Managing and administering an estate may be a complex matter and most people are unsure even where to begin. It is hard enough to accept the loss of a loved one. The last thing we want to do is to hurry about in search of key papers and statements, as well as information as to the proper process to handle the estate of your loved one. We see every day the stress this incurs. Here we summarise the usual procedures for obtaining Probate to validate the will and administer an estate. Hopefully this step-by-step guide can act as a starting point which could make this process simpler and more manageable. 

Step 1: Registering the Death 

After the death you should first register such at the registrar of births and deaths and obtain a death certificate. You will need to produce a medical certificate of the cause of death to obtain the death certificate. 

Step 2: Making Funeral Arrangements 

After the death certificate has been obtained, you may begin making funeral arrangements.  

If there is a will (as further explained below), it is the responsibility of the person named therein as executor(s) to arrange for the funeral. It is possible that the deceased may have indicated his/her wishes in the will as to their preference for burial or cremation. The executor should take into account such wishes when making funeral arrangements. 

The expenses incurred in arranging the funeral and disposal of the body is payable from the deceased’s estate. However, it is usually not permitted to deal with the deceased’s assets at this early stage as a has not been obtained from the Probate Registry. Therefore, in practice, the family members of the deceased will pay for such expenses and be reimbursed from the estate after a grant of representation is obtained.  

Step 3: Looking for a Will and Inspection of Safe Deposit Box 

You should check carefully to see whether the deceased made a will and if there is a will, whether it is the latest will or if it has been subsequently revoked. (This step can be taken earlier so that the deceased’s family members will know whether there is an executor to handle the funeral arrangements.)  

You could start by checking the personal documents of the deceased and/or enquiring with the deceased’s other family members. Often, you will also have to check the deceased’s safe deposit box.  

To gain access to the safe deposit box, the following individual could make an application to the Director of Home Affairs for a Certificate for Necessity of Inspection of Bank Deposit Box: 

1. An executor or one of the executors of the deceased; 
2. A person who is entitled to administer the estate; or 
3. The surviving renter if the safe deposit box is jointly rented by the deceased with another person.  

After the certificate of inspection is obtained, the holder of the certificate should make an appointment with the Secretary for Home Affairs and the bank for inspection of the safe deposit box.  

If a will is found in the safe deposit box and the holder of the inspection certificate is named as the executor under the will or the holder is the surviving renter of the safe deposit box, the holder can remove the will after taking a copy and returning the copy to the safe deposit box. The holder should also make an inventory of the contents in the safe deposit box.   

If there is no will found or if there is a will but i) the holder of the inspection certificate is not the executor, or ii) there is no executor appointed in the will and the holder is not the surviving renter of the safe deposit box, the bank staff should immediately close the safe deposit box after obtaining a copy of the will (if any) and giving the copy to the public officers. 

It should be noted that you should not remove any item, save and except a will (if possible), from the safe deposit box during inspection.  

Step 4: Obtaining Grant of Representation 

Thereafter, it is usually necessary to obtain a grant of representation in order to deal with the deceased’s assets.  

If the deceased passed away with a will appointing an executor, the executor should apply for a Grant of Probate. If the deceased passed away without a valid will (e.g. no will was found or the will has been revoked), persons entitled e.g. wife, children should apply for a Grant of Letters of Administration.  

The application for a grant is made to the Probate Registry of the High Court using specific forms supported by relevant documents, including:- 

1. An affirmation or affidavit by Executor/Administrator; 
2. An affirmation or affidavit verifying the Schedule of Assets and Liabilities, and the Schedule of Assets and Liabilities of the deceased in Hong Kong as at the date of death, together with other supporting documents (e.g. death certificate of the deceased, will of the deceased, certificate showing the relationship of the applicant and the deceased, filing fees etc.)   

After making the application, the Probate Registry may raise requisitions on the application to obtain further information or seek clarification. If the Probate Registry is satisfied with your answers to the requisitions, the grant will be issued.  

Step 5: Distribution of the Estate 

After the grant of representation is obtained, the personal representative of the estate (i.e. the executor under the will or the administrator appointed if there is no will) will first need to collect the assets of the deceased under the estate and then make payment of the deceased’s debts, funeral and other expenses in relation to the estate. Thereafter, the estate may be distributed accordingly.  

If there is no valid will, the administrator should distribute the estate in accordance with the Intestates’ Estates Ordinance. The order of entitlement depends on the relationship of the surviving relative with the deceased. (It should be noted that the rule of intestacy only benefits people who have direct blood relations with the deceased and does not benefit unmarried partners, step-children (unless legally adopted) and in-laws.  

For example, if the deceased leaves a widow/widower only but leaves no children, parents or other close relatives, then the surviving spouse is entitled to the whole of the deceased’s residuary estate. Another example is where the deceased leaves a spouse and a child, the surviving spouse is entitled to all of the deceased’s personal chattels, and a sum of HK$500,000 from the residuary estate, thereafter, if there is any remaining asset, it would be divided in half and distributed equally between the surviving spouse and the child of the deceased.  

On the other hand, if there is a valid will, the executor should distribute the estate in accordance with the deceased’s wishes under the will. In the event that there is partial intestacy (i.e. where there is a will which does not completely dispose of the deceased’s assets), the Intestates’ Estates Ordinance will govern the distribution of those undisposed assets.  

Conclusion 

The above is only a brief summary of the process of handling one’s post-death matters and dealing with the deceased’s estate. In reality, complications may arise in any stage of obtaining probate and administering the estate. If you have any questions regarding the above or would like to obtain further information on our probate and estate planning services, please contact one of the members of our Probate and Estate Planning team.   

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances. 

March 2021

What can be done if there are disputes over the validity of a will or the administrator of the estate? Provided that the ‘Grant of representation’ has not yet been issued by the Hong Kong Probate Registry, which would indicate that it has already validated the will, a concerned party may enter a ‘Caveat’. This will ensure that the “Caveator’, that is the person who lodges the caveat, will be informed if any application is made for the issue of a grant of representation.

While the existence of a caveat may indicate there are genuine concerns in a probate or administration process and therefore a sign of potential disputes, the effect of entering a caveat is not necessarily contentious in itself. Nevertheless, caveat proceedings do start when a caveat is lodged with the Probate Registry against an estate of a Deceased. The Probate Registry only process non-contentious applications for grant. If the application has become “contentious”, the contention must be resolved first. In theory, the entering of a caveat can be contentious, and the caveat must be dealt with first before the application can be processed further.

A caveat is a notice preventing a grant of representation being issued by the Registry without notice to the caveator. Some of the common reasons to enter a caveat are:-

•    To allow more time for the caveator to make enquiries, obtain further information or evidence to:

o    Oppose proof of a will
o    Challenge the validity of a will
o    Oppose the issue of the grant of representation to the person entitled
o    Ascertain entitlement where there is no will (the deceased died intestate)

•    To act as a preliminary step to a probate action, or to citation (for more information, see our article on citations)
•    To be a first step in an application by people who have equal entitlement to the grant of representation

Once entered, a caveat remains in force for 6 months from the date of entry and then automatically ceases to have effect, unless withdrawn or removed prior to such date. There is no limitation to the number of further caveats and extensions that can be made. 

How to Handle a Caveat?

Issuing of any grant of representation shall not be allowed if the Probate Registry has knowledge of an effective caveat. Where an effective caveat is in place, the applicant for grant of the relevant estate would be asked by the Registrar to deal with the caveat. This can sometimes come as a surprise to grant applicants as they may not have been previously aware of the caveat.

Depending on the circumstances, there are various ways of handling an estate with a caveat. In any event, given the many potential contentious issues that may arise and the sensitive nature of probate or administration in general, legal advice should be sought and the matter should always be handled with care.

A caveat can only be removed:-

•    By withdrawal of the caveat by the caveator giving notice at the Probate Registry, as long as an appearance to a warning has not been entered
•    By the non-appearance of a caveator to the warning to caveator
•    By an order of the High Court that the caveat does cease to have effect and a grant of representation be issued
•    By the expiration of 6 months form the date of entry or effective extension

It may be worrying to discover that a caveat has been lodge, but it is not unusual to find occasions where the caveat process is misused and caveats are simply lodged to stall for time, or even where parties have no grounds to contest a will or the administration of an estate. Where there is no valid reason to lodge a caveat, there could be costs consequences for the caveator. 

Whether you discovered a caveat or you are thinking of entering one, it should be reminded that caveat proceedings are by nature contentious and can well be the start of a litigation. Any step taken after the commencement of a caveat proceedings could cause legal consequences, including costs. It is therefore recommended that you seek independent legal advice before taking any step in dealing with a caveat.

If you have any questions regarding the above or would like to obtain further information on our probate and estate planning services, please feel free to contact our Probate and Estate Planning team.  

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.

February 2021

早期建议如何能大大减少未来的成本

正如中国俗话所说：家丑不可外扬，所有的家庭问题都应该在“屋内”解决是中国文化根深蒂固的思想。通常家庭和私人财富经理都不会轻易联系律师，只有当问题严重到难以处理或者成为灾难的时候，才会想到去聘请法律顾问，此时要解决如此严重的问题往往会需要一笔相当大金额的资金。本通报是为在早期阶段建立的法律备留提供实务的指标，以避免未来出现这种噩梦。

结构形成

在香港，有多样的服务和产品可以供高净值人士和家庭选择。香港仍然是超级富豪的聚集中心，他们拥有大量的私人财富，主要包括易于投资的资产，其中大部分以私人信托的形式持有，用于财富和遗产规划的主要手段。这听起来很简单，但随着高净值人群的扩大，香港的财富和遗产规划师看到第二和第三层次的富人对复杂规划的需求越来越大，特别是对于财富的代际转移，家族企业的继承问题及长期慈善目标。

客户的喜好（或在许多情况下，他们的服务提供者的喜好），以及遗产原因往往是选择结构和管辖区的主导因素。然而，设计不良的结构和不适当的管辖区选择可能导致严重的违规问题，资产的不流动，不必要的行政支出，或对商业运作的阻碍。因此，根据以下关键因素，在最适合的管辖范围内，与法律顾问密切合作来搭建一个适合的结构框架很重要:

1. 受益人的具体需求

相关问题包括:

a) 是否需要持续的支持，以及支持多长时间（例如，对未成年人和老年受益人）？在这种情况下，什么是确保部分资产保持流动性的最佳方式？
b) 是否有必要拥有独立的财富组合，如果有必要，离岸基金是否合适？
c) 是否有任何具体的管辖事项（例如，美国公民问题）需要为某些受益人提供更多保护？
d) 他们在家族企业中是否有任何作用？如果使用私人信托公司，是否可以预见身兼数职的冲突？

2. 税收效率

流行的离岸司法管辖区（如英属维尔京群岛和开曼群岛）的实体和活动不征税，这对于那些要求其资产易于转让，同时对所有权高度保密的人来说是理想的。在香港，虽然本地产权没有资本收益税，但在香港进行的贸易活动，专业或商业经营所产生或衍生的利润须缴纳利得税。因此，结构中的相关香港实体所获得的报酬或利润，即使是通过离岸工具，也可能要被征税。
税收考虑的另一个方面是个人受益人的潜在个人责任，特别是在接受分配时。

3.    合规问题

随着全球范围内反洗钱和反金融犯罪斗争的开展，从提供基本的个人资料到提供详细的有关资金和收入的来源都成为不可避免的合规要求。诸如 “实益拥有权”，”经济实质 “和 “FATCA “等术语在所有流行的财富停放管辖区经常成为头条新闻。根据不遵守报告义务的动机来选择管辖区是不现实的，因为人们最终会选择一个没有或很少有金融和专业基础设施的管辖区，即使如此，这样的管辖区最终也会发展并变得规范。
对合规要求的正确做法是请法律顾问绘制出每年完全遵守所有报告义务所需的行动和信息。从逻辑上讲，适当的规划和准备的成本将大大低于处理未能遵守某些职责的后果的成本。  

关键的文件

多年来，在香港，信托一直是资产保护和继承计划的默认设置。尽管了解这些好处，家庭一般不愿意放弃对资产的控制权，往往会寻求保留某些权力。然而，最近的法院案件（例如JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch)）证明，由委托人控制的信托很容易受到攻击，法院已经开发了一些方法，使第三方（通常是债权人或离婚的配偶）能够对信托资产执行命令。

与此相反，许多司法管辖区引入了具体条款，旨在使信托人（委托人）能够保留广泛的权力。香港的信托不会仅仅因为委托人为自己保留了投资或资产管理的权力而无效。然而，香港的法定保护并不包括保留撤销权或任命和罢免受托人或受益人的权力，而这些权力在包括新加坡在内的离岸制度中都有。

因此，重要的是要明白，所有的文件必须始终根据具体事实来起草。然而，作为一项一般原则，关键是只保留有关委托人所需的权力。例如，将企业纳入信托的委托人可能希望保留否决企业的拟议出售或其他处置的权力。但是，请注意，如果这与其他广泛的权力相结合，如更换受托人的权力，决定谁是受益阶层成员的权利，以及例如对信托资产的任何处置的否决权，那么法院可能会说，委托人有办法控制信托资产的处置，并且在实践中，确保他们有受托人会服从他们的意愿。另一条一般规则是，保留对行动的否决权可能比积极的权力更安全。仅仅能够阻止行动的发生，委托人被认定为保留了实际所有权的可能性要小得多，因为他们不能仅仅通过行使这些否决权来实现对财产的任何处置。

减轻诉讼风险

纠纷是不可避免的，而且往往会使受托人处于冲突的地位。典型的争议情况包括受益人的配偶在离婚时要求披露信托的细节，受益人无法就分配问题达成共识，或者受托人和受益人之间在处理某些资产方面存在分歧。
将问题提交给法院可能听起来令人生畏，但大多数法院都有法定的监督管辖权，可以下达处理信托资产的命令。香港《受讬人条例》第56条允许受托人向法院提出申请，要求获得必要的权力来管理或管理归属于受托人的财产。与境外法院可能行使的更广泛的自由裁量权相比，这是一个相对狭窄的管辖权。作者为一个位于香港的开曼信托的受托人代理，根据信托法第48条寻求开曼法院的命令，以批准受益人无法同意的分配建议。因此，在纠纷的早期阶段，向对信托有管辖权的法院寻求指示，以减少全面诉讼的风险，是一种良好的做法。

总结

由于围绕着私人财富管理问题的多样性和复杂性，正如上述强调的问题和情况，财富管理人应该在规划，起草的早期阶段，以及在任何潜在纠纷的发现前因第一时间与法律顾问紧密合作。

February 2021