Introduction
The population of elderly individuals aged 65 and above in Hong Kong is expected to nearly double from 1.71 million (22.7% of the total population) in 2023 to 2.74 million (36.0%) in 2046.[1] As we enter into a “super-aged society” as defined by the World Health Organization, it is essential to prepare for health considerations, engage in estate planning and establish inheritance arrangements.
If not, consider the following questions:
- Would you want someone you don’t trust to manage your finances in the event of mental incapacity?
- Do you want a situation where, in the absence of your authority, your hard-earned wealth cannot be applied towards defraying your medical or health care expenses when you become mentally incapacitated?
- Do you want your estranged family members to inherit your estate?
- Would you want your family members to be burdened with making difficult decisions regarding life-sustaining treatments without knowing your wishes?
If you answered “no” to any of these questions, then you need the “Three Instruments of Peace”, namely the Enduring Power of Attorney, the Will, and the Advance Medical Directive. It is concerning to note that only 20% of respondents in a recent IFPHK report have established these essential instruments,[2] reflecting a lack of awareness among the elderly population.
This article will outline the scope, effects, requirements and practical considerations for the Three Instruments of Peace.
Enduring Power of Attorney (“EPA”)
Scope & Effects
An EPA allows an individual to appoint one or more attorneys to handle their financial matters in the event they become mentally incapacitated. A common example is dementia, where individuals progressively lose their ability to care for themselves physically and financially, increasing the risk of financial exploitation. Having a properly executed EPA in place while mentally competent safeguards against this, providing crucial protection in difficult and unexpected situations.
Legal Requirements
The execution, registration, powers and scope of EPAs is governed by the Enduring Powers of Attorney Ordinance (“EPAO”). As stipulated in sections 2-6 of EPAO, the instrument must (a) be in the prescribed form (either Form 1 or Form 2 set out in the Schedules to the Enduring Powers of Attorney (Prescribed Form) Regulation), (b) be executed in the prescribed manner, (c) and contain the prescribed explanatory information.
The donor must sign the document in the presence of a registered medical practitioner, who confirms that the donor is mentally capable, as well as a solicitor. Alternatively, the donor can sign it first before a registered medical practitioner and then within 28 days, before a solicitor. The instrument must also be signed by the attorney and be registered to the Registrar of the High Court. The EPA becomes effective as specified in the instrument or upon its execution.
Practical Considerations
If you lose mental capacity without having an EPA in place, your family member may need to go through the lengthy and costly process of applying to the Guardianship Board to become your guardian or seek a committee appointment under Part II of the Mental Health Ordinance to manage your financial affairs. In contrast, having a valid EPA in place beforehand not only saves time and money but also ensures that the attorney is appointed according to your wish.
Wills
Scope & Effects
While an EPA is effective even when one loses his or her mental capacity, it ceases to be operative when one dies. A will comes into play when one passes away. It is a legal document that outlines how a person’s assets shall be distributed upon his or her death. Despite the fact that many may be familiar with high-profile estate disputes involving billionaires and celebrities in Hong Kong, few realize that having a clear, valid will is crucial for everyone, regardless of the size of their assets. Don’t forget that your MPF account, savings, or personal chattels also count. Moreover, you can also state your wishes regarding funeral arrangements and bequeath your memorable items to your loved ones in your will.
In the absence of a will, the distribution of assets and the appointment of a personal representative will be governed by the Intestates’ Estates Ordinance (IEO). An order of entitlement is established for those related to the intestate to inherit his or her assets or property, and such entitlement may not always be as the intestate expected. For instance, the precise entitlement of a surviving spouse without issue in intestacy is contingent upon the survival and proximity of any further relatives. This can be where the intestate has a surviving spouse and parent(s) or brother(s) or sister(s). In such a case, the surviving spouse is entitled to personal chattels, HK$1,000,000 and half of the residue plus interest; the other half is allocated to the parent(s) of the intestate or held in statutory trusts for brother(s) or sister(s) of the whole blood. In other words, under the IEO, the intestate’s spouse will not inherit all of his or her estate.
Furthermore, it is important to note that cohabitants not legally married are not covered by the IEO. Consequently, the surviving partner is unable to receive any of his or her deceased partner’s estate. Instead, it may sometimes happen – again, depending on the survival of other relatives, that the intestate’s estate could go to his or her brothers and sisters of half-blood, with whom they had been estranged.
Legal Requirements
To ensure that your assets are distributed according to your wishes, setting up a will is beneficial to both you and your loved ones. The legal requirements of a will as outlined in the Wills Ordinance are as follows:
- it is in writing, and signed by the testator, or by some other person in his presence and by his direction;
- it appears that the testator intended by his signature to give effect to the will;
- the signature is made or acknowledged by the testator in the presence of 2 or more witnesses present at the same time; and
- each witness either attests and signs the will; or acknowledges his signature, in the presence of the testator, but no form of attestation shall be necessary.
Practical Considerations
Be aware that all earlier wills and testamentary dispositions made by the testator may be revoked once the new will is signed and witnessed. Additionally, a beneficiary of the will should not act as the witness, as this would render their entitlement void. Another important point is that a will is automatically revoked upon the testator’s marriage, unless it was created when the testator was anticipating marriage to a particular person and intended for the will to remain valid despite the marriage. These are just a few key considerations when drafting a will. In fact, poorly drafted wills can easily lead to disputes, potentially resulting in the distribution of your assets contrary to your wishes or causing lengthy and expensive legal proceedings. Therefore, it is advisable to consult a solicitor who understands the law and can address your specific needs.
The Advance Medical Directive (“AMD”)
Scope & Effects
To fight for your life and live like a warrior until the very last moment, or to leave in peace with less suffering, is now a choice that is yours. The major consideration in determining the need for the AMD is whether there is any situation in which you want to be kept alive by means of life-support, such as artificial ventilation or nutrition, even if the condition of the body is intolerable. Or, whether, you would be willing to receive such support only when the situation holds some chances for a cure and if not, you would rather have pain relief rather than treatment. Additionally, an AMD helps ensure that your family members and doctors abide to your wishes and religious beliefs, if any.
Legal Requirements
While it is more common for individuals with serious illnesses to create advance medical directives, individuals who are perfectly healthy may also opt to do so, as severe injuries or illnesses can arise unexpectedly. The Legislative Council has passed the 3rd Reading of the Advance Decision on Life-sustaining Treatment Bill (“Bill”) on 20th November 2024. The Ordinance is set to commence in approximately 18 months to provide sufficient time for medical institutions, relevant policy bureaux and departments, and other related organizations to develop or revise protocols, records, and systems, as well as to train their staff. The preliminary requirements for making an AMD are as follows:
- The individual making the directive must be an adult with the mental capacity to make decisions regarding life-sustaining treatment.
- The individual making the directive must sign the directive and must insert in it the date of signing.
- They must clearly write all instructions in the directive and sign it in the presence of at least two witnesses, one of whom must be a registered medical practitioner. This practitioner should explain the nature and implications of the directive and confirm that the individual is mentally capable.
While we await the Ordinance to take effect, AMDs under common law continue to be legally binding.[3] In fact, section 54 of the Bill states that a pre-existing directive will be treated as an advance medical directive for the purposes of this Ordinance, as long as the outlined requirements were met at the time it was created.
Practical Considerations
An AMD takes effect when the maker of the directive becomes mentally incapable of making decisions about life-sustaining treatment; provided that the specified precondition for the instruction is met (such as being in a persistent vegetative state or a state of irreversible coma). Nonetheless, one must not confuse an AMD with euthanasia. AMD makers cannot refuse any form of help; for instance basic or palliative care, or request to end their life through an AMD.
Conclusion
To conclude, as Hong Kong is moving towards being a ‘super-aged society’, it has become all the more essential to tackle health issues and provide efficient estate planning to uphold both your and your loved ones’ wishes. While we will be keeping a close eye on the gazetting of the Advance Decision on Life-sustaining Treatment Ordinance, our firm is in a position to advise you on the preparation of Wills and EPAs tailored to your specific needs and preferences in the meantime. This will help you mitigate the risk of unexpected health issues and eventual aging, ensuring that considerations related to old age are no longer a source of fear and uncertainty.
[1] Census and Statistics Department (2023). Hong Kong Population Projections for 2022 to 2046.
https://www.censtatd.gov.hk/en/data/stat_report/product/FA100061/att/B72310FA2023XXXXB0100.pdf
[2] Institute of Financial Planners of Hong Kong (2023). Annual Report 2022/2023.
https://www.ifphk.org/pdf/AnnualReport/IFPHK_AnnualReport2023.pdf
[3] HE v A Hospital NHS Trust [2003] 2 FLR 408
