This is the first of a series of cautionary tales about not having the right documents in place should you die or become incapacitated prematurely.
My friend, *John*, was from Australia and owned a business in Hong Kong with fellow shareholders. He was the same age as me (late 40s) and as I had started my will-writing business, mentioned this to him as his situation was complex. He had an estranged wife in another country (that he was trying to reconcile with) no children and a sister who was back in Australia. Both very dear to him.
*John* assured me that he had confirmed paperwork in Australia and mentioned that 50% of his Australian superannuation (pension) was to go to each lady – he didn’t have much else there. He also had 2 life insurance policies and a savings plan in Hong Kong which he had assigned beneficiary to his sister, the business shares, and bank accounts.
If we talk about the wrong timing for things to create a disaster! *John* had reconciled with his spouse (around a year before he passed away) but had run into difficulties with his fellow shareholders – they were fighting over dividends and targets. He also forgot to update a credit card payment for one of his life insurance policies. His sister had come over to HK to help with business and she was going to make the overdue payment on Monday (he had missed two premiums so had to pay the third to catch up or it lapses – ceases). He had taken what money he could out of his savings plan to sustain the business.
*John* passed away without having the right instructions in place. He did not have a will, did not hold a shareholder agreement with his co-workers (he verbally agreed that his sister would take over his shares instead of being paid out), did not instruct his Australian superannuation for distribution, missed premiums on his (major) life insurance and as his death was unexpected, left a lot of chaos for people to try and resolve.
His poor sister missed out on the most but his wife did not inherit everything, either.
By not having a will in Hong Kong, 50% of *John’s* assets went to his wife and 50% to his sister (HK Intestacy Laws) – he had promised his sister everything in HK. This also included the shares of the company. One of the life insurances paid out to the sister but by the time it did, most of it went on probate costs.
By not having a shareholder agreement, the company was able to devalue John’s shares in his absence and his sister lost the business. Maybe with some legal savvy, his sister could have fought this but without funds to start, how?
By the way, the sister and reconciled wife did not get on – *John’s* sister tried to be the bigger person and work with the wife but to no avail, as the wife was overseas. This caused huge delays in trying to resolve any legal or administrative issues. An administrator had to be appointed (this is the executor of your will) and as he had a wife, the courts needed a signature off her to allow the sister to be appointed, this took months alone. All the while, draining funds or the possibility of getting on top of things. Time is money in this case!
For Australia, as he had originally stated his wife as beneficiary, and had not amended (maybe he thought he had changed it?) the wife inherited the Superannuation benefits. The wife even took the personal chattels that had been in the family for years, John’s sister asked her for them (they had some worth but not as much as sentimental value ) because she could, according to the law.
Your situation does not have to be complex, can be quite easy or you could be a member of a blended family – any circumstance that you are in warrants the right instructions for the right people. This may be simply writing a will, or it could be creating legal guardianship for your children, or having a shareholder agreement, or a family trust.
Imagine the bureaucracy we go through with our own money on a daily basis – how would your loved ones cope if we were no longer here to manage it?