+24 Estate administration

Guardians of fortune Accountants take centre stage as Nina Wang’s estate administrators

[ 24 ] A Plus + January 2008 By Heda Bayron

erek Lai is in a hurry. He has The Nina Wang case is only one just wrapped up a meeting in a list of high profile international in Kowloon. Upon returning cases showing the role of estate Dto Deloitte’s offices in Admiralty, he administrators in disputes over a still has to dash off for a conference deceased person’s assets. When the call. It has been a long day. In fact, legendary New York philanthropist it’s his first day on a new job: Lai has Brooke Astor died in August 2007, been appointed as administrator of the a court appointed temporary late tycoon Nina Wang’s estimated administrators over her US$132 million HK$100 billion estate. estate until a court rules on which of Being an administrator is no easy Astor’s two wills is valid. feat, says Lai, the chief of Deloitte’s When a dispute arises over China reorganization team and a entitlement to an estate and the veteran of estate administration cases, appointment of administrators is being but he declines to comment on details considered, each party may propose to of this high profile case. the court its own possible appointee The legal battle over the estate as administrator, which often includes of Asia’s former richest woman, who accountants, lawyers or sometimes died in April last year, promises to be specialist bankers. The court will then epic. It pits feng shui enthusiast and make its decision in the best interests businessman Tony Chan, who claims of the estate, after considering the to be the sole heir under a 2006 will, nominees’ experience and expertise, against the Chinachem Charitable likely costs, and the views of the Foundation run by Wang’s siblings, parties involved. the organization said to be the sole beneficiary in a 2002 will. If the Tracing the assets previous eight-year-long litigation over Estate administrators play an essential the estate of Nina Wang’s husband, role in bringing clarity and order to

Teddy Wang, is any precedent, this the probate process: Their powers are PHOTOS: YASUHIDE FUMOTO/GETTY IMAGES could get ugly, lengthy and costly. set out in the court order under which Administrators are independent they are appointed. Generally, their professionals who are appointed by powers would include investigating and the court and work under its direct preserving the assets of the estate. supervision and direction. Their job In a way, an estate administrator’s is to professionally administer and work can be similar to a detective’s. manage the assets of an estate under They may have to pore over records of dispute and remain neutral when bank accounts, properties, securities various parties are vying to become the and collectibles to come up with an ultimate beneficiaries, Lai says. inventory of the estate. The more assets

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In some situations you may have to deal the individual has accumulated in his with people’s emotions and occasionally or her lifetime, the more complicated the job becomes. In the case of Nina matters can get very personal. Some Wang’s estate, the court said hundreds of companies are involved and the beneficiaries or potential beneficiaries assets are “huge in value and varied in type.” can become extremely upset if they feel Because of its complexity, an that they might be deprived of assets to administrator’s job often goes to big accounting firms with the manpower which they feel they should be entitled. and expertise in areas ranging from forensics to taxation. Tracing the existing assets of a unlike in the case of a company where A successful administrator must deceased, Lai says, can be a lot harder transaction records should be kept, have good listening, persuasion and than it might at first appear. “For individuals may not possess or retain negotiation skills. “We have to let example, people may think, but have adequate records. relevant parties know our actions are no evidence, that a deceased relative not personal,” says Lai. “Sometimes lent money to different parties before Family minefields people may not do things in a rational he passed away. In such circumstances, Perhaps the biggest challenge for way because whatever one side does, the we can go through the deceased’s bank an administrator is to ensure he other would automatically oppose. As accounts and records to see if there are acts independently when placed in administrators, we can find ourselves in cheques issued to any person or other the middle between feuding family the middle. Sometimes one party may evidence suggesting possible loans. members or beneficiaries. be in control of some assets, another This could be quite a big exercise. We “In some situations you may party may be in control of other assets, would then ask the bank for copies have to deal with people’s emotions and a third party may say that we of particular cheques that we have and occasionally matters can get should challenge the first or second identified. This exercise costs money very personal. Some beneficiaries or party for having handled the assets in and time. Then, we have to contact the potential beneficiaries can become a particular way. It can be difficult to relevant people who were recipients of extremely upset if they feel that they ensure that all sides are satisfied.” funds and ask more questions: ‘Did you might be deprived of assets to which In probate cases, administrators receive this amount of money? Can you they feel they should be entitled,” are answerable to the court and can be tell me why you received this?’ And the he says. required to submit reports regularly. process goes on.” Some of Asia’s most high profile Although the extent of what they can Lai says it is often a great challenge court battles have involved family do with regard to the estate is primarily for administrators to verify what they members fighting over inheritance. based on relevant court orders, are told not least because the estate Nina Wang herself had a protracted administrators are still vulnerable to owner has already passed away. and acrimonious battle with her liabilities. It is possible for a party to sue Estate administration frequently father-in-law, Wang Din-shin, over her an administrator if it is believed that involves more challenges than what an husband’s assets in a sensational trial the administrator has failed to properly accountant usually comes across, for that fascinated many in Hong Kong. perform his or her duties. In a U.S. case example, in handling the assets of a Nina Wang was eventually awarded the in 2004, the beneficiary of a US$2.2 company in liquidation. This is because HK$40 billion estate in 2005. million estate sued an Ohio lawyer, who

[ 26 ] A Plus + January 2008 KPMG, says it should be done as early as possible, especially when substantial fortunes are involved. Accounting professionals offer a variety of services in this area. One measure is to place assets in a trust for specific beneficiaries. “The benefit of having a trust is – it’s an asset protection device because the trust is separate from the individual. So if the individual runs into disputes or third party claims, then his assets will be protected. The trust can preserve assets in such a way that it can carry on from one generation to another,” Wong explains. High net worth individuals are advised to consider measures to minimize taxes on their assets, such as contributing to or establishing a charitable foundation. As more and more Chinese become millionaires, the need for estate planning and estate administration is expected was the court-appointed administrator, impact on costs. “The length of estate to increase. Wong says many mainland after the value of the estate allegedly fell administration cases varies, depending Chinese clients now prefer to do estate more than 90 percent. on the circumstances. Disagreements planning in Hong Kong because of the Because things can be contentious, between beneficiaries could become territory’s sound legal system. estate administrators have to base their personal and result in cases continuing “Because of globalization and decisions on solid evidence. That could for longer than might otherwise be the complication of business transactions, mean, for example, that not every case,” Lai explains. businessmen, particularly the asset of a deceased could be traced, mainlanders, will consider ways to notwithstanding the best efforts of the The importance of preserve and protect the assets once administrator, simply because there is estate planning they have accumulated enough wealth,” no evidence to prove its existence. Although disputes over estates could says Wong. Estate administration could bring a windfall to administrators, For Derek Lai, estate administration reap huge fees depending on the veterans in this field advise of the may be difficult but there are rewards. size and complexity of the case. importance of avoiding such disputes “It was very exciting when I was a PricewaterhouseCoopers and Deloitte from happening in the first place. junior and as I moved up the ladder. have reportedly earned HK$170 Death may be an uncomfortable It’s getting more and more interesting,” million in administrative fees in the topic but the cases of the Wangs he says. “You come across many types Teddy Wang case, although both and Brooke Astor underscore the of people from all walks of life and firms refused to comment. Some importance of estate planning. see the best and the worst in them. cases take years to settle, and this can Rebecca Wong, a tax partner at It’s reality.” A+

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