Background of this Questionnaire Survey - - PDF document

9/3/16& 1&

Survey administered jointly by Faculty of Law, The University of Hong Kong and the Concern Group of Guardianship System and Financial Affairs

Ascertaining the need for Special Needs Trusts in Hong Kong

Moderator: Ms Anna Lee Speakers: Professor Lusina Ho / Associate Prof Rebecca Lee 9 March 2016

Background of this Questionnaire Survey

As&the&parents&/& caretakers&of& person(s)&with& intellectual& disability&age,& need&to&plan&for& the&dependents’& future

Wish&for&a& decent,&happy& and&healthy&life& for&their& dependents

Make& arrangements& for&the& dependents& while&the& parents&are& sCll&capable&

Resources& ImplicaCons&

9/3/16& 2&

Background of this Questionnaire Survey – Resources Implications

Manpower 1.&Family&members&or&relaCves& J&Available,&trustworthy&&&willing?& J&Too&much&responsibility&on&them?& J&Who&to&take&over&if&they&become&unavailable? 2.&By&NGO/Government && J&No&proper&arrangement&at&present& J&Limited&to&basic&subsistence,&no&quality&of&life 3.+Devising+a+mechanism+to+look+a7er+the+well+ being+of+individuals+with+intellectual+disability:+ >+Elements:+Monitoring,+Managing+and+Caring+

Financial:+Assets 1.&Sufficient&assets&to&generate& income&for&the&dependents. 2.&Assets&to&be&transferred&an& affordable,&competent&and&durable& manager&at&a&suitable&Cme. 3.+IdenEfying+/+establishing+an+ asset+manager+that+is:++ >+Long>lasEng,+Subject+to+legal+ supervision+and+Affordable

Part A: Background Information

QUESTIONS 1-6

9/3/16& 3&

Part B: Existing financial and personal welfare planning tools for people with intellectual disability

QUESTIONS 7-16

Part B: Existing Tools Inheritance without a will

& &

Personal+ ChaLels

• First+HK

$500,000+

50%+of+residual+ estate+ 50%+of+residual+ estate+

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Part B: Existing Tools Inheritance without a will

• + Surviving+ spouse+ will+ inherit+ all+ personal+ chaLels+ (such+ as+

personal+effects,+household+items,+cars+and+jewellery)+and+the+ first+HK$500,000+of+the+residual+estate

• Whatever+ sEll+ remains+ will+ be+ divided+ into+ two+ halves+

between:+ (1)+ the+ surviving+ spouse+ and+ (2)+ the+ deceased’s+ children,+who+will+share+this+half+equally+amongst+themselves.

• If+ the+ deceased+ did+ not+ have+ a+ surviving+ spouse,+ his/her+

assets+will+be+shared+by+his/her+children+equally+

Part B: Existing Tools Inheritance under a will

& &

Distribute+the+ deceased’s+ assets+ according+to+ his/her+wishes+

9/3/16& 5&

Part B: Existing Tools Inheritance under a will

• +Need+to+appoint+an+executor+when+making+a+will+
• +At+least+two+ways+of+gi7ing+under+a+will:
• Giving+ your+ assets+ directly+ to+ anyone,+ including+ your+ children+ with+

intellectual+disability.+However,+if+they+do+not+have+the+capacity+to+manage+ the+ assets,+ a+ guardian+ will+ need+ to+ be+ appointed+ to+ manage+ it+ on+ their+ behalf

• You+may+also+set+up+a+trust+by+will.+The+executor+of+the+will+may+also+act+as+

trustee+ to+ hold+ the+ trust+ assets,+ and+ manage+ it+ for+ the+ benefit+ of+ your+ dependent+with+intellectual+disability

Part B: Existing Tools Guardianship

• Parents+are+the+guardians+of+their+dependent+children+only+unEl+the+laLer+

reach+the+age+of+18

• When+their+dependent+with+intellectual+disability+reaches+18,+parents+may+

need+to+apply+to+the+Guardianship+Board+to+appoint+themselves+as+a+guardian.+ However,+ the+ Guardianship+ Board+ will+ only+ consider+ applicaEons+ if+ such+ a+ need+arises

• If+ a+ guardian+ is+ appointed,+ he/she+ can+ make+ decisions+ on+ where+ the+

dependent+lives+and+what+medical+treatment+the+dependent+receives.+He/she+ also+ has+ power+ to+ handle+ money+ for+ the+ dependent,+ subject+ to+ the+ limit+ of+ $15,000+per+month+(as+at+1+March+2016)

9/3/16& 6&

Part B: Existing Tools Guardianship

• Limits:
• In+the+absence+of+a+proven+need,+not+possible+for+you+to+appoint+

a+guardian+as+soon+as+your+dependent+child+turns+18+

• The+ amount+ of+ money+ that+ a+ guardian+ can+ handle+ for+ your+

dependent+ is+ limited+ to+ $15,000+ per+ month.+ This+ means+ that+ a+ guardianship+ order+ cannot+ be+ used+ to+ manage+ a+ flat+ for+ your+ dependent+adult+to+live,+or+to+pass+your+wealth+to+him+

• Guardians+ are+ not+ under+ an+ obligaEon+ to+ assist+ persons+ with+

intellectual+disability+with+making+their+own+decisions

Part B: Existing Tools Enduring Power of Attorney

Donor+ ALorney+

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Part B: Existing Tools Enduring Power of Attorney

• An+enduring+power+of+aLorney+allows+someone+(the+donor)+who+is+sEll+mentally+

capable+to+appoint+an+aLorney+to+take+care+of+his+financial+maLers+in+the+event+ that+ he+ becomes+ mentally+ incapacitated.+ For+ example,+ you+ may+ appoint+ an+ aLorney+to+manage+your+financial+affairs,+even+to+sell+or+make+use+of+your+flats+or+

• ther+properEes+on+your+behalf+when+you+are+unable+to+do+so.+The+aLorney+may+

use+the+assets+to+provide+for+your+dependent+with+intellectual+disability++

• +An+aLorney+has+no+financial+limit+on+the+amount+of+property+he/she+can+handle+
• n+ behalf+ of+ the+ donor.+ However,+ an+ aLorney+ deals+ with+ the+ donor’s+ financial+

assets+only,+but+will+not+decide+on+the+where+the+donor’s+intellectually+disabled+ dependent+should+live+and+what+medical+treatment+he+receives

• An+aLorney+has+full+power+to+deal+with+the+donor’s+assets+without+consulEng+the+

donor+

Part C: Existing Tools Private Trust

9/3/16& 8&

15&

• SeLlor+

Trust+property+ managed+by+trustee+ to+generate+income

• Karen+Trust+

School+fees+for+four+ nephews+totaling+approx.+ $1.7+million+ Living+expenses+

• f+$120,000+per+

month+to+be+ provided+by+the+ trust+ Remaining+funds+to+be+donated+to+ charity+a7er+the+mother+passes+away+ Property+passed+to+ the+trust+during+ seLlor’s+lifeEme+ + Beneficiary+

16&

• High&fees&charged&by&

professional&trustees& N

• t

& e a s y & t

• &

fi n d & a & t r u s t w

• r

t h y & a n d & w i l l i n g & t r u s t e e & t

• &

s e r v e & g r a t u i t

• u

s l y , & w h

• &

i s & a l s

• &

l i k e l y & t

• &

s u r v i v e & b

• t

h & t h e & s e ] l

• r

& a n d & t h e & b e n e fi c i a r y &

9/3/16& 9&

Part C: Mechanism under the Government’s consideration Special Needs Trust

QUESTIONS 17-24

! !

SeLlor+ A+

Trustee+

SeLlor++ B+ SeLlor++ C+

Beneficiary+ A+ Beneficiary+ B+ Beneficiary+ C+

• 1. Caregiver/seLlor+will+devise+a+care+plan+and+write+a+leLer+of+

intent+during+his+lifeEme.+Caregiver/seLlor+will+then+transfer+a+ small+sum+of+money+(e.g.+$5,000)+to+set+up+the+trust

• 2. Caregiver+ will+ execute+ a+ will+ at+ the+ same+ Eme+ to+ transfer+ a+

substanEal+amount+from+his+estate+into+the+trust+on+his+death

• 3. The+ trust+ will+ be+ acEvated+ when+ the+ caregiver+ passes+ away.+

The+ trustee+ will+ then+ make+ periodic+ distribuEon+ to+ the+ succeeding+caregiver+according+to+the+leLer+of+intent+and+care+ plan+

• 4. The+ trustee’s+ case+ manager+ can+ make+ periodic+ visits+ to+ the+

dependent+ to+ ensure+ that+ the+ caregiver+ is+ looking+ a7er+ the+ dependent

• 5. Upon+the+dependent’s+passing,+the+trustee+will+distribute+the+

surplus+to+any+person(s)+indicated+in+the+leLer+of+intent+

Funds+ transferred+ by+ seLlors+will+be+pooled+ together+ to+ keep+ the+ management+ fee+ to+ a+ minimum

++Case+ Manager+

+Caregiver+ +Caregiver+ +Caregiver+

9/3/16& 10&

Survey Deadline: May 28, 2016

Website /online survey: http://snt.support

Email: snt.support@hku.hk

https://www.facebook.com/hkusnt/

Thank you!

! 1! Ascertaining+the+need+for+Special+Needs+Trusts+in+Hong+Kong+ + –+Survey+administered+jointly+by+Faculty+of+Law,+The+University+of+Hong+Kong+ and+the+Concern+Group+of+Guardianship+System+and+Financial+Affairs+ + Information+for+Reference+ + The!information!set!out!in!this!document!is!for!preliminary!reference!only!and!should! not!be!considered!as!legal!advice.!!You!should!consult!your!own!lawyer!if!you!want!to!

• btain!further!information!or!legal!assistance!concerning!any!specific!legal!matter.!

! ! Will+ ! Any!person!over!the!age!of!18!may!make!a!will.!!A!will!is!a!legal!document!which!sets!

• ut! how! a! person’s! assets! are! to! be! distributed! after! his! or! her! death.! ! The! person!

making!the!will!is!called!the!‘testator’!(or!‘testatrix’!if!female).!! ! If!a!person!makes!a!will,!he/she!can!arrange!how!his/her!assets!will!be!shared!amongst! relatives!other!than!according!to!the!law!of!intestate.!!At!the!same!time,!the!testator!/! testatrix!can!appoint!executor(s)!(number!of!executors!not!to!exceed!FOUR)!to!manage! and!distribute!the!assets.! ! Under! the! laws! of! Hong! Kong,! you! may! make! a! will! to! say! how! your! assets! will! be! distributed.! ! You! need! to! appoint! an! executor,! who! can! be! trusted! to! carry! out! your! wishes!under!the!will.!!You!may!leave!your!assets!to!anyone,!such!as!your!spouse!and! child(ren)!,including!your!children!with!intellectual!disability.!However,!if!your!children! do!not!have!the!capacity!to!manage!the!assets,!a!guardian!will!need!to!be!appointed!to! manage!it!on!their!behalf.!You!may!also!set!up!a!trust!by!will,!in!which!case!your!assets! will!not!be!passed!to!your!children!with!intellectual!disability!directly,!but!will!be!held!

• n!trust!by!the!trustee!(who!may!also!be!your!executor),!who!will!continue!to!manage!

your!property!throughout!the!lifetime!of!your!dependent!with!intellectual!disability.!!! ! If!you!do!not!make!a!will,!your!assets!will!be!distributed!according!to!the!laws!of!Hong! Kong.!!In!general,!this!means!that!your!surviving!spouse!will!inherit!all!your!personal! chattels! (such! as! personal! effects,! household! items,! cars! and! jewellery)! and! the! first! HK$500,000!of!the!residual!estate.!!Whatever!that!still!remains!will!be!divided!into!two! halves,!half!for!your!surviving!spouse!and!the!other!half!will!be!shared!by!your!children! equally.! ! If! you! do! not! have! a! surviving! spouse,! your! assets! will! be! shared! by! your! children!equally.! ! Glossary:+++ ! Executor!–! A!person!appointed!by!the!maker!of!the!will!(testator)!to!manage! the! testator’s! estate! and! execute! the! testator’s! wishes.! ! The! testator!can!at!most!appoint!4!executors.!!The!executor!may!also! be!a!beneficiary!under!the!will,!or!someone!trusted!by!the!testator,! such!as!his!lawyer!or!accountant.!!The!executor!must!be!over!21! years!old!at!the!time!of!administering!the!deceased’s!estate.!!

! 2! Guardianship+Order+ ! The!Guardianship!Board!has!the!power!to!appoint!a!guardian!to!take!care!of!adults!over! the! age! of! 18! who! are! mentally! incapable! of! making! their! own! decisions! about! their! personal!affairs,!financial!matters,!or!medical!or!dental!treatment.!! ! A! Guardianship! Order! confers! on! the! guardian! the! power! to! hold,! receive! or! pay! a! specified! monthly! sum! (currently!maximum! at! HK$15,000)! on! behalf! of! the! mentally! incapacitated!person!for!the!maintenance!or!other!benefit!of!him/her.!!A!Guardianship! Order!given!in!respect!of!a!mentally!incapacitated!person!for!the!first!time!will!have! effect!for!up!to!one!year.!!A!Guardianship!Order!which!is!renewed!or!further!renewed! has!effect!for!a!period!not!exceeding!three!years!from!the!date!of!the!renewed!order.! ! As!parent,!you!are!the!guardian!of!your!dependent!children!only!until!they!reach!the!age!

• f! 18.! ! When! your! dependent! with! intellectual! disability! reaches! 18,! and! when! the!
• ccasion!arises!for!a!decision!about!his!personal,!medical!and!financial!affairs!needs!to!

be!made,!you!or!a!relative!may!apply!to!the!Guardianship!Board!to!appoint!a!guardian!to! make! such! decisions! for! him.! ! However,! the! Guardianship! Board! will! only! consider! applications! if! a! need! to! make! such! decisions! arises,! so! it! is! not! possible! for! you! to! appoint!a!guardian!as!soon!as!he!turns!18,!in!the!absence!of!such!occasions.!In!addition,! guardian!would!only!make!decisions!on!behalf!of!persons!with!intellectual!disability!but! will!not!assist!persons!with!mild!or!moderate!intellectual!disability!with!making!their!

• wn!decisions.!

! The!guardian!can!make!decisions!on!where!the+person!with!intellectual!disability!lives! and!what!medical!treatment!he!receives.!!The!guardian!also!has!power!to!handle!money! for! him/her,+ but! the! law! limits! the! amount! the! guardian! can! handle! for! his/her! maintenance!to!HK$15,000!per!month.!!This!amount!is!the!median!monthly!earnings! released! by! the! Census! and! Statistics! Department,! and! is! adjustable! according! to! the! General!Household!Survey.!!This!means!that!the!guardianship!order!cannot!be!used!to! manage!a!flat!for!your!dependent!adult!to!live,!or!to!pass!your!wealth!to!him.!!! ! Glossary:++ ! Guardian!–! A!person!who!is!given!the!legal!power!to!make!personal,!medical! and! financial! decisions! for! another! person! (e.g.! minors! and! persons!with!intellectual!disability)! ! ! + +

! 3! Enduring+Power+of+Attorney! ! An!enduring!power!of!attorney!(EPA)!allows!its!donor!(the!person!who!wishes!to!give! their!power!of!attorney!to!someone),!while!he/she!is!still!mentally!capable,!to!appoint! an! attorney(s)! to! take! care! of! the! donor’s! financial! matters! in! the! event! that! he/she! subsequently!becomes!mentally!incapacitated.! ! While!a!general!power!of!attorney!will!cease!to!be!effective!automatically!if!one!become! mentally!incapacitated,!an!EPA!will!‘endure’!the!donor’s!mental!incapacity!and!give!the! attorney!the!power!to!continue!the!donor’s!financial!affairs!despite!such!incapacity.! ! Everyone!faces!the!risk!of!losing!mental!capacity!due!to!illness!or!accident.!!An!enduring! power!of!attorney!allows!someone!(the!donor)!who!is!still!mentally!capable!to!appoint! an!attorney!to!take!care!of!his!financial!matters!in!the!event!that!he!becomes!mentally! incapacitated.! ! You! may,! for! example,! appoint! an! attorney! to! manage! your! financial! affairs,!even!to!sell!or!use!your!flats!or!other!properties,!when!you!are!unable!to!do!so;! the! attorney! may! use! the! assets! to! provide! for! your! dependent! with! intellectual! disability.! ! Unlike!the!guardian,!there!is!no!financial!limit!on!the!amount!of!property!the!attorney! can! handle! on! behalf! of! the! donor.! ! However,! an! attorney! deals! with! the! donor’s! financial!assets!only,!but!will!not!decide!on!the!where!the!donor’s!intellectually!disabled! dependent!should!live!and!what!medical!treatment!he!receives.!!Also,!the!attorney!has! full!power!to!deal!with!the!donor’s!assets!without!consulting!the!donor.!! ! Glossary:++ ! Donor+–! A!person!who!appoints!an!attorney!(by!way!of!an!enduring!power!

• f!attorney)!to!take!care!of!his!financial!matters!in!the!event!that!

he/she!becomes!mentally!incapacitated! ! Attorney!–! A! person! who! is! given! the! power! by! the! donor! (through! an! enduring!power!of!attorney)!to!take!care!of!the!donor’s!financial! matters! in! the! event! that! the! donor! becomes! mentally! incapacitated! ! ! + +

! 4! Trust+ ! A! trust! is! a! legally! binding! arrangement! under! which! assets! of! the! settlor! are! transferred!to!a!trustee,!who!will!then!administer!the!trust!assets!and!distribute!them!to! the!designated!beneficiaries!according!to!the!terms!of!the!trust!deed,!as!well!as!with! reference!to!the!intention!of!the!settlor.! ! Professional!trustees!with!expertise!and!experience!in!managing!trusts!are!available!in! the!market,!but!they!invariably!charge!high!fees.!!! ! Special+Needs+Trust+ ! In!reality,!it!is!not!easy!to!find!a!trustworthy!trustee!who!is!willing!to!serve!in!this!role! gratuitously,!and!who!is!likely!to!survive!both!the!settlor!and!the!beneficiary.!!While! there!are!professional!trustees,!not!many!people!are!able!to!afford!the!high!fees!charged! by!professionals!to!set!up!and!manage!an!individual!trust!tailor!made!for!just!one’s!own! dependent!with!intellectual!disability.!!To!overcome!these!difficulties,!some!countries! have!developed!the!Special!Needs!Trust.!!In!the!Chief!Executive's!policy!address!2016,! the! government! has! announced! that! the! Labour! and! Welfare! Bureau! will! establish! a! working!group!to!explore!the!feasibility!of!establishing!a!public!trust,!with!a!view!to! providing!affordable!services!for!people!with!intellectual!disability.!! ! The!Special!Needs!Trust!is!an!affordable!trust!specially!designed!for!people!with!special! needs!(including!people!with!intellectually!disability).!!The!Special!Needs!Trust!pools! together! funds! contributed! by! individual! participating! settlors! for! management! and! investment.! ! This! allows! the! sharing! of! fees! and! hence! lower! fees! for! individual! participants.!!To!reduce!the!fees,!such!trusts!usually!only!cash!but!not!flats!or!shares.! ! To!participate!in!such!trusts,!the!caregivers!with!the!help!of!the!trustee!and!its!case! manager!devises!a!care!plan,!which!sets!out!the!expenditures!needed!for!the!dependent,! write!a!letter!of!intent!that!appoints!the!caregiver!to!succeed!them!and!explains!how!the! trust!fund!should!be!disbursed!for!the!benefit!of!the!dependent!and!after!the!dependent! passes! away,! and! then! transfer! an! amount! of! money! (a! small! sum! such! as! about! HK$5,000)!to!set!up!the!trust.!!They!also!execute!a!will!to!transfer!a!substantial!amount! from!their!estate!into!the!trust!on!their!death,!e.g.!they!may!instruct!the!executor!to!sell! their! flat! and! put! the! proceeds! into! the! trust! fund.! ! Like! in! an! MPF,! the! amounts! designated!for!each!beneficiary!will!be!segregated,!although!the!pooled!funds!will!be! invested,!usually!with!a!view!to!preserving!the!capital.! ! When!the!caregivers!pass!away,!the!trust!will!be!activated.!!The!trustee!will!then!make! periodic!distribution!to!the!succeeding!caregiver!according!to!the!letter!of!intent!and! care!plan.!!The!trustee’s!case!manager!can!make!periodic!(e.g.!twice!a!year)!visits!to!the! dependent! to! check! that! the! caregiver! is! looking! after! the! dependent.! ! Upon! the! dependent’s!passing,!the!trustee!will!distribute!the!surplus!to!any!person(s)!indicated!in! the!letter!of!intent.! ! The!main!advantage!of!the!Special!Needs!Trust!is!that!financial!assets!devoted!for!the! dependent! are! managed! by! a! professional.! ! The! trust! also! allows! dependents! to!

! 5! participate!in!the!decisioncmaking!process!of!the!caregiver!if!this!is!set!out!in!the!letter!

• f!intent.!

! Glossary:!! ! Settlor!–!! ! A!person!who!transfers!his/her!property!to!the!trustee! ! Trustee!–! A! person! who! receives! property! from! the! settlor! and! manages! the! trust! property! for! the! benefit! of! the! beneficiary! ! Beneficiary!–! !! A!person!who!receives!benefits!from!the!trust.!! ! Case+Manager!–!! A!person!who!helps!caregivers!devise!care!plans!and!write! letters!of!intent! ! Care+Plan!–! A! plan!which!sets!out!the![monthly]!expenditures!needed! for!the!dependent! + Letter+of+Intent!–!! A! letter! which! appoints! the! succeeding! caregiver! (if! applicable)! and! explains! how! the! trust! fund! should! be! disbursed! for! the! benefit! of! the! dependent! and! after! the! dependent!passes!away! ! ! !