KUALA LUMPUR: The estate planning industry in Malaysia is expected to grow in the coming years, as more Malaysians are now realising the importance of having a will.
It is estimated that more than 85 per cent of eligible Malaysians do not have a will, which is an essential tool for managing one's assets after death.
Rockwills International Group Group chief executive officer Azhar Iskandar Hew said there is still a huge demand for will services, particularly customised wills that meet the requirements of the testator's instructions.
"So far, the demand for wills and estate planning in 2023 has been encouraging, and strong numbers have been posted by Rockwills, resulting in an all-time high of more than 3,000 wills in March 2023.
"There were no regulatory changes that caused the increase in demand for estate planning as the government was focused on economic recovery rather than wealth di "contribution," he told Business Times.
When asked about points that may drive further growth of the sector, Malaysian Institute of Estate Planners president See Kok Loong said that in anticipation of 2024, the current government should consider several potential developments for the estate planning industry, such as nominal stamp duty changes, tax incentives for family offices, estate planning fees as tax rebates, and the potential of the reintroduction of inheritance tax.
"It is possible that the government may introduce nominal stamp duty for estate planning purposes, such as a RM10 per property transaction from parents to children and grandparents to grandchildren. This can encourage proper estate planning among families.
"To promote family office investments, the government might consider offering tax incentives, such as a 15 per cent tax rate for family office investments exceeding RM20 million. This can attract high-net-worth individuals to engage in comprehensive estate planning," he said.
As for estate planning fees as tax rebates, See said introducing a one-time tax rebate for individuals would incentivise more people to engage in estate planning.
"For example, offering a RM1,000 tax rebate for estate planning fees can make the process more accessible and attractive," he said.
On the potential of the reintroduction of inheritance tax, See said that with the implementation of the sales and service tax (SST), there might be discussions about reintroducing inheritance tax.
He said this could significantly impact estate planning strategies and create new opportunities for the industry.
Areca Capital Sdn Bhd chief executive officer, fund manager and financial planner Danny Wong thinks it is the right time for some high net worth to consider estate planning as the economy progresses.
"New rules and tax will affect estate money, such as the potential future tax on inheritance estate.
"After the pandemic impact, many people realised the importance of estate planning. In addition, many countries tax estate money, so new policy on this is likely," he said, adding that the company has just launched its new wealth management service, expanding into estate planning services, including private trust set-up.
Given potential domestic and global economic changes, Azhar said that as Malaysia becomes increasingly digital, the estate planning laws have yet to catch up with the progress.
"As Malaysians begin to embrace the usage of trust as an essential tool in estate planning, trust laws should be revised to cater for contemporary needs and lifestyle changes.
"Without the changes to the current laws, the demand for estate planning and for those interested in providing estate planning services will be somewhat curtailed.
"However, by having tax guidelines that encourage estate planning as well as updating existing laws, the potential will be greater for the estate planning" industry," he said.
Azhar said the global economy also sees increased investments by Malaysians abroad and a growing awareness of the need to protect these assets with proper estate planning to benefit their heirs.
"There is a definite uptake in demand for foreign wills by Malaysians," he said.
Echoing Azhar, See said that the estate planning industry is more advanced globally due to well-established financial markets and inheritance tax" stems.
"Malaysia can learn from international best practices and adapt them to its unique Malaysia's growing economy and increasing wealth present a significant opportunity for the estate planning industry. As more individuals and families accumulate assets, the demand for comprehensive estate planning services will likely rise.
"Further, collaborating with financial advisors can create synergies. Financial advisors can highlight the financial benefits of estate planning, further driving demand," he said.