If It’s Worth Striving For, It’s Worth Preserving NOW!

If It’s Worth Striving For, It’s Worth Preserving NOW!

Most people start thinking about planning their Estates when they reached retirement age. After all, the normal progression of life is to get out of school, start a career, get married, have kids, get your kids through university, retire, become grandparents, enjoy life… and then, after a long and fulfilling life, we know that we will eventually pass on.

But we all know, real life rarely happens this way. It consist lots of ups and downs. People get divorced, some marry more than once, some may never marry and some remain single all the way to retirement. In actual fact, real life is full of options, choices and twists of fate when it comes to relationships.

Looking forward to a rewarding career and fulfilling lifestyles has it challenging times too. While some reap what they had sowed, some merely inherit it from their rich parents. Whichever the route and whatever the way, if it’s worth striving for, it’s worth preserving. Preserving what you got involves planning just like what you’ve planned throughout those challenging times in your life be it raising a growing family or a company.

Dying, of course, is not an option nor can we choose how and when it will happen to us. Every time we leave our homes, get into our cars, we are at risk of being in a fatal car accident. We have seen tragic calamities such as the 9/11, tsunamis, airplane crash, landslides and many others that happened beyond our wildest imagination. The fear of the unknown can never be measured with a rational mind. Sad to say, Malaysians chose to disregard death as a taboo event. Not knowing what will happen to their hard earned wealth when they pass on, they would rather just write a Will. As the saying goes…

“If you fail to plan, you plan to fail”

A Will is just a vehicle for transmission of your wealth. It merely states who get what and how much. While generally most people need a Will, High Complex Individual are discouraged from just writing a Will without understanding the other options for planning their hard earned wealth. The process of understanding their wealth complexities, telling them the needs of planning and laying down strategies to circumvent possible risk, that would shrink their wealth, is called ASSET PRESERVATION planning. Let me illustrate further…

You are running some businesses and as a director of these companies you are required to provide director’s guarantees for all business loans taken by these companies. Obviously, like many others, you are unaware of its impact to your personal wealth. In the event of unforeseen circumstances or uncontrollable factors like economic crisis, these businesses may tumble overnight. These companies may go bust and before you know it, your creditors have served you with a demand letter demanding (as you’re the personal guarantor) the defaulted loan that your company was unable to serve.” Sounds familiar? Many successful businesses during the last crisis in 1996/1997 had been affected by such scenarios and their directors were made bankrupt.

Malaysians are forgetful lots, although some may be aware of these issues, many chose to be ignorant about these painful lessons experienced by others. Segregation of personal wealth from the personal guarantee must be planned concurrently when applying for business loan. This segregation process is called ASSET PROTECTION planning. In the event of lawsuits or bankruptcy suits, these protected wealth are not affected and are always there for your beloved family

Having said of the above, you may ask “when exactly is the best time to plan my Estate?” Before answering the question, let’s understand what does Estate means and what does it entail? It can be best explained in two forms that is….

1) Estate issues on death.
2) Estate issues during the lifetime.

Estate issues on death

More often than not, the word Estate has frequently relayed to the state of an individual’s wealth upon his/her death by many Malaysians. At death, assets and liabilities accumulated during the lifetime shall comprise the Estate of the deceased. These Estates can either be positive (assets more than liabilities), negative (assets less than liabilities) or none at all (assets and liabilities has been dealt with during the lifetime). Now let’s think for a few moments! What would happen if you became incapacitated or died today?

  1. Would your spouse, family and successor trustee(s) know what to do?
  2. Would they know what assets you own and where to find those assets?
  3. Do they know whom to notify and what to do in administrating your Estates?
  4. Do they know who your lawyer, accountant and estate planner are?
  5. If you own a business, do they know what to do to keep it operating and running so that the surviving partner will not short change them?

The list goes on and on… especially when you have highly complex wealth structures. Coming from the cultural perspectives in Malaysia, most individuals prefer not to let their spouse or family members know about their complex wealth issues. No doubt it is the right of every individual, but at least organize it and let someone know where to find it. The point is to try and make things as easy as you can for your loved ones instead of letting them treasure hunt your Estates when you pass on. Below are the checklists of documentations for easy reference to your loved ones.

Essential Estate planning documents

  1. Wills – preferably to keep in custodian with any Trust Company to prevent loss, tampering and damage. Duplicate copy for future references
  2. Trusts deeds
  3. Power of Attorneys
  4. Insurance Policies
  5. List of Passwords i.e. banks, computers, safes, hand phone etc, etc
  6. All Banks Account Information
  7. Employment benefits e.g. medical and insurance
  8. Agreements for acquiring assets
  9. Tax records
  10. List of Servicing Professionals
  11. Prepaid Funeral or Memorial Services
  12. Location guide of safes, locked or hidden places
  13. Family history, location of photographs and other irreplaceable items
  14. Etc

You may think to organize the above documents need lots of your time and effort therefore you would rather procrastinate until you have the time to do so. Frankly, it is not an option. The effect of your procrastination becomes a nightmare to your beloved family members. The delay, difficulty to locate assets, ineffectiveness, rising cost and anxiety are some of the common factor faced by them upon your demise.

Therefore, planning now is vital. Furthermore it is much easier to do it since you know what and where those assets were. Most of our clients when asked “where do you keep all personal data and documents?” Their reply would be “four places, in my office, some at home and few in my car but mostly in my head.”

Estate issues during the lifetime

During the course of our practice, we discovered that most of our clients have excellent accumulation strategies but many lacks preservation strategies. Some have high risk tolerance level while some take calculated risk. Some are far sighted while some are opportunists. All these are some qualities that our clients possessed that had built what they are today.

Our role of an Estate Planner is to ensure what they have built, will be preserved and extend beyond their life for many generations. Therefore planning now enables you to understand your wealth complexities better and provide you with full control of the planning situation. During the lifetime planning also enable you to minimize the impact due to uncontrollable factors such as the next economic crisis that may shrink or wipe out your hard earned wealth.

Planning your Estates means to preserve your hard earned Assets and to ensure that any Liabilities either committed or foreseeable (that might occur in future) do not have any significant impact to your wealth.

You may ask “how to withdraw from a liability that has been committed?” For example you have signed a director guarantee for your company to undertake a business loan. Withdrawal is almost impossible as it is one of the requirements needed by the bank before they approve your business loan. Let’s us think out of the box for a moment. You can’t turn back the clock to withdraw the director guarantee but you promise to yourself that you’ll be careful in your business dealings and make sure your company can repay back the loan amount. Such situation is called controllable factor.

However, you may have not considered the uncontrollable factor like…

You owed a favour to a friend. You trust him and to repay him, you agree to be his nominee/proxy in one of his companies. You are holding shares on his behalf and were appointed as a Director.

You have no idea what’s going on in his company. You have been signing lots of documents blindly requested by him without knowing the significant impact it has on you.

One fine day, you’re being charged as the director with Money Laundering activities that the company has involved in. You may become a victim to such activities.

As individuals’ situations can be dynamic and unique in many ways, I hereby attach a health check questionnaire for your better and kind understanding. Upon filling up the questionnaire, you should be able to grasp certain level of understanding.

In short, peace of mind can only be achieved should these uncontrollable factors be incorporated as part of the planning process. By distinguishing your business risks away from your personal wealth enables you to build an additional veil against your creditors.

Therefore planning for your “Estates” does not confine only to your inheritance issues. Plans like who will get your house, have you written a Will or will your children be able to manage your wealth upon your death are only parts of an inheritance plan.

However, making sure your current wealth is preserved with further accumulation and finally distributing it according to your goals and objectives requires a more Holistic Planning for High Complex Individuals.

At A.D. FINANCIAL, we start our relationships by listening to you and putting…YOU FIRST

Do a Asset Protection & Preservation Health Check


Alvin Yap is the Principal Consultant and Group Managing Director of A.D. Financial Sdn Bhd (“ADF”). Under his leadership, ADF has expanded its footprint in Asia by establishing offices in Singapore and Hong Kong to provide consultancy for high net worth clients from Singapore, Indonesia, Vietnam, China and other countries. Besides that, he is highly sought after to speak in regional and international family wealth planning seminars. His expertise in Business Succession Planning has led many business owners and founders of listed companies to seek his advice on their complex business continuation and personal wealth matters.

Alvin is currently devoting his Practice to Multi Family Office Advisory for high net worth Individuals in structuring their complex wealth matters with a view to preserve their hard earned wealth. A strong believer of “Preservation First, Accumulation Second” and “Distribution Last”, Alvin’s expertise injects a fresh perspective on how wealth and family values can be preserved for many generations in Asian families.

If it is worth striving for, it is worth preserving


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