Why China Nationals Owning Assets in Malaysia Should Have a Malaysian Will

If you are a citizen of the People’s Republic of China who owns assets in Malaysia, having only a China will may create delays, extra legal costs and enforcement issues for your family. A separate Malaysian will can make the administration of your Malaysian assets much smoother.

Why a China Will Is Difficult to Use in Malaysia

China and Malaysia have different probate and succession procedures. Even if a China will is valid in China, Malaysian banks, land offices and other institutions generally require it to be recognised through Malaysian court processes before Malaysian assets can be transferred.

The same difficulty arises in the other direction. As one commentator observes:

“When a foreign law is applicable to the inheritance process, Chinese notary offices may be averse to working on such cases because they are unfamiliar with the foreign laws, and may be unable to determine whether a beneficiary is entitled to assets under said foreign laws. This is why many cases, even without disputes, wind up in court.”

Source: https://jiahkimlaw.com/international-estate-planning/chinese-inheritance-law/

Section 52 of Malaysia’s Probate and Administration Act 1959 allows grants obtained in many Commonwealth jurisdictions to be resealed in Malaysia. However, China is not a Commonwealth country, so probate proceedings are required in Malaysia. This usually means:

• Translations: China wills are often drafted in Chinese and based on Chinese legal concepts. Malaysian courts, banks and land offices may require certified translations and supporting evidence of the will’s validity and execution.
• Higher costs: the proceedings are more complex and require more documents.
• Longer delays: the administration of the assets takes longer.

A China will may also fail to comply with Malaysian law, which would render it invalid. If so, your Malaysian assets will be distributed under the Distribution Act 1958, in accordance with the law rather than your intentions as the testator.

What Should the Malaysian Will Cover?

A Malaysian will that specifically covers your Malaysian assets allows your Malaysian executor to apply for probate locally. The executor can then deal with the following assets more efficiently than by relying solely on a foreign will (if any):

• Malaysian property
• Malaysian bank accounts
• Fixed deposits
• Shares and investments in Malaysia
• Malaysia My Second Home (MM2H) fixed deposits

Many China nationals under MM2H maintain:

• Malaysian bank accounts
• Fixed deposits (the MM2H security deposit)
• Malaysian real property

Without clear estate planning, family members may struggle to access these assets after death until proper probate procedures are completed.

Unclaimed Assets

Many foreign property owners also overlook what happens to their Malaysian bank accounts after death. Under Malaysia’s Unclaimed Moneys Act 1965, monies that remain unclaimed or dormant for prescribed periods may be transferred to the Registrar of Unclaimed Moneys. These include:

• monies legally payable but remaining unpaid for at least 2 years;
• dormant bank accounts that have not been operated for at least 7 years; and
• dormant trade accounts for at least 2 years.

Once lodged with the Registrar of Unclaimed Moneys, the monies are first credited into the Consolidated Trust Account. Ten years later, unclaimed monies may be transferred to the Consolidated Revenue Account.

Although rightful owners or beneficiaries may still make a claim, the process becomes significantly more complicated (as court proceedings are required) if the deceased’s assets are not properly documented and administered. A properly structured Malaysian estate plan and will can help ensure that beneficiaries are aware of, and able to claim, Malaysian assets efficiently.

What Happens Without a Valid Will?

Without a valid will, your assets will be distributed in accordance with the Distribution Act 1958. If there is no surviving spouse, issue (children), parent, sibling, uncle, aunt, great-grandparent or great-grand-uncle or aunt, or in default of any person taking an absolute interest under the Act, the Government is entitled to the whole of the estate, except insofar as it consists of land.

Land, in turn, reverts to and vests in the State Authority in the circumstances set out in sections 351 and 352 of the National Land Code 2020 (NLC 2020), which relate respectively to the death of a proprietor without successors and the abandonment of title by proprietors (Section 46 NLC 2020).

Protect Your Malaysian Assets

A China will on its own is rarely enough to deal with assets in Malaysia. Without a separate Malaysian will, your family may face translation requirements, court proceedings, higher costs and long delays, and your assets could even end up with the Registrar of Unclaimed Moneys or be distributed under the Distribution Act 1958 instead of according to your wishes. A Malaysian will that covers your Malaysian property, bank accounts, fixed deposits and investments, and that sits alongside your China will, gives your executor a clear path to probate and gives your family certainty.

If you are a China national who owns property or holds assets in Malaysia, including under MM2H, consider seeking advice from a Malaysian lawyer. A lawyer can review your existing China will, advise on how it will be treated in Malaysia, and help you prepare a Malaysian will that works alongside it.