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  • Apr 16, 2014
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LifestyleFamily & Education

Hongkongers urged to write their will as survey shows most do not have one

Every parent wants to safeguard their children's future, but not having a will could leave their fate in the wrong hands, writes Mary Kavanagh

PUBLISHED : Tuesday, 19 November, 2013, 8:42am
UPDATED : Wednesday, 20 November, 2013, 6:28pm

"My husband is a lawyer, but we don't have a will," says Marjie Sweeney, a mother of three girls who lives in Hong Kong with her family. "We just haven't got round to it."

A recent client survey conducted by investment firm The Henley Group showed that about 70 per cent of those polled - predominantly international investors/expatriates - had not yet written a will. Almost half of the target group had children under 18, and 60 per cent were property owners.

So the Sweeneys, who have lived outside their native Scotland for almost 20 years, own property in London and have three children under 18 attending school in Hong Kong, are clearly not alone.

Henley Group CEO Mark Rawson says the results are "shocking", yet he is not surprised by them. "People don't think about these things until they are forced to think about them," he says. "It is like tax returns - anything that is unpleasant we tend to put off."

But if you are resident in Hong Kong and die without a will you have no control over what happens to your assets or who will look after your children.

Many people assume that if you die without a will - known as intestate - all the assets go to the surviving spouse, but Rawson says this is not necessarily the case. Even if you intend or wish for your assets to go a specific person and for guardianship of your children to go to a particular relative, "neither of these two things may happen if you don't have a valid will", he says, adding that "the laws of intestate will dictate how assets will be passed to next of kin in a fairly prescribed manner".

"If a husband or wife passes away and leaves children behind, HK$500,000 worth of assets pass to the surviving spouse, plus chattels [personal possessions]. Fifty per cent of the residuary estate will pass to the spouse, and the other 50 per cent will pass to the children, in equal shares," he says.

The children's assets will be held in trust until they turn 18. These assets can be accessed by the surviving spouse (or guardian), but only to be used for the direct benefit of the children - for example, education costs. Clearly, all the assets do not go automatically to the surviving spouse.

If the children are under 18, and both parents pass away without having a will in place, "you have no input on who will look after your children when you are gone", says Todd Beutler, a partner at global law firm DLA Piper. "I cannot think of a more important task for a parent to take care of than to plan for what would happen if they're not there," he says.

If you die intestate in Hong Kong, in the absence of a named guardian, local authorities will step in to take responsibility for your children's welfare while the court decides who the permanent guardian will be. Beutler says this process could take time and money, and the outcome could go many different ways. "Get a will and make sure you know what will happen," is his advice.

Katie Graves, a partner in the wealth-planning team at Withers, agrees that making provision for who will look after the children if something happens is very important. "Even though you may think it is obvious who will look after them if you are not there, that might not be the case," she says. "And because it has not been written down formally, it may not happen."

Like Rawson, she is not surprised by the survey results. "We get a lot of clients, many of whom have a British connection, but also those from other parts of the world who live in Hong Kong, so it makes sense for them to do a will here, but they don't have anything in place," she says.

In addition to the lack of control over what will happen to your assets and who will take care of your children if you die intestate, she points out that you might also unnecessarily expose your estate to inheritance or estate tax.

For those who already have a valid will that was executed in a foreign jurisdiction, Hong Kong law generally acknowledges such documents. But guardianship can still present a challenge because the appointed guardian in this case is most likely not a resident in Hong Kong.

"If you have moved to Hong Kong, it would be sensible to review the will in light of the move," Graves says. "One of the things to think about is temporary guardianship. This can be done as a separate document to supplement the will you have in place."

Starting a family is one of the main triggers for clients to write a will, she says. "The other thing that kicks people into action is if a colleague or friend dies unexpectedly and didn't have their affairs organised."

Still, many people put off arranging a will. And there's no shortage of excuses.

Beutler notes that some people believe they are too young to think about death, others are too busy and a will is simply not a priority, cost could also be a deterring factor, and cultural factors may come into play.

"In some parts of Asia, China included, mortality is a taboo subject," Beutler says. "A will addresses this taboo, and some people don't want to do it - maybe they think of it as unlucky or so distasteful from a cultural perspective that they have great reluctance to deal with it."

Whatever the reasons, he is adamant that everyone should have a will. "What possible reason could someone have for not trying to have their affairs organised from the simplest level of 'I want to make sure my property is left to the right person' to 'I want to make sure the right person is in charge of getting the job done'," he says, referring to the role of the executor. A will enables a person to set this up according to their wishes and to effectively control what will happen if they are not around.

This year is the first time The Henley Group has conducted a survey specifically on wills and they plan to repeat it annually. Rawson says that their job as financial planners serves not only to help people achieve their financial goals, but also to plan for the "what ifs" in life and make sure people have the right plans in place to protect themselves and their families.

"It is a simple process to put a valid will in place," he says. "It doesn't involve major long-term commitments or a massive outlay. It can be updated and changed as circumstances dictate."

Sweeney plans to talk to her husband again about putting a will in place, but she might have to be the one who takes the lead. After all, she says, lawyers can be slow to make decisions.

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