FREAKY FRIDAY – The Art of Procrastination
My lovely client Klaus* (not real name) was German, lived in Germany with a Korean wife Trudy* and had 3 children, one had graduated and moved to Spain. One was studying at university in the UK and the other in high school in Germany. He ran a HK business with an old school friend – been in business for over 25 years and as friends for 50 years.
As Klaus was German and did not want to pay taxes on his HK earnings, he and his partner Thomas* had a handshake and old school friend agreement. Klaus’ earnings were sent to his HK bank account and as global reporting (CRS) was not in place, all ran smoothly for the time of the business. This was worth around US$25,000,000. In shipping and freight.
Poor Klaus* was diagnosed with stage 4 cancer so he asked me to write his will. I asked him about an official written agreement for the business between Klaus* and Thomas* but he said there was no need so I didn’t push. Klaus* gave me the details for his will and said he had to go on a trip back to Germany then we would sign off on his will.
Klaus* treatment for cancer was given in HK as he had a good medical package so when I went to see him, he was being checked at the Adventist hospital. My understanding was to get the document signed, I mentioned being a witness and grabbing his doctor as the other but he said he would rather get it signed back in Germany.
I received a call around 3 months later as he had sadly passed away. Trudy* his wife asked me about the will and perhaps shareholder agreement. I explained that Klaus* had the will and that there wasn’t an official document for the company. She arranged to come to see me when she came to HK.
Sadly, the will was not signed and Thomas* decided to fight the family on the ownership and value of the business … everything was in Thomas* name so there was not much they could do as Klaus* had not declared anywhere that he was a business owner. The will was not signed so could not be used.
As his eldest was the most capable to sort, he applied as the administrator (executor in your will) and started the process of claiming for the bank account. The business had to be fought for privately which inflicts high legal costs.
Had Klaus* have signed his will and had “something” in writing, witness by 2 people, the family would not have had to go through financial stress, other than the waiting time to gain possession and lose the family’s income from the business.
You never know, especially these days, with what will happen so best be prepared and have your estate distribution documents in place – your will, a family trust, a shareholder’s agreement. They can get dusty in a safe place but at least you would be prepared.