Estate Planning and Wealth Transfer
This domain tests how Hong Kong assets pass on death and how to structure transfer efficiently. Expect wills, intestacy, probate, trusts, nominations, joint ownership, and cross-border issues.
Core framework
- Estate duty was abolished in Hong Kong in 2006, so there is no Hong Kong inheritance tax. Death still triggers probate, debts, funeral expenses, and administration.
- Intestacy is governed by the Intestates' Estates Ordinance. Where there is no will, the spouse and children rank ahead of remoter relatives. A will appoints executors and guardians and gives certainty; it must satisfy Wills Ordinance formalities.
- A trust involves a settlor transferring legal title to a trustee for beneficiaries. Discretionary trusts offer flexibility, privacy, and continuity; consider perpetuity, tax, and control.
- Joint tenancy passes by survivorship; tenancy in common passes under the will or intestacy. Insurance nominations and MPF death benefits follow policy or scheme rules and may bypass the estate.
Tools and cross-border issues
- Tools include wills, trusts, insurance, nominations, gifts, and family companies. For cross-border families, check domicile, forced heirship, foreign tax, and asset situs.
Worked example. A widow with two minor children owns HK$20m of shares and a HK$8m flat held as tenant in common with her brother. Without a will, intestacy may delay access and require an administrator. A trust can hold assets for the minors and name a guardian. A HK$5m life policy with a valid nomination can provide liquidity for probate and living costs while the estate is administered. The reasoning is that ownership form and beneficiary designation decide who receives what, not the will alone.
Traps that cost marks: assuming no estate duty means no tax; forgetting joint-tenancy survivorship; using a will to override a valid nomination; naming minors as direct beneficiaries; ignoring foreign forced heirship; confusing executor and trustee; and failing to review after marriage or divorce.