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Recently, there has been great momentum in the fight against discrimination and equal rights for members of the LGBTQ community. We have seen this movement develop through a series of judicial challenges which have recognized certain rights for same-sex married couples in Hong Kong. Same-sex married couples are now legally entitled to:
- Apply for a spousal visa to enter and live in Hong Kong;
- Elect for joint tax assessment or personal assessment jointly with his or her spouse and claim tax allowances or deductions in respect of his or her spouse;
- Apply for and live together in public rental housing as an “ordinary family”; and
- Claim under intestacy and inheritance law as a surviving spouse.
The latest in the series of judicial challenges is Ng Hon Lam Edgar v Secretary for Justice [2020] HKCFI 2412, which opened new doors to estate planning for same-sex married couples. Same-sex married couples can now claim as a “surviving spouse” under the Intestates Estate Ordinance and Inheritance (Provision for Family and Dependents) Ordinance. To learn more about this decision, read our legal update on this case A year in review – #LoveWins: The journey towards equality for Hong Kong’s LGBTQ community in 2020.
In the past few years, there has been an increasing number of same-sex couples travelling abroad to tie-the-knot overseas. Unfortunately, Hong Kong still does not recognize same-sex marriages, including same-sex marriages legally registered overseas. This was made clear in the recent case of Sham Tsz Kit v Secretary for Justice [2020] HKCFI 2411, where the Judge said that it would be “too ambitious” to place legally recognized foreign same-sex marriages and foreign opposite-sex marriages on the same footing. As a result, while there has been progress in the recognition of rights of same-sex married couples, same-sex married couples are denied the very core fundamental rights associated with a marriage. In this article, we will discuss some of the challenges same-sex married couples face and what they can do to protect themselves.
Progress but still many obstacles
In the case of QT v Director of Immigration [2017] 5 HKLRD 166, the Court of Appeal cited divorce, adoption and inheritance as obvious examples of areas of life which accorded marriage a “unique status”. These core rights and obligations are still denied and/or not fully accessible to same-sex married couples:-
Divorce
Even if same-sex married couples are legally married elsewhere, they will not be able to get a divorce in Hong Kong. This means if things don’t work out, same-sex married couples must commence divorce proceedings overseas where same-sex marriages are recognized. In order to commence divorce proceedings overseas, the divorcing couples need to establish jurisdiction, which may be problematic for same-sex married couples who call Hong Kong their home.
Adoption
Same-sex married couples still cannot jointly adopt children in Hong Kong and the only way for them to do so is for one of them to adopt the child as a single parent and this process, at this moment in Hong Kong, is extremely difficult if not impossible. After the adoption, only one of the parties to a same-sex marriage is recognized as the adoptive or legal parent.
Estate planning
The decision of Ng Hon Lam Edgar was intentionally narrow in scope. The Judge made clear that he was only referring to same-sex married couples who were legally and validly married in a foreign jurisdiction and has not addressed the position of civil union and civil partnerships. Furthermore, the decision did not address broader issues of wealth and estate planning such as the position of same-sex married couples with children.
For heterosexual married couples, if one parent dies, the other parent will automatically get parental rights. This is not the case for same-sex married couples. This is because as discussed, same-sex couples can only adopt children as single parents in Hong Kong and therefore only one party is recognized as the child’s legal or adoptive parent. Therefore, if the deceased was not the adoptive or legal parent, the adopted child may have no entitlement under intestacy even though he or she is the only child of the surviving spouse.
Conversely, if the deceased was the adoptive or legal parent, the adopted child would end up losing his/her only legal guardian as the surviving partner/spouse has no parental rights. The surviving spouse will need to go through the court proceedings in order to legally adopt the child as his or her own or be appointed as the child’s legal guardian. Again, this process is not guaranteed.
What can same-sex married couples do to protect themselves?
Gay and lesbian couples can protect themselves from these uncertainties through planning. Proper wealth and estate planning is essential for anyone who wishes to protect his or her assets and loved ones. We consider the following documents as “must-haves” for your life plan:-
Cohabitation Agreement
Same-sex married couples should consider drawing up a cohabitation agreement setting out the financial arrangements between them if they do separate. This is similar to a pre-nuptial agreement where both parties may protect themselves in the event their relationship ends. In Hong Kong, same-sex married couples are not entitled to any financial remedies as there is no legal procedure to govern the breakdown of their relationship. For example, a party to a same-sex marriage will have no right in the court to seek maintenance from the other party or to get any entitlement by way of capital sum or a transfer of property for his or herself. Parties must fall back to the general remedies arising out of contract or property law. The cohabitation agreements are contracts between the parties and should be binding on them unless they are subsequently challenged in Court. They would serve as useful evidence of a common intention if there is a dispute with regard to ownership of assets on separation.
A Will
Your will is the foundation of your estate plan. A properly drafted Will avoids the problems associated with intestacy, where you have no control over who benefits, who manages your estate and the welfare of your minor children.
A will can go much further than providing for how your assets will be distributed and who is going to oversee the execution of the Will. A will can cover who should be the guardian of your minor children in the event of your death. This is particularly important for same-sex married couples as one spouse may not be treated as the legal parent/guardian of the child. You can also use your will to direct how taxes should be paid, forgive debts, and more.
Furthermore, it is essential that you review your Will periodically and keep it updated. The continuous changes and uncertainties in the law in respect of LGBTQ rights may have significant implications on estate planning. For example, as a general rule, when you marry, any existing Will is automatically revoked and becomes no longer valid. However, it is unclear whether a civil partnership or same-sex marriage revokes a Hong Kong Will.
A Lifetime Trust as an alternative to a Will
In the alternative, you can consider setting up a lifetime trust. A lifetime trust is created while the creator of the trust (the settlor) is still alive. It is most common for people to set up a discretionary trust. A trust is established when the settlor transfers his or her assets and/or property to a trustee, who agrees to administer the trust assets for the benefit of the beneficiaries. The trust is a tailor made instrument to address the needs and objectives of the settlor. There is much flexibility in the drafting and if necessary, control may be retained by the settlor and his/her family. It is made to benefit the interests of the beneficiaries, which could be the settlor, his/her spouse, his/her children and/or other family members during the subsistence of the trust. The main benefit of a lifetime trust over a Will is that a lifetime trust does take effect upon its creation while the Will only takes effect upon one’s death. Also, there is no need to go through probate which could be tedious and lengthy. This means the operation of the trust would continue despite the death of the settlor and there could be faster distribution of estates to the beneficiaries while the details of the trust remain confidential.
Deed of Guardianship
When one parent passes away, the other parent gets an automatic right of guardianship. However, this is not the case for couples in a same-sex marriage or civil partnership with children. In the unfortunate circumstance where the legal parent passes away, the child will be left without a legal guardian.
Guardians can be appointed in either a Will or a Deed of Guardianship. However, ideally, guardians should be appointed in a Deed.
Enduring Power of Attorney
When one loses his/her mental capacity, the default position is that his/her assets would be frozen and court procedures are needed for others to manage that person’s financial affairs. A standard power of attorney would not be helpful in these circumstances as it is only valid when the donor is mentally capable. As a result, your partner/spouse will have no access to your finances in the event you become mentally incapacitated. Therefore, your partner/spouse may not be able to pay your day-to-day expenses, debts and liabilities such as household expenses, utilities, hospital bills, etc. This is important for married, un-married, heterosexual and same-sex couples alike.
An enduring power of attorney (EPA) enables an individual (the donor) to appoint a trusted person (the attorney) to exercise specific powers over specified properties and financial affairs in the unfortunate event that the donor becomes mentally incapacitated at a later date. An EPA allows the attorney to operate the donor’s bank accounts and utilize the donor’s financial resources to look after the donor. With an EPA, you can ensure that your finances will continue to be managed in the event of your mental incapacity.
Conclusion
While we foresee that the law relating to the LGBTQ community will continue to evolve in Hong Kong, it will take time before the necessary measures are in place for the protection of vulnerable individuals. In the meantime, our advice would be to not simply wait and let destiny unfold: you can manage your relationship and assets now with good legal planning.
