Estate issues in Hong Kong when French nationals are involved
The settlement of a French national’s estate including assets in Hong Kong can be relatively costly, long, and problematic if simple precautions, such as the appointment of an executor, are not taken.
From a Hong Kong perspective, which law applies to an international estate?
To determine this, the distinction between movable and immovable property is used:
- Movable property is governed by the law of the deceased’s “domicile” (a common law concept referring to one’s permanent home);
- Immovable property is governed by the law of the place where it is situated, “Lex Situs“.
- The notion of “domicile” is to be determined as a matter of priority since it can determine the law applicable to movable property.
To determine the “domicile” of a person, it is necessary to determine where the person intended to take up residence and whether he/she had severed his ties with his/her domicile of origin.
Whether the death took place in Hong Kong or not, regardless of the law applicable to the estate, as soon as the estate includes assets in Hong Kong, whether movable, such as a bank account, shares held in a securities account, or real estate, it will be necessary to go through the “Probate” procedure.
By “Probate”, we refer to a judicial procedure for the settlement of estates, specific to common law countries such as Hong Kong.
Dealing with estates in Hong Kong often confuses French nationals because the way estates are handled in France varies significantly.
Indeed in France, the notary takes charge of the entire procedure from the opening of the estate, the determination of the heirs to liquidation and sharing, including the inventory of assets. In Hong Kong this role is entrusted to an executor, whether professional or not.
Hong Kong law provides for two options:
- appointing an executor by way of a will; and
- the absence of a will and in this situation, relies on the law to appoint the administrator of the estate.
If an executor is not appointed, the settlement of the estate in Hong Kong will take longer, and the settlement of the estate relating to the property in France will be suspended during this time.
The Probate Procedure
The opening of the estate in Hong Kong requires the filing of an application with the Probate Registry, a division of the High Court of Hong Kong, for the issuance of a Grant of Representation Order, empowering the executor or administrator, as the case may be, to manage the estate. Once the Grant of Representation is obtained, the procedure does not stop there, as there are a certain number of other legal requirements to be met.
The process will be less troublesome in the presence of an executor appointed by the deceased in his will. Indeed, the administrator of an estate has to prove his capacity, which is all the more complicated when the deceased was a foreign national.
The importance of drafting a will in Hong Kong
In the absence of a will, the “Probate” procedure (which is already slow) is further lengthened.
For this reason, we strongly recommend that French nationals owning property in Hong Kong, or in another Common Law country, have a will drawn up in English to designate one or more executors.
It is important to emphasize that a Grant of Representation is required to take possession of the property in Hong Kong, even if French law applies to the whole estate. Banks will require this Grant of Representation to release funds held in an account in the deceased’s name, and this applies to other common law countries.
For French nationals who move from one country to another and hold property in several common law countries, there are simplified procedures to avoid having to obtain a Grant of Representation in each country.
Finally, it is essential to be reminded that when it comes to international estate matters, we must make a distinction between the following:
- the determination of the law applicable to the estate, which determines the rules of devolution of the estate (the heirs and the share due to them);
- the settlement of the estate (role of the notary in France/ Probate procedure in Hong Kong); and
- inheritance tax.
In light of the above, the assistance of a lawyer to guide you through the successive steps of an estate (being at the stage of the planning or the opening of the Probate procedure) is fundamental.
If you need more hands-on assistance with your legal issues, we recommend to contact one of us at OLN. Our French practice has decades of experience advising French nationals on estate planning and can provide expert advice to help you protect your Hong Kong assets.
If you have any questions regarding your estate planning or other legal issues, feel free to contact us.
Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.