Protect Your Family – The Complete Guide to Wills and Guardian Appointment in Hong Kong
Do we need a Will? Is our existing Will valid? Who will care for our children if we both pass away? (This post was originally written in 2014 and revised in October 2016).
These are common questions, subjects that are tossed around at coffee mornings and dinner parties, and even on the flight deck of an aeroplane.
A Will is the instrument by which money, real estate, and personal property are distributed after your death. It is also how you formally appoint guardians to look after your children if something happens to both parents.
If you are an expat family with no relatives in Hong Kong, appointing guardians and temporary guardians for your children is the number one reason to arrange drafting of your Wills. However, it’s not the only reason. You need a Will if you own anything – real estate, investments, money, etc. and in the absence of a Will that fulfils the legal requirements, the Rules of Intestacy are brought to bear, both in your home country and wherever you own property or substantial assets. These are imposed by the government and vary from country to country, and indeed from state to state in places like Australia, the USA, and Canada.
In Hong Kong for instance, a limited amount, known as a statutory legacy (HK$500,000 at the time of writing), is allowed to pass from husband to wife, anything over that is divided between the spouse and the children and put into trust; in other words, the capital is not available. It is even more important to have a Will if there has been no formal marriage, because the law is definitely not on the side of a surviving partner and things can get very complicated and distressing.
The government does not allow you to depart from this life leaving loose ends. If you do not write a Will, you must make do with the default version. In a situation where there are substantial assets, the opportunity to make the most of tax allowances and to put in place some financial arrangements that will reduce the size of your estate are sacrificed and the Inland Revenue could be your main beneficiary!
What happens if no guardians have been appointed?
If there is no evidence of guardians being appointed, whether in a Will or in a formal Deed, a local court in the country where the children are at the time when the parents pass away is convened as soon as possible, and the children are made wards of court in that country. At that point the State takes responsibility until a guardian is found.
If no suitable person is available or willing to take on the responsibility, the orphaned child or children remain wards of court and the State will remain in charge of their wellbeing for the rest of their minority.
If both sets of grandparents apply to the courts to be appointed the legal guardians, there is the possibility of a major family rift if they cannot agree. The legal rights are actually with the father’s family if the couple is married. Whichever way the court decides it will not award the children to either set all the time there is a dispute raging on. At the end of the process two sets of grandparents will be at loggerheads and that is a situation, which will benefit nobody, least of all the children.
Families living overseas who are isolated from their normal extended family support group are particularly at risk if things go wrong. Godparents have no legal status although many people choose them thinking that these are the people that they would like to bring up the children if circumstances took their parents away. The appointment MUST be made in a legal document – nothing else will guarantee that the preferred guardians of your children will be appointed as you would wish!
As it can take time for a Will to be presented to the courts, it is important to back up the appointment of guardians in the Will with a legally binding Deed of Appointment of Guardians, and for expats an additional Deed of Appointment of Temporary Guardians, ensuring that each guardian has an original version of the deed, so they can immediately present the document to the courts and take the children into their care. A good Will writer, who is concerned about what happens to his clients’ children if both parents pass away, will include these deeds free of charge as an integrated part of the Wills.
Is my existing Will valid in Hong Kong?
Most responsible parents will have a Will, but the question of domicile comes to the fore if there is a joint death of husband and wife, and children are left subject to the provisions of an existing Will. It is true that a Will made in England will be acceptable in Hong Kong, but the Hong Kong probate office will not take the Will through probate if the person who has made it is domiciled somewhere else. They will, however, accept a grant of probate issued in certain countries. The court in Hong Kong will re-seal the grant and then it can be used to release the Hong Kong assets. Great delays are to be expected and professionals’ fees can escalate quickly before the estate is finally paid out to the intended beneficiaries.
Domicile in this context is ‘domicile of choice’, and has a different definition from ‘domicile of origin’ or ‘domicile of acquisition’. In the absence of any statement to the contrary, or any positive action to change it, the domicile of choice and the domicile of origin (where you were born) are usually the same. The Hong Kong probate office will interpret it that way, and will only accept a re-sealed grant, not the original Will. Incidentally, domicile is not the same as residence or nationality, or anything to do with definitions for income tax or capital gains. The answer is probably to have two Wills if your domicile of origin is not Hong Kong – a Will limited to Hong Kong and another Will for your home country. With careful drafting the Wills work round each other and fit together so that there is no conflict between them.
One common misconception is that you can only have one Will, but that is not so. It is perfectly possible to have two or more Wills, and this applies particularly if you decide to invest in property, or indeed if you and your spouse come from different countries. By having two (or more) Wills you can be sure that a grant will be issued in Hong Kong for the Hong Kong Will, and then everything can be dealt with locally without the wait for resealing a grant. Time is definitely of the essence when children are involved and this will short circuit the system. Most importantly, you have ensured that your children will be looked after by friends until their guardians arrive and the Hong Kong social services will have little or no say in what happens to them. You will have done everything you can to help your family deal with a difficult situation without interference from the Government agencies.
Making a Will is a job that almost everyone puts off. But it need not be a painful experience. We do our best to make the process as relaxed as possible. The peace of mind that comes from knowing that this small but important job is finished is well worth the time and effort it takes to complete the task.
Before you instruct your professional Will writer, take time to think who you want to put in charge of administering your Will, who should be responsible for your children and what happens if your main beneficiaries die with you.
If drafted correctly, a Will can last a lifetime (unless things change drastically). It brings great peace of mind knowing that everything is organised properly. You will not leave a trail of problems behind you if you take off suddenly and don’t come back.
However, as your situation changes it is important to keep your Wills up to date. For a young married couple, 10 years will probably mean a huge difference in their lives. Children, property, financial situation will all have changed since the day they made their commitment to each other, and they will need to re-visit their Wills at regular intervals, even if just to check that everything is still fine. Being reminded to do this is really helpful and stops lapses that might cause trouble. By storing your attested Wills with your Will writer, you not only keep them safe from damage or getting lost, most Will writers who offer storage facilities will send annual reminder letters to ensure that any changes in your circumstances are reflected in your Wills, so they are always kept up to date.
This article has covered what we think are the most important items in a Will. Of course there are other issues to worry about, and not everyone has children! If you want to know more, then call Åsa Wilkins on 3100 0101 for a free phone consultation – no strings attached. You can also email [email protected], or visit the library section of www.Phoenix-Wills.com for more information.
If you would like to know more please contact us and Phoenix Wills can arrange a Q&A session over coffee or wine with you and your friends.
Is your family properly covered? Read more about health insurance for children in this post.