Distribution of Estate under Distribution Act 1958

Introduction

Life and death are always the two most baffling questions in the world.

I was inspired, or rather blessed, that my father passed away recently leaving a will (‘Will’) written right before he got admitted into the hospital for his then final confrontation with cancer which he journeyed since 2009. Being the father that I know, I am certain he would always do his best to ensure things are in good order for his family before he left.

Having said that, I did come across many people in practice who passed away without leaving a Will due to unforeseen circumstances happening day in and day out, which leads to ‘Intestacy’. Intestacy occurs when someone (a.k.a ‘intestate’) passes away without leaving a Will. The effect is that the intestate’s assets would then need to be distributed according to the law under Distribution Act 1958 (‘DA 1958’) instead of a Will.

However, there may also be instances where someone passed away leaving a Will but the Will failed to provide for the distribution of some of the properties, resulting in them to be dealt with under DA 1958.

It must also be clarified here that DA 1958 is only applicable to non-Muslims in the Peninsular of Malaysia and the state of Sarawak. As for Muslims, such distribution on intestacy shall be governed by the law of Syariah.

Letter of Administration (‘LA’)

Where there is no Will, the law provides that any person having an interest in the estate of the intestate may apply for LA to administer the deceased’s estate. There could be more than one person having such interest, in which case the procedural rules require all such persons to give their consent to the applicant before proceeding with the application of LA.

The application of LA could be made either at the High Court or even at the Land Office through the District Land Administrators (‘DLA’). The latter requires that the deceased’s estate consists wholly or partly of immovable property not exceeding 2 million ringgits in total value. Either way, the applicant must provide the following documents prior to instructing a lawyer to proceed with the application of LA:-

1. the original Death Certificate;
2. the list of assets and liabilities of the deceased together with documentary proof of ownership; and
3. the list of beneficiaries under Section 6 of DA 1958 together with documentary proof of relationship.

The purpose of having an LA is to formalize the authority to administer the estate of the intestate.

If one chose to apply for LA through DLA, note that no lawyer shall be allowed as a legal representative unless permitted by the DLA.

Section 6 of DA 1958

Once LA is granted by the High Court or the Land Office, the intestate’s estate shall be distributed under Section 6 of DA 1958 in the following manner, primarily in favor of the spouse (i.e., the legal spouse), issue (i.e., the children and the descendants of deceased children), and parents:-

1. should the intestate be survived by a spouse, issue, and parent or parents, the surviving spouse shall be entitled to 1/4 of the estate, the issue shall be entitled to 1/2 of the estate and the parent or parents the remaining 1/4;
2. should the intestate be survived by a spouse and a parent or parents, the surviving spouse shall be entitled to 1/2 of the estate and the parent or parents shall be entitled to the remaining 1/2;
3. should the intestate be survived by a spouse and issue but no parent or parents, the surviving spouse shall be entitled to 1/3 of the estate and the issue the remaining 2/3;
4. likewise, should the intestate be survived by issue and a parent or parents, the surviving issue shall be entitled to 2/3 of the estate and the parent or parents the remaining 1/3; and
5. lastly, should the intestate be survived by EITHER a spouse, issue, or parent or parents, then either of the surviving spouse, issue, or parent or parents shall be entitled to the whole of the estate accordingly.

According to Section 7 of DA 1958, any part of the estate to which the issue (i.e., the child or children of the intestate) is entitled shall be held in trust in favor of the issue, which means, if the child or children predeceased the intestate, such estate shall then be held in favor of the grandchild or grandchildren of the intestate, if any.

In a situation where someone passes away without any surviving spouse, issue or parents, do not worry that the whole estate would fall into the hands of the Government. In fact, the whole of the estate of the intestate shall be held in favor of the following persons in order of priority:-

1. Firstly, on trust for brothers and sisters of the intestate in equal shares; then,
2. Secondly, for the grandparents of the intestate in equal shares; then,
3. Thirdly, on trust for uncles and aunts of the intestate in equal shares; then,
4. Fourthly, for the great grandparents of the intestate in equal shares; then,
5. Fifthly, on trust for great grand uncles and great grand aunts of the intestate in equal shares.

It must again be emphasized here that for any part of the estate of the intestate to which the

(i) brothers and sisters,

(ii) uncles and aunts, or

(iii) great grand uncles and great grand aunts

are entitled, such estate of the intestate shall be held in trust for them. In other words, if they predeceased the intestate, their child or children will stand as beneficiaries instead, as provided in Section 7 of DA 1958.

However, when this issue was first ventilated by our Court of Appeal recently in the case of Gan Cheng Khuan v Gan Kah Yang & Ors [2018] MLJU 1363, it was decided that if brothers and sisters of the intestate predeceased the intestate, their child or children cannot be benefitted under the intestacy. We opined this is in direct contradiction the statutory trust founded under Section 7(2) of the DA 1958. 

If, and only if, the deceased died without any immediate surviving family or relative as above, the Government shall be entitled to the whole estate. Such instance is indeed very rare. 

As seen above, the law seems to be in favor of the issue in situations where the deceased is survived by variables of the spouse, issue and parent or parents. This is regarded as the intention of the Parliament to safeguard the welfare of the children or the descendants of deceased children, especially the minor whose age is less than 18 years old. However, it is important to note that the term “children” refers to a legitimate child or a child adopted under the Adoption Act 1952 of Peninsular Malaysia or the Adoption Ordinance in the State of Sarawak.

It is also worth notice that Section 5 of DA 1958 provides that for the purpose of distribution under this Act, there shall be no distinction between those who are related to the deceased person, whether through his father or mother (e.g. grandparents and uncles), whether related to him by the full blood or half blood (e.g. brothers and sisters), nor between those who were actually born in his lifetime and those who at the date of his death were only conceived in the womb but who have subsequently been born alive. In other words, an issue, for example, may have succession rights from conception, but the child must be born alive subsequently.

Premised on the above, it is safe to conclude that it is the legislature’s intent that the Government shall be the last to benefit under the intestacy.

Sounds Complicated? Just write a Will!

After all, it is advisable to just write or make make your own Will (An Overview of Estate Planning in Malaysia) to prevent any unwanted complexity in the distributions of assets when someone passed away simply because the testator (i.e. someone who has made a Will) can determine who will be the beneficiaries and what to give to the beneficiaries, as well as to appoint an executor entrusted with the duty to distribute according to his Will.

About the Author

This article was written by Chia Swee Yik, Partner of this Firm, who practices mainly in the area of probate law.

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