Podcast S2E6 | Private Client: Estate Administration

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TRANSCRIPT

Welcome to a new series of The HIP Talks podcast: a collection of discussions on legal topics hosted by Hugill & Ip Solicitors. We provide high quality legal services with integrity, professionalism and respect for our clients and the community. Our solicitors have achieved outstanding results and recognitions in the areas of Dispute Resolution – Corporate & Commercial – Private Client, Probate and Trust – Family – Employment – Business Immigration and Data Privacy.

 

Jacqueline Cheng  00:31
Hi, everyone, I’m Jacqueline Cheng from Hugill & Ip and I’m here today to do a podcast with Alfred Ip, partner of Hugill & Ip.

Alfred Ip  00:40
Hello, Jackie.

Jacqueline Cheng  00:41
Hi, today we’re going to be talking about estate administration mostly. But before I do that, I have a hypothetical question to present to you first.

Alfred Ip  00:51
Okay.

Jacqueline Cheng  00:53
So Alfred, if hypothetically, a family member of mine has passed away, and I’m in a fluster, what is the first step that I should be doing?

Alfred Ip  01:02
The first thing that you have to do is to deal with the grief of you losing your family member, you have to put your mind at peace, because I know that must be tough for you, but then it takes time to heal. And afterwards, after you’ve done all the funeral and dealing with all the post-mortem matters, it’s time for you to handle his or her estate. And by that time, you can come to me and I’ll guide you through the way.

Jacqueline Cheng  01:33
That sounds good. So what would be the first step?

Alfred Ip  01:37
I think the first step is to identify the assets that you need to administer. Because in the state administration, the first thing is to apply for grant of probate, and in a grant of probate, there will be a search of assets and liabilities. And this search, you have to set out all the assets that the seeds had under his name. Without stating it in the list, you cannot administer it. So it’s actually quite important to identify the assets in the name of the deceased.

Jacqueline Cheng  02:10
So if my family member had assets in like Canada, as well as Hong Kong, do, I still need to put those assets in the grant?

Alfred Ip  02:20
Not in the Hong Kong grant, but you may have to do a similar process in Canada. So actually, you have to also to identify whether the will – if there is a will – is applicable to the Canadian assets as well.

Jacqueline Cheng  02:36
What if I’m unsure of the types of assets my family member has in Hong Kong?

Alfred Ip  02:42
Then we have to find out for you.

Alfred Ip  02:45
There are a few things that we can do for you in order to find out the assets. Usually there are these kind of assets: bank accounts, share certificates, or safe deposit box, what would be the best way to proceed, the first step?

Jacqueline Cheng  03:03
So from my understanding is that in Hong Kong, there’s actually no centralized system in which I can just put in the deceased name and then get a list of all the assets that the deceased has in Hong Kong.

Alfred Ip  03:14
So you’re correct, what should we do?

Jacqueline Cheng  03:18
Um, usually, I think bank accounts is usually the best way forward, because most deceased would have bank accounts in Hong Kong. And for this, we usually have to actually write to each individual bank to see if the diceased holds an account with them.

Alfred Ip  03:34
But there’s so many banks in Hong Kong, where to begin?

Jacqueline Cheng  03:38
So usually, we would go through the deceased papers, personal belongings first to see if there’s any letters that are bank statements that the deceased is still keeping. And then we’ll ascertain and write to those bags that we found statements for. Otherwise, we do recommend that if you completely have no idea, then we would probably suggest to write to the top 10 banks in Hong Kong first to see if there’s any, if the deceased holds any accounts with them.

Alfred Ip  04:10
Like HSBC, Standard Chartered, Bank of China and Citibank, things like that, right?

Jacqueline Cheng  04:16
Right. Correct. Um, do you think private investigators would be a good source as well?

Alfred Ip  04:23
Yes, actually, a lot of the private investigators or recorded data collection agencies, they maintain a record of all the public records such as land searches or company registries. That would be a very good start if you have no idea about anything regarding the deceased assets.

Jacqueline Cheng  04:49
That’s good to know. So now that we’ve ascertained the assets my next question for you, Alfred, would be after the grant is obtained, how would I, I believe most of the bank accounts would be frozen. How can I unfreeze them and get access to those funds?

Alfred Ip  05:09
Well, um, you will have to send the probate to the banks and ask them to cancel the deceased account and transfer the proceeds to the designated account for the estate administration.

Jacqueline Cheng  05:23
Would there be any legal documents that will be involved?

Alfred Ip  05:27
Oh, definitely, the grant of probate that is issued by the Hong Kong court, and the bank would then you should stamp a rubber chop on it to show that it has been administered.

Jacqueline Cheng  05:40
Okay. I believe the next question I have for you that I actually got a lot of clients asking about are safe deposit boxes. Usually, they come to us and tell us that they have no idea what’s in the safe deposit box. So how would the administrator or the executor gain access to the safe deposit boxes items?

Alfred Ip  06:04
First of all, they have to make an appointment with the Home Affairs Department. The people at the Public Affairs Department would take an inventory list of all the items in a safe deposit box of a deceased, irrespective whether those items belong to deceased, they will write down a list and that list will be included in the probate that will be issued by the court.

Jacqueline Cheng  06:31
And would I need to go back to the bank to collect these items?

Alfred Ip  06:37
Yes, after the grant of probate is issued, you have to go back to the bank and ask to cancel the box and get everything out.

Jacqueline Cheng  06:45
So what if I don’t have any items? They took the inventory list and they found nothing in the safe deposit box? Do I still need to go back?

Alfred Ip  06:52
Yeah, you still have to go back to cancel the box otherwise, you have to continue paying the rent.

Jacqueline Cheng  06:59
Oh, that’s good to know. Um, now that we’ve gone through bank accounts and safe deposit boxes, I think there’s a lot of clients that are actually interested in landed property in Hong Kong. How would you go about doing that? And another question is, would you sell the property? Or can I just simply transfer the property to the beneficiaries?

Alfred Ip  07:28
It very much depends on the family consensus. After the grant is issued, the executor or the administrator has the power to sell the landed property. But then, of course, if the family wants to keep the property, the administrator can transfer the legal title to the beneficiary. The only question that we have is, if let’s say there are 10 beneficiaries, it is undesirable to transfer the legal title to all 10 beneficiaries who are entitled to share the property, because it will be difficult for the beneficiaries to come to consensus to sell the property at the same time in future. So, if that is the case, that a lot of beneficiaries are entitled to share one landed property, perhaps the best way to do it is either to sell it after the grant is issued or to agree among the beneficiaries to have one or two of them buying out the other beneficiaries’ shares. And to come about it is to enter into a deed of family arrangement among all the beneficiaries, so that they understand that their assets will, their interest in the properties will be relinquished or bought out. But of course, the advantage of it is that this deed of family arrangement will be subject to stamp duty. And nowadays, as you know, stamp duty is quite high for those who already have landed properties, it is 15% for residential properties. So this perhaps is part of the legal advice that we will give when people are considering the estate planning. If there is any landed properties is better to make a specific provision for it, so that you will end up in one or two beneficiaries, without them ended up with a deed of family arrangement and have to pay stamp duty on it.

Jacqueline Cheng  09:26
But if that’s the case, if one of the beneficiaries, let’s say, already owns a piece of property in Hong Kong, and they simply want to become the owner of the estate landed property would there be tax implications?

Alfred Ip  09:45
If he is the designated beneficiary of a particular piece of property, all the executor needs to do is to transfer the legal title to him and that would be a document called assent. The assent is the document the transfers the legal property to the beneficiary. And in that respect, there is no stamp duty. The only needs to be a nominal stamp duty, I think around $5 Hong Kong dollars, or 50, something like that. That is insignificant.

Jacqueline Cheng  10:17
Do you mention an assent? Is this some sort of legal document that needs to be drawn up?

Alfred Ip  10:24
It is a legal document that should be drawn by lawyers because that preserves the legal title and in the future, if the property is to be sold, the person who buys the property has to ascertain the good title. And this is why the assent should be drafted or drawn up by lawyers.

Jacqueline Cheng  10:44
Um, what if I wanted to just going back to selling the property, can the executor and administrator simply be able to sell it on behalf of the deceased?

Alfred Ip  10:55
Yes, the answer is yes. But then that is a big issue that the administrator or the executor must look into. He or she has the power to sell the property, but he or she has to sell the property, at or above market value in order to protect the interests of the beneficiaries because it’s their duty. Otherwise, they should seek consent from all the beneficiaries. And the beneficiary should understand that they are indeed selling the property at an undervalued (price) and they shall have specific consent to it.

Jacqueline Cheng  11:34
Thank you, Alfred. I think you’ve given a lot of good information in regards to dealing with landed property in estates.

Alfred Ip  11:42
Yeah, and in that respect, how about other properties such as company shares, like public company shares?

Jacqueline Cheng  11:52
In regard to public shares, I think one of the main queries that a lot of clients do have is whether they can just liquidate the shares in Hong Kong once they get access to it. And from my experience, the answer is not as simple, especially if the client is living overseas and doesn’t have some kind of brokerage account to deal with it. So Alfred, would you do know like what the client should do if they’re overseas?

Alfred Ip  12:23
Well, first of all, they should ascertain whether the shares are actually in a brokerage account, or with a share certificate. A share certificate is something very old. Nowadays with the “seeker” as we call it, not many people will hold the actual share certificate of a public listed company. But then we come across a lot of elderly who keep on the share certificate, put it in their safe deposit box. So in order to liquidate the shares it become an issue, how can they do that?

Jacqueline Cheng  13:04
They’ll have to first have to liaise with the shares registrars, a lot of times from what I’ve seen is that if they simply want to liquidate it, then they’ll have to prepare a standard form of transfer. And this document allows the transferor to basically transfer those shares as transferee and a transferee is usually a third party that would be able to help them liquidate the shares in their brokerage accounts. Do you know whether there could be stamp duty involved if they were to prepare a standard form transfer?

Alfred Ip  13:50
Yes, I understand is 0.02%.

Jacqueline Cheng  13:55
That’s from my understanding as well.

Alfred Ip  13:57
Very good, I’m correct.

Jacqueline Cheng  13:59
Um, so what if they decide to just would you recommend that they liquidate all the shares or some of due to the market fluctuation of the market a lot of beneficiaries have come to me and say that they actually do not want to liquidate those shares. What can they do?

Alfred Ip  14:18
I think the easiest way to do is to liquidate the shares and distribute the cash to the beneficiaries. And if they consider that it is necessary, or it’s wise to keep the shares they can always buy from the market with the distribution that they receive. There’s only 0.02% of the stamp duty involved and a small percentage of brokerage fees. So it’s relatively insignificant. I think it’s more important for the administrator to discharge the duties properly, including effective administration of the estate so that they won’t be blamed in future by the beneficiaries for delay in estate administration.

Jacqueline Cheng  15:02
So now that we’ve dealt with public shareholdings, what about if the deceased was a sole, let’s say, a sole shareholder and a sole director of a company that they incorporated in Hong Kong?

Alfred Ip  15:16
That actually becomes an issue because a limited company is a separate legal entity. And if the deceased being the sole director and sole shareholder of a limited company, that limited company becomes director-less when the deceased passed away.

Jacqueline Cheng  15:35
So what does that means director-less?

Alfred Ip  15:38
That means that no director is appointed as the director of the company. And because if the deceased shareholder is the only shareholder, no resolution can be passed to appoint another person to become the director of the company. So in order to avoid that, we always advise our clients to appoint a reserve director before they passed away, so that the company would not be left in a limbo. And a lot of times these kind of sole director sole shareholder company are used as an asset holding vehicle: that means that client put assets into the name of this limited company as part of the wealth management and planning purpose. The last thing that we want is to leave the assets with a company with no directors and with only deceased shareholders, the process will be that the administrator has to first of all, seek a grant of probate in order to get hold or get control of the share of that limited company, and exercise the power as the shareholder to appoint someone as the director of that company before that person can do anything on behalf of the company.

Jacqueline Cheng  16:54
So does that mean that director doesn’t necessarily have to be the administrator or executor?

Alfred Ip  16:59
Yeah, it doesn’t have to be but of course, that person must be someone that is reliable or trustworthy in the eyes of the administrator, because that person will be the one who winds up the company, get control of the assets held by the company, and put it back to the part of the estate.

Jacqueline Cheng  17:17
What if, is it possible that that person continues to operate the company instead of dissolving it?

Alfred Ip  17:25
Well, it very much depends on the nature of business of the company. If that company has an operating business and that person considers himself capable of handling the business, yes. But then, of course, if that person is not the administrator, then the administrator is effectively entrusting that person to manage the estate of the deceased. And that person must be someone with the necessary skills and knowledge to discharge the part of their duty to the administrator. Otherwise, it will be borderline breach of administrative duties to the beneficiaries. So it is something that has to be carefully considered before making a decision on it.

Jacqueline Cheng  18:12
That’s good to know, Alfred, I want to turn our attention to another type of asset that is, well, more Hong Kong related would be Mandatory Provident Funds.

Alfred Ip  18:24
Yes.

Jacqueline Cheng  18:24
A lot of beneficiaries have actually come to us have had issues accessing these funds. Their main concern is how will they be able to ascertain the amount before they get the grant. And how can they actually claim this MPF.

Alfred Ip  18:41
I think a lot of people do have the misconception that MPF is like insurance policy, and deceased can in their lifetime name someone as a beneficiary in order to get hold of these funds after he passed away without the probate process, which is not true. MPF is just like a bank account. Without the ability to name a beneficiary, it must fall part of the estate. And the person who passed away and administering his estate has to ascertain by informing the MPF service provider about the demise of the deceased and find out whether there’s any money left in the MPF account. So would the MPF service provider provide this kind of information?

Jacqueline Cheng  19:33
It actually depends on which MPF service provider: I have come across that there are times when a lot of them have asked that we present the grant to them first before they will let us know the amount of MPF that they that we’re able to claim.

Alfred Ip  19:48
This is very different from the banks who are normally willing to disclose this information to the intended administrator.

Jacqueline Cheng  19:56
That’s correct.

Alfred Ip  19:57
Yeah, it actually increases the difficulty in estate administration…

Jacqueline Cheng  20:01
Yes, because in a way, then you’ll have to go back and amend the grant, again, with the other required information before they will release the MPF.

Alfred Ip  20:11
That’s not very nice. But then they are a little bit stiff in handling requests like that.

Jacqueline Cheng  20:17
Yes. It’s been a difficult process that one.

Alfred Ip  20:20
Yeah, um, another part that is also a lot of people ignored is tax. Hong Kong has always had a very simple tax system. But then a lot of people do not realize that actually tax forms part of the estate administration. Jackie, can you share your experience on that?

Jacqueline Cheng  20:43
Yeah, so a lot of times, clients come to me first, I’ll have to liaise with the Inland Revenue Department in Hong Kong, to see whether the deceased has any tax refund, or whether there’s actually tax liabilities that we have to settle in the future. Um, usually, they would come back with a tax return form for us to complete. And then we’ll have to fill it out and then returned to them. And then a few months later, they may come back and tell us the result as to whether we actually have to pay them and settle any debts, or whether we actually get a refund. And it actually may surprise a lot of people, because a lot of times I’ve seen is that we the deceased may actually have a tax refund for them. And this is interesting, because in Hong Kong, you actually have to pay a year’s in advance for the tax. So if that person hasn’t well passes away before the year ends, then they actually get a refund from their salaries tax, let’s say.

Alfred Ip  21:52
Yeah, this is something that a lot of people don’t understand, because there’s a provisional tax that any person will have to pay every year. So at the end, if that financial year, the income was actually less than the previous year, there will be a tax refund. So I think that emphasizes the importance of having an experienced lawyer helping the administrator to make necessary inquiries in order to ascertain the assets of the deceased and smooth through the administration process, so that there won’t be anything left.

Jacqueline Cheng  22:28
Yeah, that’s actually very helpful. Usually, it is knowing what debts and what assets are present will help the estate administration process a lot.

Alfred Ip  22:40
Yeah. And another thing that is what I’ve just mentioned, MPF is not insurance policies, how to handle insurance policies.

Jacqueline Cheng  22:50
Insurance policies is actually a very interesting one, because not only are there different types of policies, but there’s also policies that may not fall into the deceased estate. And this is the case when, let’s say you’ve applied for these policies, and you’ve actually named beneficiaries that are to take over, that can make the claim after your passing. So when you have named beneficiaries, then technically that insurance claim doesn’t fall into your estate, well, the deceased estate and instead it would go directly to the beneficiaries. However, when there’s no named beneficiaries, then the claim will actually fall and we have to distribute it in accordance to either let’s say, the Will or intestacy law in Hong Kong.

Alfred Ip  23:41
And insurance policies, not only in what insurance policies that were taken out by the deceased during his or her lifetime, for the purpose of either assets planning or protecting families, a lot of times, we also come across insurance policies taken out by the employer of the deceased at a time when they were employed by the company. A lot of times actually, it becomes quite difficult to find out. Jackie, in the course of your experience, have you come across this kind of cases?

Jacqueline Cheng  24:16
Um, yeah, there’s actually a couple of cases that I’ve had to assist with, where insurance companies were actually not willing to release any information to us at all. Even if especially the case if there’s named beneficiaries, insurances are very protective and they keep everything confidential. So the the only way to resolve it in the end, was to just make almost you can say random applications to them, claiming that you’re the beneficiary and if you turn out to be that beneficiary, then they will be happy to release the money to that beneficiary but otherwise they will not release any information to you at all.

Alfred Ip  25:02
So, in that case, perhaps the only other person who know anything about the insurance policies is the employer who has taken out the insurance policies for the employee as some employees advantage or employees benefit.

Jacqueline Cheng  25:18
Correct. So perhaps the administrator or executor should contact the deceased employer to see if they weren’t able to assist them with giving them that kind of information.

Alfred Ip  25:31
Okay. Um, we’ve talked about many types of assets that are required to be administered in the estate administration, how long would it usually take for estate administration?

Jacqueline Cheng  25:42
That’s actually a very difficult question. Because it all depends on the complexity of the estate, whether there’s a lot of assets to handle, how many beneficiaries are involved, would it become a contentious matter if there’s, let’s say more than one beneficiary that can inherit the estate. Usually, most administrators or executives will try their best to probably get everything done within a year’s time after the issuance of a grant. But if it becomes a complex case, then sometimes it will take longer.

Alfred Ip  26:22
I can imagine that and for administrators who are not residing in Hong Kong definitely is going to be more difficult and take more time to administer the estate.

Jacqueline Cheng  26:31
Is there any, if they don’t reside in Hong Kong, what is the easiest way for them to actually administer a deceased estate?

Alfred Ip  26:41
I think the easiest way is to authorize someone like a practicing lawyer to administer the estate for them in Hong Kong, so that they don’t have to come and back and forth, back and forth and sign all the papers that are necessary, usually in front of a notary in the place that they reside. And that actually adds another layer of complexity because if the administrator actually do not reside in Hong Kong, if they need to communicate with all the financial institutions about estate administration, they will be more cautious about ascertaining the identity of the person and executing his or her instructions. And there will be more bank charges as well if they’re required to remit the deceased estate to a designated account overseas. So it’s definitely more convenient to have an administrator within the jurisdiction to deal with all this estate administration and make a distribution within Hong Kong.

Jacqueline Cheng  27:45
So is Hugill & Ip able to offer this service?

Alfred Ip  27:49
Yes. And we do that all the time.

Jacqueline Cheng  27:51
As I’m assuming we actually get a lot of overseas clients that require this kind of assistance.

Alfred Ip  27:58
Yes. And they actually need that kind of assistance, because a lot of times they are not familiar with the Hong Kong system, which can be very different from the country where they’re residing and without the necessary guidance or assistance, they will find it very confusing in the estate administration. So that is the role that we have to play, basically deal with the whole process for them.

Jacqueline Cheng  28:23
My understanding is that, what if a creditor comes along and has a claim against the estate?

Alfred Ip  28:34
I think for the administrator, it is their role to ascertain whether the liability does exist. If the liability does exist and the amount is not disputed, it is within their duty to repay those liabilities before making distribution to the beneficiary. So, a lot of times the creditor will require the administrator to execute an undertaking to pay off all the debts after calling in the assets before they are willing to allow the administrator to become the administrator and administer the estate.

Jacqueline Cheng  29:10
is there a time limit as to the creditors can bring against these claims?

Alfred Ip  29:14
That is the reason why we advise to the administrator to always seek a court order and ringfence the time that the creditor may bring the claim against the estate, and we call a Rule 60A order. After getting the order, a notice should be placed in the gazette in order to notify anyone who may have a claim against the estate to make their claim within two months. And this is very important for the administrator to do this before making distribution.

Jacqueline Cheng  29:49
So I’m assuming that after the two months, the beneficiaries can then liaise with the administrator and executor to finalize the matter…

Alfred Ip  29:58
Correct. After that two months, if the administration is completed, it will be the time for the administrator to make distribution. And before making distribution, they should prepare an estate account, clearly setting out all the assets according and the expenses to have incurred, the liabilities have been repaid and the remaining amount that will be distributed to beneficiaries.

Jacqueline Cheng  30:26
What if it turns out that the estate had more liabilities than assets?

Alfred Ip  30:32
Then it becomes an insolvent estate. If there’s an insolvent estate, the beneficiary will not get anything but the administrative costs will be deducted from the estate first. And if necessary, the administrator should seek a court order in order to make sure that the distribution of the assets will be in a creditors’ interest. And that usually would be in pari passu, that means that if there is a $100 debt, and there’s only $10 of assets, the assets will be distributed in accordance with the amount of debt that each creditor in their respective proportion.

Jacqueline Cheng  31:15
That’s good to know. So am I correct to assume that the administrator or executor would not be personally liable for these to settle all the deceased debts?

Alfred Ip  31:24
They will not be personally liable to settle the deceased debt, but they have to discharge their duties properly in order not to attract any personal liabilities in the course of administering the estate.

Jacqueline Cheng  31:39
I want to actually turn our attention more to the distribution of estates in Hong Kong. What is usually the first step when it comes to distributing an estate after you’ve, let’s say paid all the liabilities?

Alfred Ip  31:54
Well, the first thing is to ascertain who are the beneficiaries. And in order to determine who are the beneficiaries, it depends on whether there’s a Will and actually in terms of intestacy. A lot of people have the misconception that for example, when there’s estates in Hong Kong, and the people or the person died intestate, the beneficiaries would be in accordance with the intestacy rules in Hong Kong. That is not per se true, because it depends on the deceased domicile. And actually, that is something that’s a lot of time to waste confusion, because the domicile of the deceased only governs the personal assets that should be distributed. In terms of the real estate in Hong Kong, the intestacy rules follow Hong Kong, where the property is situated. So, the administrator is tasked to make sure that the person who are the beneficiaries are receiving the right share of the estate under the right rules.

Jacqueline Cheng  33:00
But what if the beneficiaries together end up saying that, oh, I don’t want to follow what’s written in a Will and I don’t want to follow the intestacy law, is that even possible? Or are they forced to, let’s say, follow what is exactly written under the Will?

Alfred Ip  33:16
Yes, it is possible. And we come across situation when the beneficiaries actually want to disclaim their entitlement the estate because potentially the tax issue and, in that respect, we also advise the client that the beneficiaries can enter into an agreement in order to redistribute the estate among themselves to their satisfaction. And that will be done by way of a deed of family arrangement. It is effectively an agreement among the beneficiaries to distribute the estate according to their agreement. But then, there is a fundamental concept that we have to explain to the beneficiaries. It is not disclaiming their own interest in the estate, it is an agreement for them to transfer their shares of the estate to any other beneficiaries with or without consideration. And that is particular in terms of real estate because as I said, such share transfer will attract stamp duty and stamp duty can be quite high in Hong Kong for residential property. So it is important for them to understand what is the potential tax liability for any agreement to be made among the beneficiaries when they’re entering into it.

Jacqueline Cheng  34:39
I remember you mentioned the deed of family arrangement before as well. Um, it says the word family is used in it doesn’t necessarily mean just your family members.

Alfred Ip  34:50
No, actually it generally means to beneficiaries that are entitled to share under the estate and a lot of time it’s family members because as especially when there’s the intestacy rules in place only family members are entitled to share in the estate. That’s why it’s commonly known as deed of family arrangement. But if the beneficiaries are entitled to share and they are not family members have to stop them to enter into this kind of a deed in order to redistribute their shares in the estate.

Jacqueline Cheng  35:19
Thank you for clarifying that. What if let’s say the beneficiary lose resides outside Hong Kong, is that going to be an easy process for us, well, for administrators, executors to transfer the funds or assets or items to the beneficiary?

Alfred Ip  35:36
I think it is not just about beneficiaries residing outside Hong Kong, also those who are residing in Hong Kong before distribution, it is particularly important to make sure that they will not have any claim against the administrators of the estate after receiving distribution. That’s why we need to actually need them to sign beneficiary instructions in order to confirm that they are happy with the inheritance that they are going to receive from the administrator, and they have no claim against the estate. For those who are residing overseas, they are usually required to sign the instruction in front of a notary to ascertain their identity. And usually we would advise the beneficiaries to seek independent advice on their liability in receipt of the inheritance that is particularly the case when they are residing in high tax jurisdiction, such as US, UK or Canada, or Australia, because they may be under a liability or duty to report such inheritance to the authority, because they may have to pay tax on it.

Jacqueline Cheng  36:47
Great. So I guess today we’ve talked about mostly three steps in estate administration as collecting of assets, paying debts and liabilities, and then how would we go about distributing the estate to the beneficiaries. I think that pretty much sums up the estate administration part of this podcast, do you have anything else to add?

Alfred Ip  37:12
I think the only things I want to add is that dealing with Hong Kong estate is only the first part after receiving the grant, if the deceased has assets outside Hong Kong is time to look into how to administer the foreign estate. The foreign estate revolves on a succession process which may be completely different from the Hong Kong process, we may or may not requires the Hong Kong grant of probate. And there might be steps that should be taken before the grant of probate is issued in Hong Kong, in order to make sure that the succession process in other countries can be carried out as soon as possible, alongside with the Hong Kong estate, in order to make sure that the beneficiary would receive their share of inheritance quickly. And this is particularly the case when we are talking about a jurisdiction with inheritance tax, such as UK, for example, let’s say if a person passed away in Hong Kong, with a Will in Hong Kong, it may take some two, three months to get the grant of probate in Hong Kong, and then the Hong Kong grant can be resealed in UK before the UK assets to be administered. But then one thing that has to be particularly of concern is the duty of the executor to make an inheritance tax declaration that if I remember correctly, that is the time limit that executor should make the inheritance tax declaration to the HMRC. And if I remember correctly, that’s 12 months. If the executor failed to do that, within 12 months, there may be penalty. So I think it is important for the executor or administrator to go to a lawyer who has international estate administration experience to help them through the process and to take necessary steps, including liasing with the foreign lawyer to help them with the estate administration process as soon as possible. Don’t wait until the very last minute because that is to be part of the duties to administer the estate properly. And another example before we wind up to is that different countries with different legal system may have a very different process. For example, in the Continental European system, the succession process is very different and one particular feature is that there’s no administrator or executor appointed to administer the estate. Usually it’s the family members, we call them heirs, who go to a Notary Public to execute all necessary document is to notary who has to do to to ascertain the person who is entitled to share the estate, and the identity of the beneficiaries and help with the estate administration. So, it is important for family members to understand in the first place how to administer that part of the assets, and if necessary go to the relevant lawyers, foreign lawyer with necessary experience in this kind of process. In order to do everything smoothly. And one of the aspects is providing necessary documents to support, to prove their relationship with the deceased and that may involve getting the birth certificate or marriage certificate, and legalization may also be an additional process to prove the genuine veracity of these documents. So, to sum up: estate administration can be quite complicated – with a lot of countries involved especially – and it is important to have the right process in place in order to wind up the estate administration properly. Do you have anything to add, Jackie?

Jacqueline Cheng  41:22
Nope. It’s been a very informative day for the podcast and I really enjoyed it.

Alfred Ip  41:28
Thank you. I hope that people who listen to it will find it helpful.

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