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“A revocable living trust allows your heirs to avoid probate entirely and keeps you in complete control of your finances while you’re alive. You can always make changes to what is in the trust and how you would ultimately like it managed or disbursed” - Suze Oman
INTRODUCTION
The passing of Samsung’s late chairman Lee Kun-hee saw his family paying over US$10 Billion worth of inheritance tax, marking one of the inheritance largest tax payments both in South Korea and globally.
With the COVID pandemic still in the backs of many people’s minds (both rich and poor alike), it can be seen why proper estate planning is more essential than ever. Against this backdrop, here is a quick highlight of key Hong Kong Trust and Probate Court decisions in recent times:
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MAJOR TRUST & PROBATE LAW DEVELOPMENTS (circa 2020 & 2021)
Ho Tung Ming Oscar v Ho Fook Shing [2021] HKCFI 1046
The Ho Tung Ming Oscar case re-examined Section 33(3) of the Probate and Administration Ordinance, Cap 10 which provides that the Court may, if the Court is satisfied that the due and proper administration of the estate and interests of the persons beneficially entitled, suspend and/or remove an executor or administrator and provide for the succession of another person in his place, and for the vesting in that other person any property belonging to the estate.
In deciding whether to remove an administrator or executor, it was noted by the Honourable Court that "the proper question to ask is whether the removal is necessary for the due and proper administration of the estate, and whether it is in the interests of the beneficiaries for the administrator to be removed. That does not mean it is necessary to establish specific wrongdoing, misconduct or fault, though obviously such conduct would be a relevant consideration...
A failure to render a full and proper account when called upon to do so, which can be seen as a breach of a fundamental and important duty of an administrator, may in appropriate circumstances be good reason to justify the removal of an administrator ." (Emphasis supplied)
(See: Shum Oi Lun Helen v Wong Yuk Ching HCMP 1189/2018 (Judgment dated 29/11/2019) at §38 per Coleman J).
Ng Kit v Wu Tsun Hua [2021] HKCFI 877
The case of Ng Kit revisited the Laws on gifts:
If a gift is claimed, the onus (e.g. the burden of proof) is on the donee to prove the existence of such a gift arrangement. .
Where a gift had been made between living persons (inter vivos) gratuitously while the donor is alive and not in expectation of death (e.g. transfer of property without expectation of the same being returned), a gift is only effective when the donor intends to make it a gift and the recipient takes the thing given and keeps it, knowing that he has done so.
As a general rule, all property, real and personal, may be the subject of gift. With certain exceptions, chooses or things in actions are assignable, and may also be the subjects of gift.
A gift inter vivos may be made by various means: by deed or other instrument in writing; by delivery in cases where the subject of the gift admits of delivery; or by declaration of trust, which is the equitable equivalent of a gift.
Gifts of chattels are more often made by delivery than by deed. A gift of chattels is not complete unless accompanied by delivery. Actual delivery is not mere evidence of the gift, but is part of the gift itself. To constitute delivery, the acts must be such, or be accompanied by such words, as to be unequivocal. But actual manual delivery by the donor to the donee of a chattel is not essential. It is sufficient if the donee is put by the donor in possession of the chattel, or if the donee obtains possession with the donor's consent. Where chattels cannot be actually delivered owing to their bulk, they can be constructively delivered.
Where a gift rests merely in promise, whether written or oral, or in unfulfilled intention, it is incomplete and imperfect, and the court will not compel the intending donor, or those claiming under him, to complete and perfect it, except in circumstances where the donor's subsequent conduct gives the donee a right to enforce the promise.
If a gift is to be valid the donor must have done everything which, according to the nature of the property comprised in the gift, was necessary to be done by him in order to transfer the property and which it was in his power to do.
In order that a voluntary equitable assignment of an equitable chose or thing in action may be valid it must be in all respects complete and perfect, so that the assignee is entitled to demand payment from the trustee or holder of the fund or debt and the trustee or holder is bound to make payment to the assignee, with no further act on the assignor's part remaining to be done to perfect the assignee's title.
Save where a presumption of gift may arise, a gift between spouses or civil partners must be established in the same way as a gift between strangers; that is to say it must be made by deed or by delivery, and there must be a clear and distinct act of gift and evidence that a gift was intended, in particular when the claim is made after the death of the alleged donor.
An act showing an intention to change the ownership may constitute sufficient delivery, notwithstanding that the chattels continued to be used by the spouses or civil partners in common: the act, however, must be such or be accompanied by such words as to be unequivocal.
Prima facie the donor of a completed gift is not entitled to revoke it nor to recall any payment made voluntarily.
Re FSF (Enduring Power of Attorney) [2021] 1 HKLRD 1099
In the case of FSF, the Court reminded practitioners that while an application under s.11(1) of the Enduring Powers of Attorney Ordinance could be made by an interested party, such an application should be made for the purpose of serving the interests of the donor rather than the personal interests of an interested party.
The discretion under the subsection must be exercised in the light of the circumstances of the case, always with due respect for the donor’s autonomy and by reference to his interests and, insofar as they could be ascertained, the donor’s wishes.
Chan King Hung v Chan Siu Kwan Paulie [2021] HKCFI 670
The general principles for the propounding of a will (in the absence of any allegation that the will was procured by fraud or undue influence) may be summarised as follows:
A person who propounds a will has the legal or persuasive burden of proving on balance of probabilities that:
there was due execution of the will;
the testator was of testamentary capacity; and
the testator knew and approved of the contents of the will.
If the evidence adduced by a challenger or otherwise (e.g. the situation) arising in the case is of a sufficient cogency to raise such an issue (e.g. conduct which points to a will having been rescinded and/or a superseding will may/ought to have been made either in jurisdiction or overseas), the Court, when assessing the evidence as a whole at the end of the case, decides whether the proponent of the will has discharged the persuasive burden in relation to the relevant fact in issue on the balance of probabilities.
The prevailing authority applied in Chan King Hung remains Nina Kung (above) at §176 (Ribeiro PJ).
As with any other matters, parties are also reminded that turning a matter into a contentious matter should be as a matter of last resort and the Underlying Objectives of the Court (and officers of the Court) to avoid adversarial conduct where possible remains the unalienable duty of all officers of the Court.
CONCLUSION
All in all, the various rulings of the previous year shows the importance of proper and good legacy planning is essential. Afterall, contentious probate matters are one of the saddest and most unfortunate cases amongst civil dispute as no living person would want to see beneficiaries (e.g. those supposedly closest to a donor when they had been alive) to litigate against each other (e.g. friends against family).
Worse still, it is always with great sadness to see the legacy of a person applied towards legal fees as such practices are undoubtedly against the interest of that of the deceased.
Practitioners handling trust and probate matters, in the event where estate planning was not properly done whilst the donor was alive, should always put the interest of the estate where possible first and attempt to find quick and amicable settlement of a matter, rather than profiting from adversity. The Underlying Objectives ought to be upheld.
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This article is co-authored by Joshua Chu from ONC Lawyers