Hongkongers urged to plan wills, powers of attorney to avoid ‘a lot of hassle’ and fights between loved ones over inheritance, funerals

After attending a seminar last month on the importance of succession arrangements, she wrote a will, an enduring power of attorney and an advance directive, which is a medical document that allows dying patients to choose their treatments.

Less than 0.1 per cent of Hongkongers have created an enduring power of attorney, while less than 0.2 per cent have made an advance directive.

A recent study by AWEsum Care, a social enterprise that helps people make legacy planning arrangements, surveyed 400 people aged between 25 and 70 and found less than 20 per cent had penned a will.

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Despite 97 per cent of people in the survey agreeing that establishing a wealth succession plan was highly important, close to half did not know how to create legal documents to ensure their assets were passed on according to their wishes.

Founder of the social enterprise Kim Chan Kai-cheun, who is also a lawyer, said many Hongkongers had not thought about growing old and were unaware of issues that might arise after their death.

“If someone dies before making a will, there is a lot of hassle for family members to prove their relationship with the deceased, especially for the older generation who may not have proper certificates and documents, dragging out the process of settling assets for years,” he said.

“We have also seen families fighting over inheritance and arrangements because planning was not done properly. With our ageing population, this will become a huge problem for the government to handle in 15 years’ time.”

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Around HK$600 billion (US$76.6 billion) worth of assets belonging to 500,000 Hongkongers would be frozen as they lost mental capacity in the next 15 years because of illnesses, he said. The situation would leave thousands of properties and assets in limbo.

He said his estimates were based on a study by the Hong Kong Monetary Authority in February 2022, which said 2.5 million Hongkongers above the age of 65 would hold onto HK$3 trillion worth of assets, averaging HK$1.2 million each.

Of the 2.5 million, about 500,000 were expected to lose their mental capacity through dementia, stroke or cancer, the study said.

Fewer than 4,000 out of the city’s population of about 7.5 million have registered their enduring power of attorney with the High Court.

An enduring power of attorney differs from a will as the former only comes into effect only after the person subject to the arrangement loses their mental capacity, and it ceases being valid once they die. A will only operates after the will-maker’s death.

Complicated paperwork, high costs and a lack of urgency have added to the challenge of getting more Hongkongers on board, Chan said.

Validating an enduring power of attorney requires the applicant to submit original and certified copies of the agreement to the High Court, with both lawyers and doctors required as witnesses.

Most doctors and lawyers are unfamiliar with the process, while typically only psychiatrists are willing to provide these services as they need to certify the mental capacity of the applicants, according to Chan.

“There are only 400 registered psychiatrists in Hong Kong, and 200 are in the public sector. The remaining 200 private psychiatrists fail to meet the substantial demand,” he said.

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Applying for an enduring power of attorney in Hong Kong costs upwards of HK$10,000, Chan said, referring to fees for hiring the relevant professionals and covering administrative charges by a court.

By contrast, Singapore has simplified the application process for a similar arrangement known as a lasting power of attorney by allowing online applications from November last year.

Under the new online system, all lasting power of attorney applications can be made online and digitally signed, cutting the average processing time from three weeks to eight days.

More than 50,000 online applications have been made as of July following the change, which was three times more than the preceding year, according to Singapore’s Ministry of Social and Family Development.

Either a doctor or a lawyer can be used as a witness, compared with Hong Kong’s requirement that both must sign off on the document.

The Singapore government has also made the service free for its citizens since 2014 to encourage them to apply.

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The Enduring Powers of Attorney Ordinance in Hong Kong was revised once in 2012 to allow lawyers to sign the documents within 28 days of it being approved by doctors, instead of requiring their simultaneous presence.

A spokesman from the Labour and Welfare Department said the Department of Justice promoted the use of enduring powers of attorney and provided information through radio programmes and the Community Legal Information Centre website.

“The government will review the application process for enduring powers of attorney as necessary,” he said.

But more could be done to raise awareness and streamline the application process in Hong Kong, Chan said. He cited an idea floated by lawmakers to establish a central database for advance directives.

Enduring power of attorney applicant Yeung said she planned to donate part of her assets while leaving some to her husband, who had also begun arranging the management of his own affairs.

She urged the government to raise awareness about the issue before it was too late as the population was rapidly ageing.

“In the end, it is a social cost and a cost for the government. If they can promote it earlier and digitalise it so everyone can do it online, without requiring both doctors and lawyers, it can reduce the barriers for the public,” she said.