Things You Need to Know When Inheriting a Property
When you inherit a property, there are many things to consider. You need to know the property that you have inherited, and if it’s just you or there are other names in the will.
If it’s just you, then it would be easier to decide if you want to keep or sell it, rent it out for recurring income or live in it. You get to decide what you want to do with the property — including renovating it or tearing it down to fit with a new design.
If you inherit part of a property, then you and the other person or persons will have to take joint decisions. Making your own decisions without the other person’s consent may result in legal disputes that could take a long time to solve, and lots of money.
There are several ways to inherit a property:
• If the property was held under “joint tenancy”, the surviving owner inherits it automatically.
• If the property was owned outright by the deceased or jointly by owners who have died, the term of their will(s) sets out who inherits.
If you inherit part of a property and another owner is still living there, you’ll need to agree with him or her whether the person will continue to live there and under what terms, or whether the property will be sold.
The right to stay may be set out in the will.
If you inherit a property that has a tenant, you have certain responsibilities as a landlord, and to care for the property. If you wish to sell the property, you will need to consider their legal rights as a tenant and give them a few months’ advance notice to vacate the premises. Be honest with the tenant and tell them of your intention to sell. Who knows the tenant may want to buy the property from you at the price that you are looking to sell. Either way, it’s advisable to get advice from a solicitor.
Understanding Different Scenario
Inheritance cases can be defined by either civil law or Syariah law that only applies to the country’s Muslim citizens. Under the Syariah law, inheritance follows the Islamic faraid principles, which determine the shares, limits and path of inheritance relevant to a deceased individual’s estate. Up to one-third of the total value of an estate may be decided using what’s known as a wasiyyah, or Islamic will.
Under civil law, estate inheritance is governed by a number of statutes and regulations. Inheritance is defined by the Distribution Act 1958 and the Inheritance (Family Provision) Act 1971, both of which lay out the conditions of inheritance.
“Civil law allows for the personal wishes of an individual to dictate the ownership of an estate upon his or her death through the use of a will. That means, in theory, a sole surviving parent with three children could leave the entire estate to only one individual,” said PropertyGuru Malaysia, in an article entitled “A Simple Guide To Inheriting Property In Malaysia”
The article stated that if an individual dies without a will, the estate is divided between surviving family members according to legal precedents for what is known as “dying intestate” (died without a will).
There is currently no tax for property inheritance in Malaysia. An inheritance tax was implemented in Malaysia under the Estate Duty Enactment 1941. An estate of a deceased was liable to a five per cent tax if it was valued above RM2 million, and 10 per cent, if it was above RM4 million. However, this legislation was repealed in 1991.
There have been talks about the reintroduction of an inheritance tax, but no new laws have been introduced so far.
It is important to choose someone to take charge of the estate in the event you become mentally incapacitated or after you die.
You have to decide who will get what, when they will get it, and how they will get it after you’re gone. This is an important decision and would help avoid family fights or disputes and costly probate court proceedings.
More people are seeking advice from an estate-planning attorney after personally going through or witnessing a close friend experience a significant waste of time and money due to a loved one’s failure to make an estate plan.
“When it comes to property, inheritance can be quite complex. It is, of course, a valuable asset, but one where the financial value is quite literally locked into the bricks and mortar of the building. That makes it a challenging asset to divide. This is why estate planning is so important.
“Estate planning attempts to remove uncertainty when it comes to distributing your estate after death, by laying out/providing for your wishes. If you’re lucky enough to own your own property, you need to make estate planning a serious consideration. It’s not just about planning for your future, but also about planning for the future of those you love the most. And the last thing you’d want to do is add to the heartache to your loved ones,” said PropertyGuru.
A professionally drafted will is the first thing to start with. This is where you need to set out your wishes in a formal document, it said.
PropertyGuru said insurance and trusts can be another important part of estate planning.
Insurance provides financial support for your family. They get a lump-sum payment at the point of death to cover funeral and future expenses.
Trusts are legal agreements that deal with the ownership and distribution of an individual’s property. Trusts can be established as a revocable trust (can be altered or cancelled), or irrevocable trust (cannot be amended once established).
It is basically a useful tool to ensure the smooth transition of ownership at the point of death.
Get your will done or seek advice from an estate-planning attorney on what you should do with your assets, including money.