It is not surprising that many Hong Kong Canadians have assets in Hong Kong, whether it is landed property, stock shares or bank accounts. In my previous blog (see Setting up a Hong Kong Power of Attorney from Canada), I discussed the use of General Power of Attorney or a property specified Power of Attorney to handle assets in Hong Kong by one’s attorney. However, a Power of Attorney will become invalid when the donor dies and thus, the attorney can no longer use the Power of Attorney to deal with the assets.
If the property, whether it is a bank account or a landed property, is jointly owned, the property will pass onto surviving owners under joint tenancy without a will. If you consider transferring your share in your landed property in Hong Kong to your family member whether in full share or part, and hold as joint tenants, it can be done by way of gift. However, you will have to be aware of the limitation of reselling the property. A potential buyer may be reluctant to buy a house if the owner receives the property by way of gift within 5 years because under the Bankruptcy Ordinance (Cap. 6, Laws of Hong Kong) in Hong Kong, any gifts made by a bankrupt party within 5 years will be avoided*. Indeed, a bank will also not grant any mortgage to an owner under such situation. If you wish to sell the property after the transfer, it is best to be done by way of sale. However, since the tax rules are different in Hong Kong and Canada, even if the interest in property is transferred to your closest family members but by way of gift, it will still stamp duty as by way of sale which would be calculated with reference to the market price.
However, if the property is solely owned by you, or if a property is jointly owned by you with other(s) as tenants-in-common, your executor/administrator will have to apply for a grant of Probate or a Letter of Administration from the court of Hong Kong in order to deal with your assets, including your share in the joint property.
Dealing with an estate without a will is already not desirable as it has to be distributed according to the law but not at your wish. But if you pass away in Canada, it will be even more complicated to deal with the estate in Hong Kong. Without a will, legal advice may be required to advise the Hong Kong court of the law of intestacy in Canada, e.g. who is eligible to apply for the grant and who are entitled to inherit the estate of the deceased. It is a long and complicated process.
A will may solve the problem but you still need a good planning. It is not desirable just to prepare one will to handle both your assets in Canada and in Hong Kong. First of all, Canada and Hong Kong have different formalities in preparing a will. It is best to find a Canadian lawyer to prepare a will for Canadian assets and a Hong Kong lawyer to draft a separate will to deal with Hong Kong assets. This will make sure the legal requirements of both places are properly complied with in the separate wills and avoid making the wills invalid. More importantly, using one will delays the process significantly because the original will must be submitted to the court for the application of grant. With only one will, you may have to get a certificate of appointment from Canada first before you can apply the probate in Hong Kong.
If you would like to discuss in details about estate planning regarding your properties in Canada and Hong Kong, contact Katherine Lam at 437.900.1688 or klam@lamlawfirm.ca.
*When a gift is avoided, it means the property will be vested in the trustee of the bankrupt for satisfaction of any outstanding debts.
Disclaimer: The information contained in this article is general in nature and does not constitute legal advice. Please contact Lam Law Firm Professional Corporation for legal advice.
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