When inheritance exists, but your family can’t access it

It’s one of the less-obvious weaknesses in estate planning – a family can be asset-rich on paper and still face a cash-flow problem after a death.

Property, savings, investments and other assets may eventually pass to beneficiaries, but not necessarily immediately. Until the estate is administered and the necessary processes are completed, access to those assets can be delayed.

In Malaysia, an estimated RM90 billion in assets is said to be frozen in probate, while 46,707 cases remained unresolved as of Dec 31.

For families, the consequences are practical rather than abstract. Mortgage payments, school fees, medical bills and everyday household expenses continue even while an estate is still being settled.

This matters even more in a country where many households have limited financial buffers. Bank Negara’s Financial Capability and Inclusion 2024 survey of 3,587 Malaysians found that 61% would struggle to raise RM1,000 in an emergency, while 40% relied solely on their own savings or those of family members as a safety net.

Seen in that context, estate planning is not simply about transferring wealth – it is also about managing the period between death and access.

Where there’s a will…

A will remains one of the most important estate-planning tools because it sets out how assets should be distributed and who should manage the estate. But it does not remove the need for administration.

In straightforward cases, the department of the director-general of lands and mines has four months from the date of a complete application where there are no disputes.

In practice, however, family disagreements, incomplete documentation, late claims and the complexity of an estate can extend the process.

This distinction is important: a will can provide clarity over who is entitled to what, but it does not necessarily provide immediate liquidity to the people left behind. For households where one person carries most of the financial burden, that delay can be particularly difficult.

What about a living trust?

A living trust addresses a different part of the problem. Under such an arrangement, selected assets are transferred to a trustee during the donor’s lifetime and managed according to the terms of a trust deed.

The trustee then administers those assets for the benefit of named beneficiaries.

Unlike assets that remain solely in the deceased’s estate, assets properly placed in a trust are held within a separate structure. Depending on how the trust is set up, this can make it possible to provide for beneficiaries without waiting for the wider estate-administration process to conclude.

That does not make a trust automatically “better” than a will. The two serve different functions and can complement each other.

A will deals with the distribution of an estate after death. A trust can be used to create more specific arrangements around timing, access and purpose – for example, regular payments for household expenses, education or medical needs.

For Muslim families, estate planning also has to take into account faraid and other shariah requirements, which means the structure chosen needs to sit within the relevant legal and religious framework.

The overlooked issue: liquidity

This is where estate planning becomes less about documents and more about household resilience. A person may leave behind a valuable property, investments and retirement savings, but those assets do not necessarily help a surviving spouse pay next month’s bills if they cannot be readily accessed.

One useful exercise is to estimate how much cash the household would need for several months if the main source of income suddenly disappeared. If monthly commitments are RM5,000, for instance, a six-month buffer would amount to RM30,000.

That money does not necessarily have to sit in cash, but there should be some thought given to which funds or assets could realistically be reached during the transition period.

The same principle applies when considering a trust. Before setting one up, families should be clear about its purpose, which assets should be placed into it, who the beneficiaries are, and under what circumstances distributions should be made.

The trustee’s responsibilities, charges, service terms and the provisions of the trust deed also deserve careful scrutiny.

Estate planning is often framed as the question of what happens to your money after you die. A better question may be what happens to the people who depend on that money in the weeks and months immediately afterwards.

After all, the real measure of an estate plan is not simply how much wealth is left behind, but how well that wealth can continue to support the family it was meant for.

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