4. Distribution of Assets

4. Distribution of Assets

Obtaining receipts

It is prudent for the personal representative to require the beneficiary to issue a signed receipt upon distribution so as to avoid unnecessary disputes down the road.

Failure of gifts

There are a number of situations in which a gift under a will is said to have failed, i.e. the beneficiary cannot get what the will intends to give him/her. E.g. ademption, abatement and lapse.

Ademption happens when a specific gift under a will no longer exists at the time of the deceased’s demise. In such case, the intended beneficiary will not get that specific gift. One exception is that the specific gift changes in form only. E.g. The deceased said in the will “I give my shares in ABC company to my Son” and the company changes its name to XYZ before his demise. The Son will get the shares of XYZ.

Abatement happens when the remaining assets of the estate is not enough to pay off its funeral expenses and debts. In such case, the specific gift under the will have to be used to pay off those expenses and the debts too and the beneficiary will not be able to get that gift.

Lapse happens when the intended beneficiary under the will dies before the deceased. But if the beneficiary is a descendent of the deceased, then the gift will go to the issue of that deceased beneficiary under s.23 of the Wills Ordinance (Cap. 30).     

Income and interest

Generally speaking, if in his/her will the deceased gives a specific gift, e.g. a specific apartment or a specific stock, to a beneficiary, the beneficiary is entitled also to the income of the gift since the demise of the deceased, e.g. the rent generated by that apartment and dividend given by the company.

Generally speaking, if such deceased gives a general gift of e.g. HK$1,000,000 to a beneficiary, the beneficiary is entitled to interest from the end of the 12 months after the deceased’s demise (i.e. the so-called executor’s year).