With the constantly evolving situation around the world, we are counting ourselves lucky in Hong Kong in that we are not confined to the four walls of our apartments. Especially so when speaking with friends and family “on lockdown” in the UK, being able to get out to hike up to the peak, or go out to a restaurant for some lunch or dinner with 3 well-chosen companions is comparably somewhat of a luxury.
From our perspective, whilst the lack of options in terms of activities to do at the weekend is slowly becoming a little frustrating, we are finding that a lot of clients are choosing to spend more time on themselves than they would normally. In particular we are receiving a number of enquiries from clients trying to tick off some of those “we’ll sort that out next week” jobs.
One such task which people tend to kick down the road for various reasons is the drafting of a will, and often incorporated within it, completing Deed of Guardianship.
We understand that this is not the most fun topic to discuss, but completing it properly will give you the peace of mind that if the worst were to happen, your estate can be distributed as you wish and without too much hassle, and that your loved ones are going to be well looked after.
What happens if I die without a will?
As is the case in the UK, if you die without a will in Hong Kong your assets will be distributed in accordance with intestacy laws. For example, assuming all of your assets are in Hong Kong and you die leaving a spouse and two children, the first HK$500,000 of your residuary estate plus all personal effects would be given to your spouse, along with 50% of the remaining residuary estate. The other 50% would be split between each of your surviving children.
On the face of it this doesn’t seem to be the worst outcome, however, perhaps you wish for your spouse to inherit everything, as you are unsure whether they will have enough to provide for themselves throughout the rest of their lifetime. Anything leftover could subsequently be passed to the children.
You may also not want your (for example) late-teen kids gaining access to a potentially large sum of money to do with what they please.
For those without children, not having a will can also result in non-desirable outcomes as the first HK$1,000,000 of your residuary estate plus all personal effects would be given to your spouse, along with 50% of the remaining residuary estate. The other 50% would be given to your parents.
If you make a will, the estate distribution process should be quicker and cheaper, and you can also ensure your hard-earned wealth is passed on to those whom you wish to benefit, including making specific gifts to certain individuals. It can also avoid unnecessary disputes between heirs.
Why do I need a deed of Guardianship?
Another oft overlooked but essential task to complete if you are a parent in Hong Kong is to ensure you appoint guardians for your children.
If both parents pass away without this in place, your children will be swiftly placed in an orphanage by social services until the courts appoint a guardian. Clearly this will be a very stressful time for the children and one which is easily avoided by the appointment of legal guardians.
The person appointed will have parental rights over the child/children until they reach the age of 18.
One slight nuance for expat families in Hong Kong is that the desired guardians may not reside in Hong Kong themselves. Hence it is always prudent to appoint some alternative or temporary guardians who can act until the testamentary guardian(s) is/are able to take up the appointment.
What are the first steps I should take?
Clearly these are complicated issues, and for this reason we ensure our clients take proper legal advice ahead of making any estate planning decisions. We can make introductions to experienced family lawyers who can assist in drafting the documents to give you confidence that they are fit for purpose should/when the time arise that they are called upon.
If you feel under-prepared on these topics please get in touch and we will help you take the first steps.