It is encouraging that survival rate for most cancer types is improving. In the United States alone, the risk of death from cancer dropped by about 2% a year from 2015 through 2019 – compared to an average drop of 1% a year during the 1990s. Accelerating declines in the cancer death rate show the power of prevention, screening, early diagnosis, treatment, and our overall potential to move closer to a world without cancer. However, there is still room for improvement, especially as some types of cancer have shown slow progress in the past few decades. As lawyers, sometimes we need to deal with personal life stories that everyone wishes would have ended differently.
Estate planning is for everyone, and such planning should be made when one is still healthy. However, estate planning is something that a lot of people are not keen to do, probably because of the stigma linked to their own death.
Our experience tells us that majority of our clients coming to us for estate planning fall into two types: (1) those who are about to have their first child or (2) those who are about to undergo serious medical procedures or treatment. They are all driven by needs arising with life-changing situations, hence connected to feeling the need to protect someone, in most cases their family members. While our estate planning team have come across a lot of cases where the planning has been done it right, our contentious estate team have also handled quite a number of cases where such planning could have been done differently. Some can even be considered “horror stories”.
Adrian: a multi-jurisdictional maze
Adrian had always been a successful businessman in the real estate industry. He was born in the UK, but moved to Asia over 15 years ago for career development. At the time of his death, he was married to a Hong Kong wife with two young children. Adrian acquired real properties in Shanghai, Singapore, Hong Kong and Phuket, and managed his savings and investment portfolio through a private bank in Switzerland. Apart from his own wealth, he and his brothers also inherited a farmhouse from his parents in Cornwall.
As soon as Adrian was diagnosed with lung cancer, he resigned from his job to focus on his cancer treatment and spend time with his family. His prognosis was relatively good and his doctor told him that chances of recovery were high despite already being in stage 2-3 when he was diagnosed.
Adrian also decided that he and his family wished to move back to Cornwall. It was after all a better environment for his children to grow up, and there was no reason for him to remain in Asia when he was no longer working hard to build his career.
Adrian was keenly aware of the importance of estate planning in view of his potential UK domicile status. Before he moved back to the UK, he came to us for estate planning advice. We advised him on various options to reduce the potential Inheritance Tax (IHT) liabilities to his estate, including transferring some of his assets to his wife, and negotiating with his brothers about buying out his farmhouse share.
We followed up with Adrian two weeks after our initial meeting. He said he had arranged to meet with UK lawyers to effect the transfer of the farmhouse to his brothers, and he had put his properties in Asia on the market. He did not answer us about his Will.
We then followed up with Adrian again before his planned relocation regarding his Will, and he said he had consulted his UK solicitors and he would have it made after his relocation.
Three months later we received an email from his wife informing us that Adrian passed away and she needed assistance dealing with his estate. We asked her about his Will and she said he did not have one because he thought that he would recover.
Without a Will, Adrian’s assets would be distributed in accordance with the intestacy rules:
- As he moved back to the UK, his domicile at the time of his death reverted back to the UK, which means his worldwide assets would now be subject to a IHT of 40%.
- As he had real properties in China, Singapore, Hong Kong and Thailand, the distribution of those properties would be subject to the intestacy rules of those jurisdictions;
- As he had assets in 6 different jurisdictions, his wife have to engage lawyers in all these jurisdictions for probate process. The processes are vastly different in each country, particularly when their children are also entitled to their shares and they are unable to sign any papers because they are still minor.
A lesson to learn from Adrian is that estate planning could be a lengthy process that takes time to complete, and at times one never knows if there could be sufficient time to process it.
Ben: time is of the essence
Ben married Carol ten years ago and they subsequently had two children. However, Ben and Carol were divorced shortly after the second child was born. Ben remained single after divorce and a decade later was diagnosed with cancer. He tried several treatments: from radiotherapy in an Oncology Centre in New York to Chinese herbal remedies prescribed by his Chinese doctor in Hong Kong.
When Ben was hospitalised, he wanted to make a Will to provide for his remaining family members including his elderly mother, his siblings and his domestic helper who had been taking care of him for years. His friend David helped and found Ben a solicitor to draft his Will. The solicitor prepared his Will and David helped Ben to arrange a doctor and the solicitor to come to Ben’s ward to attend execution of the Will a few days later.
Ben passed away that evening before signing his Will.
Ben’s family members issued proceedings in Hong Kong seeking to propound the draft Will of the Deceased as a document embodying Ben’s testamentary wishes under s5(2) Wills Ordinance (Cap. 30), as it was the only way that they could share Ben’s estate. Under Hong Kong intestacy rules, in the absence of any Will, only Ben’s children were entitled to share the Estate. Ben’s children were named as defendants and Carol had to defend the proceedings as their guardian.
All the parties to the proceedings eventually settled through mediation with professional administrators being appointed to administer Ben’s Estate, after spending over HK$3M on legal fees and HK$1M on estate administration by professionals.
Ben passed away in 2014 and the beneficiaries received their first distribution in 2022, a whopping 8 years later.
The lesson we learn from Ben is that estate planning ought to be done earlier than later, otherwise it could be a lengthy and costly process for the heirs. This is particularly the case when there are family members who may not be entitled to their fair share of the estate unless they are being provided in a Will.
Daisy: if only for that piece of paper
Daisy had been with her same-sex partner Elaine for over 20 years. Elaine left her husband and moved in with Daisy together with her young son. In the course of their relationship Daisy treated Elaine’s son as her own. Elaine helped Daisy with her businesses at the beginning, and when Daisy’s business took off, they decided that Elaine would be a stay-home wife. Since then, Elaine took the responsibility of looking after Daisy and her son, and Daisy became the breadwinner of the family.
In the course of the relationship, Elaine had been attending family gatherings with Daisy, and she was treated by Daisy’s parents as a family member. However, the nature of the relationship was never discussed or acknowledged by Daisy’s parents.
Daisy and Elaine were never married because same-sex marriage is not recognised in Hong Kong. They did consider entering a civil union or same-sex marriage overseas, but after 20 years of being together they did not consider the needs to have their relationship validated by a marriage certificate.
Daisy was diagnosed with cancer and Elaine looked after her, taking her to the hospital to attend treatments and providing her all the necessary care that Daisy needed, something that all caring wives would do to their frail spouse. Daisy repeatedly assured Elaine that she would be well looked after if she died.
Daisy unfortunately did not survive cancer and passed away after 8 months of treatments. Soon after, Daisy’s parents started questioning Elaine over Daisy’s assets, from the location of the title deeds of the matrimonial home that was under Daisy’s name to the details of Daisy’s handbags collection. One day Daisy’s parents attended the matrimonial home unannounced, demanding to take inventories of Daisy’s possessions. Elaine found them very intrusive and at the end the police was called.
Elaine moved back to live with her mother after Daisy passed away to avoid further confrontations with Daisy’s parents. One day when Elaine returned to the matrimonial home, she found out that her home was locked and she could no longer get in.
As Daisy did not make any Will, Daisy’s parents were the only beneficiaries and Elaine was not entitled to share the Estate. However, Elaine could claim against Daisy’s estate under s3(1)(ix) of Inheritance (Provision for Family and Dependants) Ordinance (Cap. 481) (the “Ordinance”), and she did.
After 3 years of legal battle and millions on legal fees spent by both parties, Elaine and Daisy’s parents reached a settlement. Elaine received around 40% of estate based on her needs, taking into account her living standard and her future financial needs.
If Daisy and Elaine had entered marriage or a civil union overseas, Elaine’s claim would be assessed as if she were divorcing Daisy under s5(2) of the Ordinance[1]. Given the length of the relationship, accumulation of wealth by Daisy in the course of the relationship and Elaine’s lack of earning capacity, Elaine’s entitlement could potentially be over 50% of Daisy’s estate. Ultimately Hong Kong does not recognise de facto marriage.
The lesson we learn from Daisy is that marriage is particularly important when one party is financially depending on the other, otherwise it is important to put a Will in place to protect the closest family member.
Takeaways
Of course, when someone is struck with cancer or a terminal illness the need for estate planning becomes even more urgent and crucial. As Estate Planning solicitors, we do our best to assist people in such circumstances by ensuring the smooth transition of assets to loved ones, and by assisting in any complications that may arise as a result of the situation. A thorough estate planning set up or review can help put the patient’s mind at ease and achieve the ultimate goal of protecting them and their loved ones.
*All of the tales above are true stories, however names, other personal and family details have been changed to preserve anonymity.
[1] Same-sex marriage validly celebrated outside Hong Kong is recognised under the Ordinance pursuant to Ng Hon Lam Edgar v Secretary for Justice HCAL 3525/2019; [2020] HKCFI 2412, the decision of which is subject to appeal at the Court of Final Appeal as at the date of this article.
