You’re Never Too Young For Estate Planning

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What Is Estate Planning?

Estate planning is a crucial process that ensures your assets are distributed according to your wishes after your death. This involves creating a will, establishing trusts, and designating beneficiaries for your assets. The primary goal of estate planning is to minimize the impact of taxes, avoid probate, and ensure that your loved ones are taken care of.
One important aspect of estate planning is choosing the right executor or trustee to manage your estate after your death. This person should be someone you trust and who is capable of handling the responsibilities of managing your assets and distributing them according to your wishes.
Another essential aspect of estate planning is ensuring that you have enough life insurance coverage to provide for your family in the event of your death. This can help ensure that your loved ones are financially secure and able to maintain their lifestyle without you.
Overall, estate planning is a critical process that everyone should undertake to ensure that their wishes are carried out after their death. While it may be difficult to think about the end of life, proper planning can help provide peace of mind and ensure that your loved ones are taken care of.

Malaysia’s Awareness of Estate Planning & Will

Malaysia has a total population of about 32.6 million. Based on 2019 estimations, 51% of the total population (16.62 million) is above 18 years old, which makes them eligible for estate planning services. From this category, 89% (14.8 million) have yet to plan their estate. (RHB, 2019)
Only two million people (28%) have a will among Malaysia’s seven million working population. (MWD Wills Depository Sdn Bhd, 2019)

Importance of Estate Planning Before 30

1. An estate plan protects beneficiaries

In Malaysia, it is crucial for individuals to start estate planning before the age of 30. This is because having an estate plan can protect beneficiaries, especially when the assets involved are substantial. Without a clear estate plan, the Distribution Act 1958 will determine the allocation of assets, which may not be in line with the deceased’s wishes.
Additionally, in Malaysia, the legal process of asset distribution can take up to 3 to 6 months, which can cause unnecessary delays and added stress for the family. Therefore, having an estate plan in place can help to avoid family disputes and ensure that the assets are distributed fairly and according to the individual’s wishes.
Moreover, in Malaysia, Islamic inheritance law applies to Muslims, and it is essential to understand the laws and regulations surrounding it. With proper estate planning, Muslims can ensure that their assets are distributed in accordance with Islamic law and their wishes.
Overall, estate planning is not just for the wealthy, and it is essential for everyone to have an estate plan, regardless of age or asset value. Starting estate planning before the age of 30 in Malaysia can ensure that beneficiaries are protected and that the asset distribution process is smooth and fair.

2. An estate plan protects your dependents

In Malaysia, it is crucial for individuals to start estate planning before the age of 30, especially if they have dependents. If you are a parent of young children, it is essential to prepare for the unexpected and protect your dependents’ future. This is where estate planning comes in.
By having an estate plan, you can ensure that your children are cared for by someone you trust in the event that both parents die before the kids turn 18. This can be done by naming guardians in your will, which will ensure that the court does not have full power in deciding their custody.
Additionally, estate planning can provide financial security for your dependents. You can set up trusts or designate beneficiaries to ensure that your assets are used for your dependents’ care and education. This can give you peace of mind, knowing that your dependents will be taken care of even if you are no longer there to provide for them.
Moreover, estate planning can help you ensure that your dependents’ needs are met in the way you desire. You can leave instructions for how you want your dependents to be raised, what values you want them to uphold, and how you want your assets to be used for their benefit.
In conclusion, estate planning is crucial for individuals with dependents, especially parents of young children. Starting estate planning before the age of 30 in Malaysia can help you protect your dependents’ future, provide financial security, and ensure that their needs are met in the way you desire.

3. An estate plan spares heirs a big tax bite

In Malaysia, estate planning is essential for individuals to avoid hefty taxes that may burden their heirs. While Malaysia does not have estate or inheritance taxes, the assets may be subject to other types of taxes, such as capital gains tax or stamp duty. By having an estate plan in place, individuals can reduce or avoid these taxes altogether.
One of the most effective ways to avoid taxes is to establish trusts. Trusts can help to reduce or eliminate taxes, protect assets, and ensure that they are distributed according to the individual’s wishes. Additionally, making irrevocable gifts or establishing joint accounts can also help to reduce taxes and protect the beneficiaries from the tax burden.
It is crucial to note that taxes can significantly reduce the value of the assets passed down to the heirs, making it essential to plan ahead to minimize the tax bite. Estate planning before the age of 30 in Malaysia can help individuals ensure that their assets are distributed tax-efficiently, leaving their heirs with a more substantial inheritance.
Overall, estate planning is crucial in Malaysia to avoid taxes and ensure that the beneficiaries receive a fair share of the assets. Starting estate planning before the age of 30 can provide individuals with ample time to plan and minimize the tax burden on their heirs.

4. An estate plan protects you, too

In Malaysia, having an estate plan before the age of 30 can also protect individuals by appointing durable attorney powers to make medical and financial decisions on their behalf. This is particularly important in cases where individuals may become temporarily or permanently incapacitated.
A living will is a legal document that outlines an individual’s medical directives, stating the kind of medical treatment they want or do not want in case of incapacitation. By having a living will in place, individuals can ensure that their medical wishes are honored even when they are unable to make decisions for themselves.
In addition to medical decisions, an estate plan can also appoint an individual to make financial decisions on behalf of the incapacitated person. This person, known as the attorney-in-fact or agent, will have the legal authority to manage the individual’s finances and make decisions about investments, debts, and other financial matters.
Having a durable attorney power in place can give individuals peace of mind knowing that their interests are protected, even if they are unable to make decisions for themselves. Therefore, it is important for individuals to start estate planning before the age of 30 in Malaysia to ensure that their medical and financial wishes are honored in case of incapacity.

References

https://www.investopedia.com/articles/wealth-management/122915/4-reasons-estate-planning-so-important.asp


https://www.businessinsider.com/personal-finance/why-is-estate-planning-important


https://purefinancial.com/learning-center/blog/why-estate-planning-is-important/

https://www.freemalaysiatoday.com/category/leisure/money/2021/09/21/3-reasons-why-you-should-have-a-will-and-estate-plan

Estate planning isn’t only for the rich or very old; it can be simple and inexpensive. The sooner you start, the better. But remember to review your plan regularly or update it if needed. If your estate plan is out-of-date, your heirs could still encounter some of the problems you tried so hard to avoid. 
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