Articles

Probate and Estate Planning

Probate and Estate Planning

It’s all in the Mind…

Tuesday, 04 June 2013 14:30

 

Common Grounds to Contest a Will

Although people in Hong Kong enjoys testamentary freedom (i.e “absolute freedom” in the disposal of their property), there are situations where a Will can be contested.  For example,

•    the Will has not been signed or witnessed properly;
•    the testator was mentally incapable to make the Will;
•    the testator had no knowledge of or had not approved the contents of the Will;
•    the testator was under undue influence to make the Will; and
•    Forgery

Here we will focus on the ground where the testator’s mental capacity is being challenged.

 

How to “execute” an Executor?

Wednesday, 22 May 2013 11:41

 

An executor is a person appointed by Will to carry out the administration of the estate.  As a result, beneficiaries rely on the executor to perform his/her duties properly including:-

1.    Take out probate; and

2.    Administer the estate efficiently and in accordance with the Probate and Administration Ordinance (Cap 10)

Unfortunately, in reality, sometimes the executor turns out to be far from perfect.  Beneficiaries may find themselves stuck with an executor who is unresponsive, difficult, hostile, or simply unfit for or uninterested in the job.  The followings are ways to “dispose” of the unwanted executor:-

 

Who can administer an estate?

The deceased’s estate can be administered by the Executor named in the Will of the deceased or an Administrator appointed by the Court.

 

If the deceased left no Will, who may be the Administrator of the estate?

 

This is called intestacy. In such circumstances, the persons having a beneficial interest in the estate can become an Administrator.  The priority is as follows:-
1.    Spouse;
2.    Children, natural or adopted;
3.    Parents;
4.    Siblings or issues to predeceased siblings;
5.    Grandparents;
6.    Uncles or aunts or issues to predeceased uncles or aunts;
7.    Official Administrator; and
8.    Creditors

Duties of an Executor/Administrator

The Executor or Administrator is entitled to administer an estate, and all the deceased’s assets will rest with that person pending distribution. 
The Executor or Administrator owes duties to beneficiaries and creditors of the estate for due administration of the estate.  Such duties can be broadly described as follows:-
a.    Locating and safeguarding the assets;
b.    Obtaining Grant of Probate/Letters of Administration;
c.    Arranging payment of any tax, debts and expenses due;
d.    Maintaining proper accounts; and
e.    Distributing the estate to the beneficiaries.

What is Grant of Probate/Letters of Administration (Grant)?


A Grant is a legal document issued by the Probate Registry authorising the Executors to administer the estate.

According to section 60J of Probate and Administration Ordinance (Cap. 10), it is an offence if any person who, without lawful authority or reasonable excuse, deals with any part of the estate of a deceased person which is not set out in the schedule of property annexed to a Grant made to an estate.

What should I do before obtaining a Grant?


•    You should locate all assets and liabilities in the name of the deceased, such as bank accounts, insurance policies, real properties and stocks and shares.

•    You should inform the bank about the demise of the account holder, and ascertain the balance of the account as at the date of death. 

•    You should also find out whether the deceased owned a safe deposit box, apply to the Home Affairs Bureau for a certificate to open the box, and attend the inspection of the box.

•    You should also ascertain whether the deceased owned any insurance policy, and notify the insurer promptly.

Where should I apply for a Grant?


You should go to the Probate Registry in the High Court, Hong Kong.

What should I prepare before making an application?

 

You should:

1.    Gather all documents necessary to support your application; such as:-
a.    death certificate certified by the Birth and Death Registry;
b.    deceased’s will;
c.    documents proving your relationship with the deceased, such as birth certificate or marriage certificate or adoption certificate; and
d.    documents relating to the deceased’s assets;
2.    Complete the appropriate forms prescribed by the Probate Registry
(click here to download the appropriate form);
3.    Make an appointment with the Probate Registry;

When you apply for the Grant, you swear to the Probate Registry to:

1.    Well and truly administer and faithfully dispose of, all such property and estate, rights and credits as the deceased at the time of his or her death was entitled to within Hong Kong;
2.    Pay whatever debts the deceased did owe, so far as such property and estate, rights and credits, shall extend;
3.    Exhibit a true and perfect inventory of all the estate and effects; and
4.    Render a just and true account thereof whenever required by law so to do.

In the course of the administration of the estate, you owe duties to protect the interests of the beneficiaries and creditors of the estate. Such duties may include but not be limited to:-

o    liquidating and closing all bank accounts;
o    taking necessary measures to protect the assets;
o    settling all debts and liabilities;
o    Arranging to transfer the title of real properties to the beneficiaries;
o    Distributing the estate to the beneficiaries.

What is my liability for being an Executor/Administrator?


If you fail to discharge your duties properly as an Executor/Administrator, you may be personally liable for people who suffer from your failure to discharge your duties. 

Can I be remunerated for being an Executor/Administrator?


Unless the Will specifically provided for the same, you cannot be remunerated as an Executor/Administrator.

However, all expenses incidental to the discharge of your duties, such as professional fees, bank charges or other expenses properly incurred in the administration of the estate may be deducted from the estate.

Should I instruct a professional to administer the estate for me?


While it is not essential for you to engage a professional to administer an estate, it is advisable for you to do so, especially in the following circumstances:-

a.    When the assets of the deceased spread across a number of countries, with very different legal and tax systems;
b.    When the amount of the estate is substantial;
c.    When there are a lot of beneficiaries; and
d.    When your relationship with any of the beneficiaries is not harmonious.

The benefits of engaging professionals to administer the estate in any of the above scenarios outweigh the expenses for their retainers.

 

I do not want to be an Executor/Administrator.  What should I do?

 

If you do not want to be an Executor/Administrator, you can either:-
i.    Delegate your duties to a professional; or
ii.    Renounce, i.e. give up your right as an Executor/Administrator

 

I live overseas and I cannot come back to Hong Kong and be the Executor/Administrator.  What should I do?

 

If you cannot come back to Hong Kong to be an Executor/Administrator, you can either:-
i.    Appoint an attorney to deal with it for you; or
ii.    Renounce your right as an Executor/Administrator

 

If you have any other questions in relation to administration of estate, please feel free to contact us.

 

This Article is for information purpose only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.  If you have any questions in relation to the matters contained in this Article, please do not hesitate to contact our Partners of the Probate and Estate Planning Practice Group of OLN.

Domicile

Friday, 20 January 2012 21:54

 

Domicile is a concept which is so complex and novel that most people do not understand, and yet it plays an integral part in estate planning.
Domicile Ordinance came into effect on 1st March 2009.  According to that ordinance, every individual has a domicile and a domicile only, and the court will determine an individual’s domicile based on Hong Kong laws.

 

 

In some intestate or resealing of foreign grant cases, the court would require guarantee1 to be provided by two sureties2 as a condition of issuing Letters of Administration in order to ensure due administration of the estate by the administrator.  Such requirement has been removed in the UK as early as 1972, but it is nevertheless retained by the Probate Registry in Hong Kong.

 

Page 2 of 3