As an expat living in Hong Kong, your circumstances can create huge complexity when you die or become too ill to look after your affairs. This is especially true when you have assets in many countries, a spouse of different nationality, or if your children are under 18.
Every country has their own unique estate planning rules, so domicile, Inheritance Tax, and succession rules can vary significantly. This means it’s important to plan ahead to make sure your money is protected, ends up in the right hands as quickly as possible, and avoids unnecessary taxes on the way.
Read on for 10 practical steps you should take to protect your assets and make sure they are passed to your loved ones without delay if you die or become ill.
1. Account for multi-jurisdictional estate planning
As an expat living in Hong Kong, there’s a high chance you hold assets in multiple jurisdictions.
You may have money and property in HK, as well as property, pensions, and bank accounts in the UK or other countries where you still have ties or have previously lived and worked.
If so, you need to ensure that you take everything into account with multi-jurisdictional estate planning. This means that you need to organise your affairs and make sure that you plan for each jurisdiction where you have ties or assets.
This includes taking time to consider if you should write a will in each applicable country.
2. Understand how the nationality of your spouse might influence your strategy
If your spouse is from another jurisdiction, this will need to be taken into account when you are considering your estate plan.
Many of our clients are married to people who are from a different country to them.
As a sophisticated international and cross-border family, you need to pay special attention to transfer tax rules, treaties, and credits, all of which differ according to the jurisdictions involved. It is important to understand how your and your partner’s circumstances might affect your estate planning.
This requires expertise in different legal and taxation rules. You need an expert to help you understand how these factor into the distribution of assets prior to and upon your death.
3. Safeguard your children’s future
If you have children under 18, it’s important to establish guardianship arrangements.
By assigning a legal guardian, your children will be protected if both parents die.
Without formally appointing a guardian, if neither parent is around to care for their children, the Hong Kong court will automatically become their guardian. This is particularly problematic for expats with family in other countries since their children could end up in the Hong Kong government care system.
The circumstances leading up to this eventuality will have been distressing enough. But if you fail to put the right guardianship arrangements in place, things can get very difficult, and could be harmful to your children’s wellbeing.
Avoid your children being taken into care by appointing a loving and competent friend or family member as a guardian.
4. Appoint someone to look after your affairs if you become unable
Set up an Enduring Power of Attorney (EPA) to ensure your affairs will be properly looked after if you lose the mental capacity to take care of things yourself.
An EPA is a legal document where you can give power to act on your behalf to one or more other people you trust.
You must have the mental capacity to set up an EPA, so it’s vital that you make the necessary arrangements as early as possible.
We work with a psychiatrist and will arrange for you to meet them. After a short conversation with you, they will determine if you have adequate mental capacity to decide who you wish to appoint as your attorney. A lawyer will then certify that the EPA is legally binding.
In Hong Kong an EPA gives control to your attorney over financial matters only and doesn’t cover health or end of life decisions.
Having an EPA gives you peace of mind that someone you trust will take care of your affairs if you are unable. Preparing these documents well before you need them also helps provide valuable peace of mind to your family, should the need for intervention ever arise.
5. Use a professional executor
Your executor will be named in your will and will be responsible for administering your estate.
While it’s possible to appoint close friends or relatives to act as your executor, the role carries important responsibilities and can be complex.
The person you choose should, of course, be someone you trust to carry out your wishes. However, if your estate has substantial value, you should consider appointing a professional to act on your behalf.
Wealthy expats should always consider appointing a professional executor with specialist knowledge and experience in dealing with different jurisdictions.
6. Prepare a letter of wishes detailing all the assets you own
Use a letter of wishes to document your assets. Your letter of wishes can accompany your will. Although it is not legally binding, it provides useful guidance to your executors when they are dealing with your estate after your death.
When you’re wealthy with assets in multiple countries, things can be more complicated. Having a comprehensive list of assets in your letter of wishes can help give your executors a clear manual to work from.
A detailed letter of wishes can potentially save huge sums of money in legal fees. Having information which makes your assets easily traceable is likely to make a significant difference to the time it takes to sort out your affairs.
A complicated estate involving assets around the world could take years to sort out if you fail to supply a comprehensive list of your worldwide assets.
With the information readily available it could mean it takes your executor weeks or months to trace your assets, rather than years.
Even collating this information can be time consuming and we can help do much of the work for you.
7. Ring fence assets using trusts to protect them from UK Inheritance Tax
Using a trust is a brilliant way to protect your assets from Inheritance Tax in the UK, or other jurisdictions. Trusts are also useful to help you transfer assets and wealth more efficiently.
You can set up a trust for a specific purpose and ensure your assets are properly managed on behalf of your beneficiaries.
This can be particularly useful if you have children or dependents with special needs or disabilities. If you are concerned about how they will manage financially after your death, a trust can give you peace of mind.
8. Review and update your plans
It’s a good idea to review your will and estate plans every few years, when a major life event occurs, or new legislation is introduced. Life events likely to change your plans include:
- Marriage or civil unions
- Significant changes to your assets.
Sometimes changes relating to someone else close to you might affect your plans, such as the death of your executor or one of your beneficiaries, for example.
9. Talk to an expert
James Ramsey at BMP Wealth is an expert in multi-jurisdictional financial and tax planning strategies, as well as estate planning.
James and the team at BMP Wealth have unique knowledge in combining financial and estate planning expertise. This makes BMP Wealth the preferred choice for wealthy expats.
We will work with you to build a comprehensive and sound estate plan. We will draft all the required documents and then pass everything to our legal experts who will draw up the legal paperwork ready for your signature.
10. Get in touch
We specialise in building, managing, and preserving the wealth of Hong Kong’s international community and can help ensure you make all the right estate planning steps to protect your wealth, family, and succession needs.
If you’re interested in learning more about how we can help you grow and preserve your wealth long into the future and want to discuss your options, get in touch. Email email@example.com or call +852 3975 2878.