Estate Planning is an all-encompassing term that involves more than just property and financial assets. It denotes the process of organizing, classifying and making arrangements for the proper handling of your affairs upon death. Generally, the matters that will need be considered will be your dependents, your assets, valuables and inheritances. The process typically involves setting up a Will, but also other instruments that ensure your wishes and legacy are fulfilled. Other documents may include Letters of Wishes, Deeds of Guardianship, Enduring Power of Attorney, Advance Health Directives, Trusts and other tools that can achieve your specific needs and wishes. These documents may be used separately or in tandem.
Q1. What is a Will?
A last Will and testament is a legal document that specifies how you want all of your material and immaterial assets to be handled after you pass away. These include your properties and financial possessions. One of the most important considerations for many, is how their children will be looked after. Appointing an executor will be crucial as this will be the person who manages how the Will is administered and, if you have children, will be the one who looks after your children’s share of the estate until they are of age. The executor will handle the distribution of your assets and oversee the overall Probate process.
A “Living Will” or “Advance Health Directive” is a different document which states your health care preferences in the event you become terminally ill and unable to communicate. It is a legal instrument designed to provide guidance to your family and doctors, detailing your choices regarding major health and life support decisions. We have already discussed the topic in a previous article, “Living Wills and Advance Health Directives“.
You can set up single Wills, Mirror Wills (usually with your spouse/partner) or Trust Wills (where your trustees manage your things after you leave). It all depends on your specific circumstance and the advice that your Estate Planning solicitor suggests.
Q2: Who should have it?
Everyone should have a Will, even when the person has limited assets, is not married and/or does not have any children. Most of us have a pension fund or an MPF/ORSO account, some savings or an insurance policy, and – most importantly – have preferences or wishes related to funeral arrangements or gifting memorabilia to specific people.
Dividing up someone’s belongings can be a difficult and emotional task. This can be made easier by ensuring that your assets have been assigned to one or more beneficiaries. Furthermore, you would also wish to appoint someone to manage the process of dividing your belongings according to your preference and without them having to bear the responsibility and aggravation of having to decide on your behalf.
Q3: What happens if I die without a Will?
If you die without a Will (commonly known as dying “intestate”), which provides exactly how you wish your assets, responsibilities and dependents handled, then your relatives need to use their best judgment. More often than not, their decisions might diverge from yours. While writing a last Will and testament might be daunting, it helps ensure that your wishes are known and carried out. When dying intestate, the government decide who is entitled to inherit your assets based on the intestacy rules. In most cases, this means the estate would pass to your closest legal relative. The problem with this is that the closest legal relative is not always the person you would have chosen to inherit your estate. For example, if you have an unmarried partner or stepchild they would not inherit under rigid intestacy rules.
Without a Will, you can’t be sure that your estate will be passed to the people you actually want to benefit, in the manner you desire. A Will makes sure that you appoint an executor, often a relative or a solicitor, who will split assets according to your directions and instructions to one or more beneficiaries – who can be relatives/friends or organizations (including charitable ones). Having a professional as an executor can ensure that no emotional involvement or personal interest is involved and also that the overall process is smoother, due to the deep knowledge of intestacy laws.
If you don’t have a Will, it could be left up to a judge to decide who cares for your children. If you want a specific person you trust to look after them, then it is vital that you make this clear before your death, otherwise someone else may be entrusted with this hugely important task. This is the reason why a Will contains (or is generally complemented by) a Deed of Guardianship that assures the well-being of minor children. A deed signed alongside a Will is more ideal as it allows guardians immediate access to the children and can be kept as an original document by the guardians for record. The original Will will likely be probated in the Hong Kong Courts, and the guardians will no longer be in possession of an original document to show their official appointment as guardians. We have discussed details related to children guardianship in our previous article, “Appointment of Guardianship of Children in Hong Kong“.
Q4: Can I write my own Will and how do I set it up?
Many people do this and often use pre-set templates or Will Writing companies. However, this is not something we advise. In fact, there are many things that can go wrong when writing your own Will, for example the document could be invalid or challenged in Court by other potential beneficiaries. We have also experienced many circumstances where badly drafted Wills have caused lengthy and costly litigation. Therefore, it is wise to consider help from a professional solicitor who understands, not only the Estate Planning and Probate process, but also the pitfalls that could lead into contentious matters.
Q5: What other aspects should I consider?
It’s advisable to start on Estate Planning sooner than later and consider the composition of your estate – in terms of value, type of assets and geographical location of the same. You need to also consider your family situation and the level of complexity of your wishes. Estate Planning is an ongoing process, and your documents need to be updated periodically or whenever you go through life changing situations - e.g. marriage, divorce, the birth of a child or the acquisition of a property or other significant assets.
Q6: How to make sure my Will is valid?
It might seem odd to many, but one of the most common reasons for a Will to be considered invalid is when it has not been signed correctly. Of course, your solicitor can avoid any uncertainty in this respect by ensuring everything is done in the proper way. Another important factor in signing your Will is making sure that it has been properly witnessed. This is when two other people sign the document after you to confirm that they have seen you sign and that you did so of your own free will.
If you’re able to sign your Will at a solicitor’s office, he/she and another colleague will usually act as witnesses themselves. If you’re unable to get to the office, your solicitor will give very clear instructions on how to ensure your will is signed and witnessed properly at home.
Signing or witnessing your Will incorrectly are not the only things that could make your Will invalid. You should also be aware that other life events could render your Will null and void. For example, getting married automatically revokes any Will that was made prior to the event – unless very specific wording relating to the marriage in question has been included in your Will. Along the same lines, a divorce would also impact your Will. Though it would not invalidate the whole document, it would mean that your former spouse was no longer entitled to inherit or act as an executor.
If you have any concerns about the validity of your Will, we recommend that you speak to a solicitor specialised in Probate matters. He/she will be able to review your Will, along with your current circumstances, and advise on whether there are likely to be any issues. We have discussed about grounds on which the validity of a Will may be contested in our previous article published on LexisNexis,”Contesting a Will: Legal Grounds and Proceedings” or in our latest podcast “Contentious Trusts & Estates: Challenging a Will“.
For information purposes only. Its contents do not constitute legal advice and readers should not regard this as a substitute for detailed advice in individual instances.