For those of you who have taken the time and trouble to make a Will, the question ‘have you made your Will yet?’ brings on an enormous feeling of self-satisfaction. Unfortunately you are in the minority, 10%! Most people have some idea of what a Will is (the Instrument by which money or assets, real estate, and personal property are distributed after your death). Intestacy is not having one. Without a Will, properly signed and witnessed, the Rules of Intestacy might be imposed by the Government of the country where you live. These rules vary from place to place, and indeed from state to state in countries like Australia and the USA and Canada.
In common law countries a limited amount (known as the Statutory Legacy) is allowed to pass from one spouse to another and anything over that is divided between the spouse and the children and put into trust for safe-keeping, so that the capital sum is not available. The statutory legacy is horrifyingly low in Hong Kong. There is little consistency internationally and for you much depends on where you think of as home (also known as your ‘domicile of choice’), for it is the rules of that country which will dictate how your assets are distributed. What is more important the Government of your home country will be entitled to tax your estate!
The terms ‘Executor’ and ‘Trustee’ occur in every Will. The two functions are similar, but at the same time separate. Traditionally both tasks were given to Lawyers or a Bank, but these days it is quite normal for a close family member to be the Executor of a Will.
The Executor of a Will is the administrator of the Estate. The appointment is made in the Will and should have an alternative appointed just in case the first choice fails – through sickness, death or simply unwilling to do it. A Trustee is a person responsible for the safekeeping of the belongings of someone who wants another person (called the ‘beneficiary’) to have the advantage of them.
![]() | Take the Will to the Probate Office, together with a death certificate, and show them the documents. | ![]() | If all is well with the Will a certificate known as a grant of Probate is given to the Executors. This important piece of paper gives government approval for the Executor to carry out his or her task immediately. | ![]() | As Trustee he or she must make sure that personal belongings and money are safe. Something as basic as changing the locks on the doors should be done immediately following a death to prevent other key-holders from going into the home and helping themselves. | ![]() | Normally Executors and Trustees are the same person. The Trustee must look after things that will become the property of other people........ such as beneficiaries who are under 18. If the testator (the person making the Will) does not want the money and any jewellery, or valuable collections to be inherited until a specified age the Trustees must look after the gifts and keep them safely (and properly invested in the case of money) until the Benefidciary reaches that age. |
And yet, important though your money is there is something at the top of every parent’s list – what happens to your children if both you parents are involved in an accident from which there is no survivor? Who will bring up these children in your place and what happens to them if the appointment is not made and how will that be funded? The law in Hong Kong says that any child under the age of eighteen must have an adult who is responsible for them. What happens, then, if both parents die in an accident? If there is no Will or if it is out of date because it has not been re-written since the birth of children then there is a problem. If the parents are dead and there is no evidence of Guardians being appointed then the State takes over that responsibility until a Guardian is found. If no suitable person is available or willing to do it then the State remains in charge of the orphaned child or children for the rest of their minority. In Hong Kong children are made Wards of Court. The Court will then supervise arrangements for their immediate care, which (at the very worst) could mean a State run Institution, a Charitable Home or foster parents. The court will then ask for applications from people who may be interested in taking on the Legal Guardianship of the children. It will consider the applications and probably interview the applicants, then award one of them the right to the children. In your Will you can appoint Guardians and at the same time make arrangements for money to be held in Trust for them and the children. Estate Duty in Hong Kong, known as Inheritance Tax in the UK, is a very big subject. Domicile of choice will define the country of personal taxation; Real Estate (immovable assets) is usually taxed in the place where it is located. Many Offshore places (eg Isle of Man, British Virgin Islands) have no death duties at all. Sensible financial planning can reduce your tax bill quite legally. Inheritance Tax or its equivalent is a ‘voluntary tax’; properly organised in plenty of time it can be reduced to the minimum. For further information about out Last Will & Testament service, please contact us. | 