Hong Kong: considerations for estate planning and international wills
24 September 2020 - During the uncertainties brought about by COVID-19, there are many questions arising around estate planning and, with estates frequently comprising assets in multiple countries, the subject of ‘international wills’ is growing in popularity.
Yuseff Murphy, Head of Trusts, Asia – Corporate & Private Clients, Citco Singapore Pte. Ltd., and Alfred Ip, Partner, Hugill & Ip Solicitors, discuss common questions around estate planning for Hong Kong residents, particularly in the era of COVID-19, as well as the questions to ask when considering whether to make one ‘international will’ instead of multiple wills to look after a multi-jurisdictional assets portfolio.
YM: When weighing up whether to take action, people tend to quantify the price of doing nothing. In the case of a person’s estate that means the distribution of assets being decided in probate court, could you share some colour on that process?
AI: The major differences between having a Will and otherwise are:
- You cannot control who will inherit your estate without making a will
- Your family members will go through a more complicated probate process
Hong Kong Court is very strict in approving probate applications, in particular proving relationship with the Deceased and the entitlement to administer the Estate. All foreign public documents must be properly legalized.
Applicable succession law is determined by the law of the place where the deceased died domiciled, hence there is an additional layer of complexity if there is no will in place.
YM: In Hong Kong, parents are frequently told that if they both pass away their minor children will become wards of the state. Is that the case? And if it is, how could one avoid it?
AI: In the event that children become orphans, and nobody can look after them, the Social Welfare Department will step in. Nobody else has parental right until a guardianship order is made, and it involves a court application which takes time and money, even if it is not contested.
Hence it is advisable to sign a Deed of Appointment of Guardianship to appoint someone to look after your children in the event that both parents pass away.
YM: In the time of this pandemic, a related concern is what will happen to a minor child if both parents test positive for COVID-19 and are held in quarantine. Is there a process that they could avail themselves of to appoint a temporary guardian for the child?
AI: It is generally not necessary to appoint a temporary guardian as the parents are still capable to exercise their parental rights and make important decisions for their children, even if they are separated from their children due to quarantine.
However, it is necessary to make sure that someone will take care of their children, so it is advisable to have a contingency plan, possibly in writing, and keep it with the person who will look after your children during your quarantine.
YM: As the world has metaphorically shrunk and with more people becoming internally mobile, if their estates comprise assets in multiple countries, is it possible to have a single “global/international will”?
AI: Yes it is possible, but the question is: whether it is advisable?
When considering whether to make one will instead of multiple to look after a multi-jurisdictional assets portfolio, there are the following questions to be asked:
- Where are the assets;
- What sort of assets (real or personal);
- What is the value of those assets;
- Whether those assets are directly held by you or through an asset holding vehicle;
- What is the succession process in those countries; and
- What sort of tax that the estate will be subject to in the course of the succession process
Hence it is important to be advised by lawyers with international wealth and estate planning experience to address the above issues and devise a strategy for you.
YM: With multiple wills, are there things that need to be considered when a new one is drafted in a new country with respect to the others in existence?
AI: It is always advisable to make sure that all subsequent wills shall not revoke the previous one unless it is intended by the testator.
More often than not, people make multiple wills without careful consideration over how it would impact the other wills. This is particularly the case when they either forgot about the existence of other wills, or they were not properly advised about the impact.
We would advise clients to engage a private client lawyer to look after multi-jurisdictional estate matters to make sure that all issues are considered.
YM: The role of estate’s executor is an important one that bears consideration. Could you share some information on their responsibilities?
AI: The responsibilities of an executor include:
- Identify the assets and liabilities of the testator;
- make funeral arrangements;
- make an inventory of the property in the estate;
- probate the will;
- call in the property after grant of probate is issued;
- pay all the debts and taxes;
- distribute the property to the beneficiaries
Family members are entrusted by the deceased or appointed by the Court to administer the estate, but if there is any dispute among family members, they would often be subject to blame, even if they have done their best to administer the estate.
Hence it is advisable to appoint a lawyer with experience in estate administration to assist with discharging the duties of estate administration.