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

早期建議如何能大大減少未來的成本

正如中國俗話所說：家醜不可外揚，所有的家庭問題都應該在“屋內”解決是中國文化根深蒂固的思想。通常家庭和私人財富經理都不會輕易聯繫律師，只有當問題嚴重到難以處理或者成為災難的時候，才會想到去聘請法律顧問，此時要解決如此嚴重的問題往往會需要一筆相當大金額的資金。本通報是為在早期階段建立的法律備留提供實務的指標，以避免未來出現這種噩夢。

結構形成

在香港，有多樣的服務和產品可以供高淨值人士和家庭選擇。香港仍然是超級富豪的聚集中心，他們擁有大量的私人財富，主要包括易於投資的資產，其中大部分以私人信託的形式持有，用於財富和遺產規劃的主要手段。這聽起來很簡單，但隨著高淨值人群的擴大，香港的財富和遺產規劃師看到第二和第三層次的富人對複雜規劃的需求越來越大，特別是對於財富的代際轉移，家族企業的繼承問題及長期慈善目標。
客戶的喜好（或在許多情況下，他們的服務提供者的喜好），以及遺產原因往往是選擇結構和管轄區的主導因素。然而，設計不良的結構和不適當的管轄區選擇可能導致嚴重的違規問題，資產的不流動，不必要的行政支出，或對商業運作的阻礙。因此，根據以下關鍵因素，在最適合的管轄範圍內，與法律顧問密切合作來搭建一個適合的結構框架很重要:

1. 受益人的具體需求

相關問題包括:

a) 是否需要持續的支援，以及支持多長時間（例如，對未成年人和老年受益人）？在這種情況下，什麼是確保部分資產保持流動性的最佳方式？
b) 是否有必要擁有獨立的財富組合，如果有必要，離岸基金是否合適？
c) 是否有任何具體的管轄事項（例如，美國公民問題）需要為某些受益人提供更多保護？
d) 他們在家族企業中是否有任何作用？如果使用私人信託公司，是否可以預見身兼數職的衝突？

2. 稅收效率

流行的離岸司法管轄區（如英屬維京群島和開曼群島）的實體和活動不徵稅，這對於那些要求其資產易於轉讓，同時對所有權高度保密的人來說是理想的。在香港，雖然本地產權沒有資本收益稅，但在香港進行的貿易活動，專業或商業經營所產生或衍生的利潤須繳納利得稅。因此，結構中的相關香港實體所獲得的報酬或利潤，即使是通過離岸工具，也可能要被徵稅。

稅收考慮的另一個方面是個人受益人的潛在個人責任，特別是在接受分配時。

3.    合規問題
隨著全球範圍內反洗錢和反金融犯罪鬥爭的開展，從提供基本的個人資料到提供詳細的有關資金和收入的來源都成為不可避免的合規要求。諸如 “實益擁有權”，”經濟實質 “和 “FATCA “等術語在所有流行的財富停放管轄區經常成為頭條新聞。根據不遵守報告義務的動機來選擇管轄區是不現實的，因為人們最終會選擇一個沒有或很少有金融和專業基礎設施的管轄區，即使如此，這樣的管轄區最終也會發展並變得規範。

對合規要求的正確做法是請法律顧問繪製出每年完全遵守所有報告義務所需的行動和資訊。從邏輯上講，適當的規劃和準備的成本將大大低於處理未能遵守某些職責的後果的成本。  

關鍵的檔

多年來，在香港，信託一直是資產保護和繼承計畫的默認設置。儘管瞭解這些好處，家庭一般不願意放棄對資產的控制權，往往會尋求保留某些權力。然而，最近的法院案件（例如JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch)）證明，由委託人控制的信託很容易受到攻擊，法院已經開發了一些方法，使協力廠商（通常是債權人或離婚的配偶）能夠對信託資產執行命令。

與此相反，許多司法管轄區引入了具體條款，旨在使信託人（委託人）能夠保留廣泛的權力。香港的信託不會僅僅因為委託人為自己保留了投資或資產管理的權力而無效。然而，香港的法定保護並不包括保留撤銷權或任命和罷免受託人或受益人的權力，而這些權力在包括新加坡在內的離岸制度中都有。

因此，重要的是要明白，所有的檔必須始終根據具體事實來起草。然而，作為一項一般原則，關鍵是只保留有關委託人所需的權力。例如，將企業納入信託的委託人可能希望保留否決企業的擬議出售或其他處置的權力。但是，請注意，如果這與其他廣泛的權力相結合，如更換受託人的權力，決定誰是受益階層成員的權利，以及例如對信託資產的任何處置的否決權，那麼法院可能會說，委託人有辦法控制信託資產的處置，並且在實踐中，確保他們有受託人會服從他們的意願。另一條一般規則是，保留對行動的否決權可能比積極的權力更安全。僅僅能夠阻止行動的發生，委託人被認定為保留了實際所有權的可能性要小得多，因為他們不能僅僅通過行使這些否決權來實現對財產的任何處置。

減輕訴訟風險

糾紛是不可避免的，而且往往會使受託人處於衝突的地位。典型的爭議情況包括受益人的配偶在離婚時要求披露信託的細節，受益人無法就分配問題達成共識，或者受託人和受益人之間在處理某些資產方面存在分歧。

將問題提交給法院可能聽起來令人生畏，但大多數法院都有法定的監督管轄權，可以下達處理信託資產的命令。香港《受讬人條例》第56條允許受託人向法院提出申請，要求獲得必要的權力來管理或管理歸屬於受託人的財產。與境外法院可能行使的更廣泛的自由裁量權相比，這是一個相對狹窄的管轄權。作者為一個位於香港的開曼信託的受託人代理，根據信託法第48條尋求開曼法院的命令，以批准受益人無法同意的分配建議。因此，在糾紛的早期階段，向對信託有管轄權的法院尋求指示，以減少全面訴訟的風險，是一種良好的做法。

總結

由於圍繞著私人財富管理問題的多樣性和複雜性，正如上述強調的問題和情況，財富管理人應該在規劃，起草的早期階段，以及在任何潛在糾紛的發現前因第一時間與法律顧問緊密合作。

February 2021