (“FA 2018”) which came into effect on 1 January 2019)].
How much is the real property gains
tax (“RPGT”) for the transfer of the property from the estate of the deceased
to the beneficiary and the third-party purchaser?
When a property forming part of the
estate is vested in the personal representative, there is no RPGT payable as
the disposal price of the property is deemed equal to acquisition price of the
property (paragraph 3(1)(a), Schedule 2, Real Property Gains Tax Act 1976
(“RPGT Act 1976”)).
When the personal representative
transfers the property to a beneficiary, there is also no RPGT payable too
(paragraph 3(1)(a), Schedule 2, RPGT Act 1976). Nevertheless, if the
beneficiary subsequently disposes of the property, the beneficiary will be
deemed to have acquired the property on the date of transfer of ownership of
the property to the beneficiary and the acquisition price of the property will
accordingly be the market value of the property on such date (paragraphs 15(2),
15A(c) and 19(3A), Schedule 2, RPGT Act 1976).
If the personal representative
transfers the property to a third-party purchaser, the personal representative
will need to pay RPGT in accordance with the rate of tax specified in Schedule
5 of the RPGT Act 1976 (as amended by the FA 2018 which came into effect from 1
January 2019). The personal representative will be deemed to have acquired the
property on the date of death of the deceased and the acquisition price of the
property will accordingly be the market value of the property on such date
(paragraphs 15B(1) and 19(3), Schedule 2, RPGT Act 1976).
