LAW & REALTY

The property of a deceased person is known as an “estate” in

law. In addition to the land or building, a small estate may consist of movable

property, such as cash, money in bank savings or current account, unit trusts,

and company shares.

After the recent amendment known as the Small Estates

(Distribution) (Amendment) Act 2008 (the amending Act), the value of a small

estate is increased to RM2 million. In other words, after the amendment, the

property of a deceased millionaire can be a “small estate”.

The debts of the deceased are not to be deducted when

ascertaining the value of a small estate. A trust property is not to be included

either in the small estate. A small estate must include some landed property

(known as immovable property in law) for example, a piece of land, a house or a

shop. Without landed property, it cannot be a small estate.

Even if the property of the deceased person consists of only

a few thousand ringgit in cash, it does not become a small estate. Movable

property (such as cash or company shares) does not constitute a small estate.

Value increased

The amending Act received the Royal Assent on Jan 24, 2008,

and was published in the Gazette on Feb 7, 2008. It will come into force on a

date to be appointed by the relevant minister by notification in the Gazette.

The most important amendment introduced by the amending Act

is the increase in the value of a small estate. The value of a small estate is

increased from RM600,000 to RM2 million.

Such an increase is phenomenal. The total value of a small

estate is now up to RM2 million. It is 333% of the original value of RM600,000

before the amendment. The drastic increase in the value of a small estate in a

way reflects the fast spiralling inflationary trend in this country.

It is instructive to note the upward adjustments in the value

of a small estate over a period of 50 years since the inception of the principal

Act in 1957.

A “small estate” was worth only RM10,000 or below, when it

was first introduced in 1957. The principal Act came into effect on Oct 1, 1957,

soon after this country achieved independence.

The recent increase in the value of a small estate from

RM600,000 (since 1990) to RM2 million is considerable. The adjustment of 333% in

the value of a small estate has been the highest since the introduction of the

principal Act (apart from the sixfold increase in 1979).

If one compares RM2 million with the initial RM10,000 (the

value of a small estate first introduced in 1957), the former is 200 times the

latter! This would mean that over a period of 50 years, the increased value of a

small estate amounts to 20,000% (or 200 times) its initial value!

Could it be that the government is anticipating that an

impending fuel price hike would lead to a steep increase in property prices?

Where to file the petition?

After the amendment, the petition is to be lodged in the

district where the immovable property (a piece of land or a house) is situated:

s.8(1). The petition need not be lodged in the district where the greater part

of the property is situated.

For example, if a house is situated in district A, the

petitioner of a small estate must file his petition in district A, though the

greater part of the property is found in another district, say district B. Even

though the house may constitute a minor part of the small estate, the petition

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must be filed in the district where the house is situated.

The Director of Lands and Mines (PTG) of the state concerned,

or the Director General of Land and Mines (PBGT) of the Federation, has

discretionary power to order that the petition be heard by the land

administrator of a particular district.

But someone must make the application. The order made must

appear to be convenient to the parties or witnesses, or it is in the interest of

justice to make such an order. The order made is final and not subject to any

appeal: proviso to s.4(2).

Sale of movable property by land administrator

The land administrator has been given additional power to

sell property. Under a new provision, if two (or more) beneficiaries are each

entitled to a share in any movable property (such as company shares), the land

administrator may sell the property. But, when exercising his discretion, he

must have regard to the interests of the beneficiaries concerned: new s.15(5A).

Transitional provision

Under the transitional provision, all small estate petitions

filed before the amendment, are to proceed under the old procedure. Only

petitions lodged after the amendment are to be heard according to the new

procedure.

All petitions for small estates distribution lodged before

the coming into force of the amending Act, must follow the previous procedure:

s.12(1) of the amending Act.

All small estate matters commenced before the amending Act

takes effect (or pending before a land administrator), must continue to be heard

under the previous procedure: s.12(2) of the amending Act.

Conclusion

The Small Estates (Distribution)(Amendment) Act 2008,

increases the value of a small estate to RM2 million. As a result, a

millionaire’s property may be treated as a small estate. It reflects the rapid

inflationary trend taking place in this country.

Every land office must therefore have sufficient resources to

deal with the influx of small estates matters. Otherwise, the accumulation of

small-estate cases and undue delay in their disposal are inevitable. It is hoped

that the authorities concerned have taken necessary steps to cater for such

eventualities.

The writer is a member of the Conveyancing Practice

Committee, Bar Council, Malaysia

www.malaysianbar.org.my

Note: This column is brought to you by the Malaysian

Bar Council for your information only. It does not constitute legal advice. You

should therefore seek professional legal advice for your specific needs. Neither

the Malaysian Bar nor the Sun Media Corporation Sdn Bhd shall be liable to any

reader who suffers losses as a result of relying on this column.

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