A Will and A Declaration of Trust

A Declaration of Trust is an estate planning tool that compliments a Will, the owner of the assets (Settlor) will create a trust deed by declaring that he declares himself as a Main Trustee and appoint a Trust Corporation as Substitute Trustee and holding the trust assets for himself and/or any others beneficiaries named in the trust deed. A power of attorney (POA) is given to a Trustee Corporation, and this POA will enable the Trust Corporation to transfer his assets to his beneficiaries named in the Trust Deed when one of the triggers event stated in the trust deed happens.

The advantage of a Declaration of Trust is that it can covers non-death event like Coma, Missing, TPD or other events the Settlor wishes to include in the Trust Deed eg when my mortgage loan is fully settled.

Thus, in Malaysia, when a person passed on, his entire estate is frozen, to unlock the frozen, Executor needs to apply Grant of Probate from the High Court, it could takes 2 to 3 months or longer before the Grant of Probate is extracted. Thus with a Declaration of Trust, certain assets like a specific bank account stated in the Trust Deed will not be frozen and the Trust Corporation can transfer the assets via the POA and use the fund for urgency purposes and solve liquidity problem when the entire assets is frozen.

Thus, an experience Estate planner will encourage his client to prepare a Declaration of Trust on top of writing a functional will.

Assets parked in the Declaration of Trust can be Cash in Bank, Unit Trust investment etc. If an insurance policy is used, in Rockwills, we called it as Insurance Trust. Declaration of Trust can also help to solve the situation of a proxy holding assets for another person. With the legal owner (Proxy) set up a Declaration of Trust, the assets can be returned to the person who has made payments for the assets (as beneficiary) when trigger event happens.

To find out more about this estate planning tool that most people neglected in order to solve liquidity and pay urgent expenses when you are no more around, please contact Rockwills Service Centre at:-

012-303 9383 / 03-7782 1993 (KL) / 06-336 1993 (Melaka)

Visit: www.rockwillsonline.com.my.