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Estate Planning: Key Takeaways

On 9th November, GJWHF$ and WILHK co-hosted a money date on Estate Planning. Protecting wealth and investments for our families is an integral part of breaking down the gender investment gap. Moreover, women often live longer than men, so it is important that women can control their estates effectively. Estate planning is a way to prepare yourself, your assets and family for the future.

Thank you to our experts Samantha Gershon and Lesley Mclean for taking the time to share their views with us. Some of the key takeaways were:

You’re an expat, with kids and no other family around, what do you need to consider with your will?

No matter where we live and how old we are, or the extent of our assets, it's always really important to have a will in place as your basic starting document. So even as expats living in Hong Kong, the recommendation is always to put a will in place so you have clarity on what will happen to your assets.

Particularly with children, a will should at the minimum provide for the appointment of temporary guardians and permanent guardians. So for example, if you're living in Hong Kong and your next of kin or family members are all living overseas, then it is important to appoint temporary guardians who could look after the children for a short period during the time it would take the permanent guardians to be able to travel to Hong Kong to collect the children (e.g. individuals that we trust, they may be friends, they may be work colleagues or neighbours).

In the time of Covid, it is also important now to think of your temporary guardians slightly differently, such as selecting guardians from different areas of your life, maybe some from work, maybe some from your friends.

Just to note, Hong Kong determines the age for guardianship as 18 and below.

As a follow-up, if you have been signed up several guardianship papers, which one would prevail?

The latest guardianship paper would prevail, but you want to avoid situations like that. You need to make sure that you have superseded the previous ones. Otherwise, there could be confusion and time wasted. Just to note, it would be sensible for the Guardian sign to confirm acceptance of the appointment.

On guardianship and children, what happens if you’re separated but you're not yet divorced.

There are various issues. So, the first thing you can do, even if you're separated, but don't want to go through a divorce, you can still finalise some of the arrangements and put them into a separation document. That way your wishes would be known and you may want to have those guardianship documents in place.

Do we need to have a will for each different jurisdiction where we have assets?

As a first step, you need to think where your assets are located. One thing to be mindful of is if you have assets in certain countries where a state duty may be imposed, then you may need to take on board tax advice in those jurisdictions. We also sometimes need to bear in mind your citizenship, as assets may be treated differently. It can often be the case that we prepare a worldwide will, that whilst it covers the assets in Hong Kong, it can also cover assets that you have in other jurisdictions. A point to note, if you prefer preparing a will in every single country an asset is located then not only does it become quite costly but it is also risky if the wills are not prepared in close coordination with each other.

If you wanted the governing law for your will to be England and Wales, but you are based in Hong Kong, can we prepare a will that makes clear that England and Wales law prevails? It is possible, if you are going to specifically indicate that you want the will to be governed by laws of England or Wales, then you would need a UK solicitor to prepare the will and advise you on the implications of that choice.

Should I pay for a will or is there somewhere where there is a template that I can fill out?

There are plenty of precedents online, but you need to be aware that you may fall into the trap of printing off a document and trying to fill in gaps without necessarily realising there are so many issues that should be taken into account and making sure that one clause is not going to come into conflict with a later clause.

Key takeaway is at least to put in place a simple will just for now. You are not necessarily going to have the comfort that it's necessarily tax efficient and is achieving everything that you might want it to achieve, but at least you've put a will in place such that you are not going to be subject to the laws of intestacy and subject to delays and additional expenses from a probate perspective.

Where should I keep these documents?

Consider sharing the documents and making sure copies are stored with relevant people in different places. Law firms will often store clients’ original wills and then recommend that the previous will is destroyed. If a client wants to store the original will themselves, it is recommended that it is put in a safe place. It is not recommended to put such documents in a bank safe deposit box because unfortunately, when one passes away the bank safe deposit box becomes frozen, and it can take two or three months to get an appointment with the Home Affairs Department to then unlock the safe deposit box.

Are all wills hardcopy or can you just have a digital will?

In short, all wills must be in hardcopy as you must be able to present the original signed will to the probate registry. Note, it is very difficult to submit a copy of a will to probate. Therefore, it is very important to keep the original will safe, usually with the solicitors.

What should one do when living as a couple but not married to ensure that inheritance goes to a partner?

Even if you're not married, a single person or in a common law relationship, you can still put a will in place. If not, that how your estate is distributed is determined solely by the laws of intestacy. Therefore, the reason for putting a will in place, is to make sure that your wishes are going to be properly followed. In Hong Kong, under the Intestates’ Estates Ordinance, it says if someone passes away without a will, but with a spouse, 100% will go to the spouse if there are no parents. If there are parents, then there will be a split under the laws of intestacy. In Hong Kong, we can put a will in place that overrides the intestacy laws in Hong Kong. Hong Kong accepts that if someone is a Hong Kong permanent resident and they are domiciled in Hong Kong, they are subject to the Hong Kong laws of intestacy.

Real estate is dealt with separately and you also have to consider the local laws of the country it is located.

What is the difference between a living trust and a will?

Trusts are something that some clients do look at in terms of if they want to vest their assets into a separate entity, outside of the scope of the of the will and provide for their family members through that vehicle. The issue is that there are often the costs and the complexities of putting a trust in place. In terms of alternatives, when you have got your will document, you can require the executors in their capacity as trustees to hold portions of the estate on trust for the children. For example, you have young children, you want them to be maintained by providing funds to the Guardians while they are young for their education and their general maintenance. And then you may want them to only receive the estate when there may be of a certain age in tranches.

How does probate work, what happens in Hong Kong, especially if someone is appointed as an executor from overseas? Does the executor have to be a lawyer?

The probate procedure is quite a complex procedure. Probate just means when someone passes away, you get their will, and you must go through a legal process. It involves taking the will to lawyers (even if the personal executor is a lawyer), because they are required to independently gather the details, and complete a schedule, of all the assets. The Probate Registry are required to review the will to determine if it appears to be valid. Once probate is granted, the executor then has authority to go to the bank, the share registrar, the investment company, the land registry, or similar to register the grant and then they