Peace of mind for your future
There is an increasing trend for executing Wills and Enduring Powers of Attorney recently for making proper financial arrangements. We shall endeavor to give a brief introduction to these documents.
Will
A Will is a legal document that takes effect after the death of the testator. It is a record of the testator’s wishes as to how his or her property should be disposed of, so that the appointed executor can distribute the estate to the named beneficiaries when the testator passes away.
The greatest benefit of having a Will is that the testator’s estate can be distributed to the named beneficiaries according to his or her wishes. The testator may even exclude certain persons from being beneficiaries. If a person died without a Will, his or her estate will be inherited in accordance with the Intestates’ Estates Ordinance (Cap 73), with the possibility of the estate being inherited by someone who is not on good terms with and/ or distant from the deceased.
In general, the Will must record (1) whom the testator has named as his or her executor; and (2) how the assets are to be distributed (e.g. a specific property goes to a beneficiary and what happens to the remainder of the estate). The original Will shall be kept by the testator after it is signed, and the law firm will usually keep a copy.
Enduring Powers of Attorney
Meanwhile, an enduring power of attorney (“EPA”) is a power of attorney made by a mentally competent person to appoint an attorney in advance to deal with his or her properties and affairs in the event that he or she loses mental capacity in the future (e.g. if he or she suffers from a cognitive impairment) until the person’s death. Therefore, even if the person loses mental capacity in the future, the EPA, which has been completed and registered in the HKSAR High Court, shall remain valid and will not be invalidated by any deterioration in the person’s condition.
It is important to note that an EPA can only deal with the properties and financial matters specified by the person concerned (e.g. using money in a bank account to pay for residential care, buying and selling shares in an investment account, renting or selling properties, etc.) and does not cover medical decisions. The donor of the EPA can further specify when the EPA becomes effective, whether or not to restrict the powers of the attorney, etc. This saves time and money, and saves the family from having to go through court proceedings to obtain order(s) to manage the person’s financial affairs if he or she loses mental capacity without an EPA in place.
The EPA must be executed before a Hong Kong registered medical practitioner and a Hong Kong solicitor. It also needs to be registered with the High Court of Hong Kong before the person’s properties and affairs can be dealt with.
Conclusion
In recent years, clients tend to execute their Wills and EPAs at the same time to ensure that their assets are properly managed in the event of mental incapacity and after their death. If you have any queries concerning the above, please feel free to contact us.
