In view of the upcoming Budget 2025, the Malaysian Institute of Estate Planners has listed out a number of recommendations for the government to consider in making estate planning more supportive and conducive for all Malaysians.
Notably, there needs to be a comprehensive approach in addressing the critical issues in estate planning, including the alarming amount of unclaimed funds in the country. As of April this year, the Ministry of Finance stated there is a total of RM11.2 billion unclaimed funds, a substantial amount by any neans.
Hence the association has listed these recommendation which include, for the government to keep a nominal Stamp Duty for Transfers to Children/Grandchildren and Trust Assignments. MIEP proposes the retention and expansion of the nominal stamp duty of RM10 for transfers of all asset categories—including property, insurance policies, and other assets—when assigned into Trusts or transferred from parents to their children or grandchildren. This measure facilitates intergenerational wealth transfer and reduces financial burdens on families, enabling smoother transitions of assets.
Personal Tax Relief for Will/Wasiat and Estate Planning Expenses
A key proposal is the introduction of personal tax relief of up to RM500 for expenses related to Will/Wasiat and estate planning. This initiative encourages individuals to proactively engage in estate planning, which is essential in addressing the issue of unclaimed monies that currently total RM11.5 billion. By providing tax relief, the government can incentivize responsible financial planning and ensure that more individuals create Wills/Wasiats.
Tax Incentives for Family Offices
To attract high-net-worth individuals to engage in comprehensive estate planning, MIEP recommends introducing tax incentives for family offices, including a favorable 15% tax rate on investments exceeding RM20 million. This initiative aims to bolster financial security for families and promote better management of wealth across generations.
Tax Reduction for Family Trusts
Currently, income generated by Family Trust assets is taxed at a rate of 24%. To encourage the establishment of Family Trusts, the Malaysian Institute of Economic Research (MIEP) suggests reducing this tax rate to 16%. This reduction would make the creation of Family Trusts more accessible to the M40 income group, allowing them to establish these trusts before advancing
into the T20 category, where setting up Family Offices becomes more feasible.
Investment in Digital Solutions for Estate Planning
The planners advocate for government investment in digital solutions that enhance estate planning processes. This includes developing user-friendly platforms for Will/Wasiat creation, asset inventory management, and other estate planning activities. Such digital tools will make estate planning more accessible to the general public, especially younger generations.
Capital Gains Tax Exemption for Family-Owned Businesses
MIEP proposes a capital gains tax exemption for the transfer of family-owned businesses during estate planning. This measure will facilitate business continuity and succession planning, allowing family businesses to be passed down without the burden of significant tax liabilities.
Tax Deductions for Estate Planning Education
MIEP suggests allowing tax deductions for individuals attending estate planning seminars and consultations with certified estate planners. This initiative aims to foster a culture of seeking expert guidance in estate planning matters, encouraging more individuals to understand and manage their estates effectively.
Simplified Probate Procedures
To alleviate the administrative burden on families during times of grief, MIEP advocates for the simplification of probate procedures. Streamlining these processes will ensure that assets are distributed according to the deceased’s wishes more promptly and with reduced costs.
Proposed Mental Capacity Act
MIEP calls for the introduction of a Mental Capacity Act that allows individuals to prepare for the management of their affairs in the event of mental incapacity. This legislation would provide mechanisms, such as a Lasting Power of Attorney (LPA), ensuring that individuals’ wishes are respected and protected.
National Will/Wasiat Registry
The establishment of a National Will/Wasiat Registry is proposed to securely store and manage Wills/Wasiats. A centralized registry will enhance the accessibility and validity of Wills/Wasiats, reducing disputes and ensuring that individuals’ final wishes are honored.
Registration of Estate Planners
To enhance professionalism in the estate planning industry, MIEP recommends that all estate planners in Malaysia be registered under the Ministry of Finance. Only registered planners should be allowed to perform estate planning work, contingent on achieving specific qualifications. This measure will ensure that consumers receive competent and ethical advice.
Public Awareness Campaigns
MIEP emphasizes the need for nationwide campaigns to educate the public about the importance of estate planning. Increased awareness can lead to higher participation rates in estate planning, ultimately reducing the number of unclaimed estates and disputes among
beneficiaries.
Support for Vulnerable Groups
Creating specific programs to assist vulnerable populations, such as low-income families and the elderly, in accessing estate planning services is essential. This initiative ensures that all segments of society can protect their interests and have their wishes honored.
Inclusion of Estate Planning in Educational Curriculum
The planners suggest incorporating estate planning education into the national educational curriculum. By teaching the basics of estate planning in schools and universities, we can raise awareness from a young age about the importance of financial responsibility and planning for the future.
By addressing the multifaceted challenges of estate management, promoting education, and ensuring professional standards, these proposals aim to build a stronger and more financially secure future for all Malaysians.
