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Question:

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“Dear lawyer Yeo,

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I want to seek your advice regarding an inheritance matter. My father recently passed away, leaving a will that states his wish to divide his shophouse and agricultural land equally among his 6 children including myself.

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While my father intended to be fair, my siblings and I do not agree with his decision as it would mean renting or selling his properties would require the unanimous agreement of all of us, which may result in disputes in the future.

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Furthermore, upon checking with the land office, we discovered that his agricultural land is less than one hectare and cannot be divided further into six (6) separate portions to us.

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Given these challenges, we would appreciate your guidance on what legal option is available to resolve this issue?

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Thank you for your time and assistance.”

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Answer:

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1.    A will is a legal instrument that enables individuals to clearly express their wishes and ensure that their assets are distributed according to their wishes.

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2.    However, many individuals do not seek professional legal advice when drafting a will. Third-party agencies that assist in will drafting often merely follow the testator’s instructions without assessing the legal and practical implications. This can result in complications, such as distributing property among too many beneficiaries, which may create difficulties in executing the will after the testator’s passing.

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3.    In the case mentioned above, the deceased’s children cannot inherit the agricultural land because, according to Section 205(3) of the Malaysian’s National Land Code, any transfer of land classified as “agricultural” cannot result in the creation of any undivided share representing an area of less than 0.2 hectares:-

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S205(3) provides that with respect to an agricultural land, a transfer of it cannot be effected if the transfer results in the creation of any undivided share representing an area of less than two-fifths of a hectare.

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4.    In other words, even if the deceased’s family has applied for a Grant of Probate from the High Court, they may still face the predicament of not being able to inherit the agricultural land as the land can’t be divided into too many small portions.

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5.    As for the shophouse, although legally all beneficiaries can each receive a 1/6 ownership share according to the will, managing or selling the property in the future would require the consent of all beneficiaries. This could easily lead to deadlock or disputes. The entire matter would get more complicated if any of the beneficiaries passed away subsequently.

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6.    Legal Solution: In such a situation, after obtaining the Grant of Probate, the beneficiaries can discuss and reach an agreement on who will renounce their inheritance rights and who will inherit the property. Once an agreement is reached, the parties can formalize it by signing a Deed of Family Arrangement. This legal document is commonly used to resolve inheritance and property matters within a family, ensuring that asset distribution aligns with the beneficiaries‘ collective wishes while preventing future disputes.

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7.     Based on this Deed of Family Arrangement, and with the consent of all beneficiaries, the deceased’s estate can be distributed to the designated beneficiaries as agreed.

For example, in the case above, the deceased’s family/beneficiaries could sign an agreement to let 3 of them inherit the shophouse, and the other 3 inherit the agricultural land, ensuring a smooth inheritance process.

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8.   However, the executor of the estate will still need to apply a court order from the High Court to give effect to the Deed of Family Arrangement.

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9.     According to the court ruling in Lee Koy Eng v Pemungut Duti Setem (and another appeal) [2020] 7 AMR 296, if a specific beneficiary inherits the property because other beneficiaries have agreed to renounce their inheritance rights through a family arrangement, the stamp duty incurred will be a nominal RM10.00.

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10.    Of course, engaging a lawyer to apply for a court order to give effect to the Deed of Family Arrangement will inevitably incur additional costs. To prevent such complications, we recommend that testators seek professional legal advice when drafting a will, rather than relying on cheaper, non-professional individual to prepare will for them.

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The above is our sharing on Malaysian inheritance law today. If you have any legal questions regarding wills, you can contact us via WhatsApp: https://wa.link/q3kmv5.

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