Fong Tat Chee explained the importance of making a will in a relaxed and engaging manner. (Photo by Sim Ting Ting)
Did you know? Without proper asset planning, many problems can arise once a person passes away. Therefore, whether it involves personal or family wealth or business assets, one should make a will early as the basis for future inheritance distribution. This not only protects personal assets but also helps ensure the smooth transfer of family wealth and business legacy.
Fong Tat Chee, Director of Lewei Advisory Services Sdn Bhd, explained that in the absence of a will, an individual’s assets will be distributed to legal beneficiaries according to the Distribution Act 1958. Under this Act, the spouse and parents each receive 25%, while the children collectively receive 50%. If family businesses or substantial wealth are involved, the situation becomes even more complicated, and the inheritance process may face even greater challenges.
He pointed out that succession planning—which includes the transfer of ownership and management rights, as well as family governance—is crucial. Without proper arrangements, families may easily face challenges such as fragmented control, poor business management, forced inheritance rules, marriage-related claims, and estate taxes.
He was the keynote speaker at the “Family Business and Wealth Succession Planning” seminar organized by the Young Entrepreneurs Committee of the Perak Chinese Chamber of Commerce and Industry. During the session, he shared insights on family wealth and business succession, as well as the importance of asset planning, and urged people to plan ahead.
Many families lack communication with the next generation.
He pointed out that many family businesses face problems because they lack communication with the next generation. Parents often fail to first understand their children’s willingness to take over the family business or to discuss asset distribution arrangements, which leads to various issues.
“Even if the parents are willing to pass it on, it is essential to ensure that the children are willing and capable of taking on the assets and wealth — and even capable of taking over the family business.”
He said that the succession of family wealth and business is not something that can be accomplished overnight. It typically requires a cycle of at least 10 to 15 years, allowing the successor to face challenges and gain experience at different stages. This process helps develop problem-solving abilities and ensures they are well-prepared to eventually take over the family business.
Make good use of asset-planning tools.
“In this process, it is not only about distributing assets directly through a will. One should also make good use of asset-planning tools, such as business trusts and family foundations, to ensure the continuity of family wealth so that future generations can benefit. In some cases, a family constitution can also be used to govern the family, allowing the values of the older generation to be passed down. Through effective communication, the family’s wealth can be preserved and continued across generations.”
He noted that although Malaysia abolished inheritance tax in 1991, this does not mean it will never be reinstated in the future. If the tax is reintroduced and the old regulations are applied, a person’s assets—if not properly planned—will be regarded as part of the estate upon death, and inheritance tax would then be unavoidable.
Clearly appoint an executor.
He urged that regardless of the size of one’s assets, everyone should at least prepare a will and clearly appoint an executor in it. The executor plays a crucial role in the inheritance distribution process. Otherwise, the estate will automatically be distributed to legal beneficiaries according to the Distribution Act 1958.
“Although this distribution ratio may appear fair, it actually carries many hidden problems. For example, if someone owns a property and passes away, the spouse and parents would each receive 25%. If these beneficiaries also fail to do proper planning, the number of owners of that property will keep increasing over time. This will make the situation more complicated and extremely difficult to manage.”
He said that another situation involves single individuals. If their parents have passed away and they have no children, their estate will be distributed among their siblings. If all beneficiaries have also passed away, the estate will ultimately be transferred to the government.
A trust can be established to provide protection.
He suggested that individuals may consider establishing a trust to serve protective and caregiving purposes, and to transfer insurance policies into the trust. In the event of an accident, the insurance payout will be paid directly into the trust, allowing the trust to take on the responsibility of providing for family members and children.
He also shared information on asset transfers, family business trusts, foundations, and family offices during the seminar.
Luo Wanjun: Succession is one of the greatest challenges.
Luo Wanjun, Chairman of the Young Entrepreneurs Committee of the Perak Chinese Chamber of Commerce and Industry, said that family businesses are the backbone of our economy. They carry not only commercial value but also heritage, values, and identity. However, succession is often one of the greatest challenges they face.
He pointed out that succession is not merely the transfer of assets or handing over the keys to the office and factory. It is about ensuring the continuity of the business, nurturing the next generation, and striking a balance between tradition and innovation. Without proper planning, even strong and successful businesses may lose their valuable legacy.
The seminar attracted a total of 42 attendees. During the Q&A session, participants actively asked questions and engaged in discussions, gaining valuable insights.
Attendees included Perak Chinese Chamber of Commerce and Industry Honorary President Datuk Low Boon Keong, the Young Entrepreneurs Committee Treasurer Tan Yit Siang, and Lewei financial planner Yang Xiaoling.