The Causes of Unclaimed, Late Claimed or Distributed ... - ipedr

2011 International Conference on Sociality and Economics Development
IPEDR vol.10 (2011) © (2011) IACSIT Press, Singapore
The Causes of Unclaimed, Late Claimed or Distributed Estates of
Deceased Muslims in Malaysia
Fatin Afiqah Binti Md Azmi 1 , Dr. Mohammad Tahir Sabit Mohammad 2 +
1 Ph.D. Candidate, LAD Faculty of Geoinformation and Real Estate
2 Associate Professor, CRES/LAD Faculty of Geoinformation and Real Estate
Universiti Teknologi Malaysia
Abstract. RM 40 billion including RM 1.8 billion in the Registrar of Unclaimed Monies, presumably
include unclaimed estates. This makes it necessary to identify the possible causes of lack and delayed
distribution of estate of deceased owners. This paper explores some of these causes, namely: the complexity
of law, lack of knowledge, lengthy process, lack of cooperation/contact between various parties, lack of
cohesive mechanism, and their attitude.
Keywords: causes of unclaimed estates; complexity of law; inheritance law.
1. Introduction
The property left by a deceased is called estate. The estates can consist of unclaimed estates, claimed but
late or distributed not as soon as required under Islamic law.
A great number of estate properties, worth of RM 40 billion including 1.8 billion in the Registrar of
Unclaimed Monies. Out of 1.8 billion, seventy million come from Employees Provident Funds (EPF) [4],
Lembaga Tabung Haji (LTH), Permodalan Nasional Berhad (PNB), and takaful and insurance companies are
not claimed or cannot be distributed on the deserving heirs [9]. In addition, Omar [3] and Tarmizi [13] added
that worth of RM 31 million of estates are waiting to be distributed by Amanah Raya Berhad (ARB)
involving wills. As reported by Buang [7], only 1% of Muslims has made will compared to (99%) who did
not write it. Out of this RM 30 million, it is said that 1% of Muslims have made wills. Writing a will does
not necessary means and is not a guarantee to the fast distribution, however, because there could be some
specific problems pertaining to the execution of will.
The estate of deceased can be movable or immovable. Regardless of this, the law has classified the
property of deceased person in small and large. Small estate generally refers to those properties the value of
which does not exceed RM 2 million; one that exceeds RM 2 million can be considered as a large estate [10;
11]. The majority of Malaysian Muslim estates fall under the small estate category.
Claiming an estate requires going to various agencies and institutions. Among them are the Civil High
Court, Shariah Court, Department of Director General of Lands and Mines, ARB, estate planning entities and
banks [12]. This paper therefore focuses on all estates irrespective of being small estates or otherwise. The
paper will examine problems caused by the provisions of law, agencies and other parties involved. Indeed, a
good inheritance system has to consider all these issues.
The various innovative preventive measures adopted by government, i.e. promotion of the making of
wills, gifts and being conducted by more agencies, seem to have failed. The accumulation of RM 40 billion
+ Fatin Afiqah Binti Md Azmi. Tel.: + 60-017-7750468; E-mail address: fafiqah2@live.utm.my
Dr. Mohammad Tahir Sabit Mohammad. Tel.: + 60-017-7979818; E-mail address: mtahir@utm.my
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eported by media is evidence, which suggests a need for further review. This failure could be because not all
or the right causes of such accumulation were identified.
2. Problems of Muslim Estates
This paper suggests that there are six main possible causes of unclaimed or delayed distribution of
estates. This needs to be tackled in order to prevent further accumulation of unclaimed estates.
The causes of unclaimed estate can be legal and administrative constraints. They are: (1) the complexity
of law; (2) the lack of knowledge; (3) lengthy process; (4) the lack of cooperation and/or contact between
various parties; (5) the lack of a cohesive mechanism; and (6) attitude that needs to be discovered.
2.1. Complexity of Law
There has been a number of cases of estates remaining unclaimed because of no application has been
made by the heirs. This may be so for several reasons caused by the law.
As result of classification of estates into large and small, their distribution falls within jurisdiction of two
courts and two administrative agencies. According to Section 25 of the Civil Law Act 1956, the
administration of Muslim’s estate shall be in accordance with the Islamic law. But Article 74 (1) of
Malaysian Federal Constitution read with Ninth Schedule Paragraph 4 (e) (i), provides that the Civil High
Court has the jurisdiction over matters relating to succession, testate and intestate, probate and letters of
administration. Thus, in light of Article 121A Muslims have to go to Shariah and Civil Courts for claiming
the estate of a deceased person. At the same time, Section 17 (1) of Public Trust Corporation Act 1995 (Act
532) gives the power to ARB to dispose movable properties whether testate or intestate which is less than
RM 2 million, while the claimant can go to the Land Office for immovable properties which is not exceeding
RM 2 million. Besides, Section 8 (1) of Small Estates (Distribution) Act 1955 (Act 98) prescribes ARB has
the jurisdiction in small estate distribution included movable and immovable properties even though in the
absent of a will. This section states that estates of Muslims, movable or immovable, exceeding RM 2 million
comes within the powers of High Court. Section 77 of Probate and Administration Act 1959 (Revised-1972)
(Act 97) enjoins that an executor has unlimited power to distribute estates of a deceased person but under
this Act the executor has to apply for letter of execution from Civil High Court. The transmission process of
estate, which does not exceed RM 2 million, for example in Land Office, can begin without lawyers going to
Court. It may take five and a half months [10].
The existence of various regulations and the involvement of several bodies in the distribution of the
estates make the law and the process of claiming estates complex, which has led to overlapping powers and
the responsibilities of these entities. An heir of the deceased may be puzzled by the complexity of law and
procedures, which may affect his decision to claim the estate. Even if he makes a claim, the procedures of
claiming estates may probably be delayed. This may be true if he made his application before a wrong
agency. No matter where the application is made, beneficiaries need to produce the certificate of death by the
Department of National Registration. Only a specific group of beneficiaries can apply for such a certificate.
In the absence of such a group of beneficiaries a lawyer needs to be appointed. Upon production of
certificate of death the beneficiaries then can claim the estate. They are given three options to settle the estate
distribution under Section 15 (1) of Small Estates (Distribution) Act 1955, that is: (i) distribution under
farai’d system; (ii) distribution of estate by agreement of all beneficiaries without applying the farai’d
system; and (iii) all beneficiaries agree to distribute the estates to the selected beneficiaries or some
beneficiaries withdraw from receiving the estates. Where first option is taken, a certificate of farai’d from
Shariah High Court need to be obtained. There might be cases where the subject estate may not be
distributed for several generations. It may then take a month to clear the case, considering the complexity of
the case and lack of experts.
All of the above makes it clear that certain beneficiaries may not claim estate of the deceased due to such
complexity and reluctance to appoint a lawyer. Yet, if they do make claim, it may take them long time to do
so, and once they apply the process may be lengthy for the reasons stated above.
A delayed distribution of estates could occur in term of execution of will. Will is used for giving a
portion of the estate to those who are not included in the list of heirs under farai’d system, either for
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individual such as adopted child, orphaned grandchild, foster parents, non-Muslim family member, etc. or for
institutions including mosque, orphanage, charitable organization, hospital, and others. A fatwa dated 20 th of
September 1973 relating to the nominees in insurance policies, Tabung Haji and EPF savings [12], make
these entities to be the executors of the will of the deceased distribute all the said properties on the deserving
heirs under the farai’d system. Under this fatwa the nomination in the insurance policy does not amount to
will and the nominated person can be considered as the executor of the estate. Disputes over the estate may
occur among the heirs if the nominee insists on being the beneficiary/legatee of the insurance policies,
Tabung Haji and EPF savings [12]. Problem may also arise when there exists a joint account with the
deceased. In the absence of will or survivorship clause written in the joint account agreement [8] the assets
will be divided according to farai’d under the above fatwa.
The distribution of estates could be delayed by enforcing an implied or constructive will. An implied will
refers to an ineffective and problematic declaration of gift (hibah), which results into will. In Re Ismail bin
Rentah (1939) 230, the deceased owner had named his daughter as nominee for shares and all benefits from
his company after the deceased’s death. After he died, the Registrar made an order to distribute all the
properties of the deceased to the family heirs according to farai’d not a gift to her. The Court held that it
cannot be considered as gift because no delivery of possession has been made from the donor to the donee at
the time. It only can be called gift on deathbed, which can be treated as will under the law. In another case,
Rosmawati binti Sharibun & Anothers (2002) 4 AMR 4913, the issue was whether or not the deceased and
his third wife’s money which were in two joint accounts could be considered as gift. It was held that the joint
account did not amount to gift because the third wife did not have exclusive control over the account as she
has to obtain the signature of her husband during the lifetime of the husband. In this case, no exclusive
ownership has been given because the qabd (taking possession) in gift is not being fulfilled, so it cannot be a
valid gift but a will.
The lack of claim may be due the family structure or the status of some members of the family. When
only the adopted children survive the deceased they cannot claim the estate, unless there is a will made in
their favour not exceeding 1/3 of the whole estate. Additionally, secret polygamy case can be another reason
for unclaimed estates. For example, if there has been a double tragedy involving husband and first wife, and
they have no children, but the husband leaves behind a secret or unregistered second wife. Unfortunately, the
second wife may not be able to claim the deceased’s estates if their marriage is not registered, and there
exists no legal documents verifying the marriage. Where the dead husband leaves behind minor children,
they will have rights to the estates of their father. Under law, a guardian should be appointed to administer
the deceased’s estates for their benefit since they are unable to claim due to their age. However, the claim
may be delayed if the guardian did not claim for them to obtain the estates in time.
2.2. Lack of Knowledge
Both substantive and procedural law is complex and difficult to be understood by layman. The lack of
knowledge of the deceased and the beneficiary of his estate might cause an estate unclaimed, lately claimed
and delayed distribution. Many Muslims still do not make will and gift to distribute their property because
they think the farai’d system is the only way whereby their properties could be transmitted to the heirs. This
may result in delayed claims and distribution of the estate. The beneficiary of the estate, one related to the
deceased by blood or cohabitation as well as the baitulmal, may not know the law, the property of the
deceased [9], the making of will or hibah by the deceased, and whether or not he/she is entitled to the estate
or a part thereof. Similarly, the lack of knowledge and understanding of law, both Shariah and Civil, legal
documents, and the involvement of varies agencies may lead to no claim, late claim or delayed distribution
of estate. A beneficiary may be unwilling to initiate the process of distribution of the estate because he does
not know whether or not the estate can be distributed under fara’id, will or trust. Beneficiaries, in some cases
may discover new list of properties, in cash or otherwise, after the application has been made. This may
contribute to late claims or delayed distribution of estates. In the case of intestate estate, the law prescribes
its distribution among the heirs and baitulmal. The baitulmal may not know about the estate unless an
application for fara’id certificate is made or notified by an agency about the unclaimed estates. Where no
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such notification is given, and no legal heir survives the deceased, the estate can remain unclaimed
considering the ambiguity in law and the lack of clear database.
2.3. Lengthy Process
The empowerment of two courts under substantive law and the procedures to be followed may be the
reason for unclaimed estates simply because the process is too lengthy and costly. The High Court has been
empowered to grant a Probate in testate cases under Section 3 of Probate and Administration Act 1959, and
Letter of Administration in intestate cases according to Section 18 of Probate and Administration Act 1959.
The period of getting a Letter of Administration is longer than Probate for testate estates. It may take up to
four years to settle the case. Additionally, the Shariah Court has been vested with jurisdiction to ascertain the
eligible heirs and their shares and to issue the certificate of farai’d to that effect [5]. Application to claim the
estate involves costs; this may play significant role in making the beneficiaries of the estate not to claim it,
especially when the value of the subject property after distribution is relatively small. In cases where an
application is made by the beneficiaries, the time between application and final settlement of the case will be
long and therefore the distribution of the estate will also be long.
2.4. Lack of Cooperation and/or Contact Between Various Parties
Occasionally, the donor and trustee might not be in constant contact and therefore the possibility of
claiming and distributing the estates will be remote. The trustee may come to know about the demise of the
donor after a year or so, and thereafter he may initiate the process of claiming the estate for the beneficiaries.
In this case, the claim might be made late, which may also result in delayed distribution. Further, the
distribution of estates could be delayed due to the lack of contact and cooperation between the beneficiaries.
They may not wish to attend the hearing or no decision could be made by the relevant agency because there
is dispute between parties. There might also be cases when a trustee does not discharge his responsibility and
does not inform the beneficiaries about the estate or about the existence of declaration of will, gift or trust.
Here, the estate may remain unclaimed.
2.5. Lack of Cohesive Mechanism
The lack of necessary database on the movable and immovable estates of the deceased owner may make
the estates unclaimable. There is no link between the Department of National Registration and other relevant
agencies such as Land Office, Courts, Amanah Raya Berhad, banks and others in order to access the required
databases on dead persons, the identification cards and certificate of birth, certificate of marriage, grant of
land, current land taxation receipt and movable estates statements. Currently all information are obtained by
individuals or lawyer through application. There is no single body where all the above information can be
accessed, claims can be speedily processed, or adjudicated. Therefore, the distribution of an estate will be
slow, expensive, discouraging and subject to a family tussle [9] based on farai’d, will, gift, and trust.
2.6. Attitude
Majority of Malaysian Muslims are less sensitive to know their rights to inheritance [9], how and where
to claim, as well as they might be less sensitive as to why they should apply. Indeed, the level of
consciousness about estate planning is still lower. Though, the importance of having a will has been stressed
upon, especially through banks, co-operatives and related bodies, educational and promotional programmers
and also electronic media [4], it is presumed that such may not necessarily prevent the delayed in the
distribution of estates.
The distribution of estate may also be delayed by a claim made by non-Muslim relative of a deceased
Muslim person. As the law is clear in Islam, and the convert knowingly excludes his non-Muslim family
members there should remain no question about the rights of the non-Muslims to inherit from the said estate.
Yet, claims are made by non-Muslims to the properties of their deceased kin. In the case of Federal Islamic
Religious Council v Lim Ee Seng (2000), the High Court of Malaya held that a former wife’s claim to her
former husband properties is dismissed because he had converted to Islam and she has no rights under
Islamic inheritance law. In the above case, the dispute by the non-Muslim family member will cause further
delay and the distribution can take place only after the court makes a decision about it.
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2.7. Conclusion
Irrespective of whether or not a person passes away testate or intestate, due to the above six reasons, his
estate is prone to being unclaimed, claimed but not sooner as should be, and distributed very late. In any
event, it impedes the economics of individual, industry and government. The latest preventive measures
introduced by government and undertaken by various bodies seem to be not as effective as one could wish.
The accumulation of unclaimed RM 40 billion and so, as publicised by media, strongly suggest the above
conclusion. Therefore, the reform of the law and procedure is needed. For this, a study is needed in order to
overcome the problems of complexity of law, lengthy and costly process, and non-cohesive mechanism, lack
of knowledge and cooperation, and attitude of various parties.
3. Acknowledgements
The author would like to thank the anonymous reviewers for useful comments. Zamalah/Institutional
Scholarship provided by Universiti Teknologi Malaysia and the Ministry of Higher Education of Malaysia
finances the work.
4. References
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[4] Patrick Sennyah (2007). RM 40b Waiting To Be Given To Heirs. New Sunday Times, pp: 3.
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[9] Siti Mashitoh binti Mahamood (2008). Isu-isu Berbangkit Dalam Pengurusan Baitulmal Di Malaysia: Pemakaian
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[10] Sittamparam, R. (2009). RM 2m Limit to Small Estates from Sept 1. New Sunday Times, (August 16).
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