USING APPROPRIATE PROVISIONS IN THE MENTAL HEALTH ORDINANCE TO MANAGE PERSONAL ASSETS AND WEALTH


Most people would consider making a will or setting up a trust as the means to manage their personal assets and wealth. In fact, there are other solutions available to aid the management of personal assets. As an example, people who suffer from Alzheimer's Disease can use relevant provisions under the Mental Health Ordinance to manage their assets and personal matters.


The Mental Health Ordinance only applies to those who are “mentally incapacitated”.  This definition comprises two categories:



  1. Mental disorder, which includes:

    1. Mental patients

    2. People suffering from significant intellectual and social ability impairment

    3. Psychopathic disorders or

    4. Any type of psychiatric disorders or mental disability which does not amount to mental handicap (for example: Alzheimer's or Cognitive Disability)

  2. Mental handicap – below average intelligence or Adaptive Behavior Deficiency 

The Mental Health Ordinance provides two major types of protection: (a) guardianship order; and (b) appointment of committee.  The two cases below illustrate how these can assist the management of personal assets or wealth.


People with relatively fewer assets


Example 1 :   Mr. Chan, 40 years old, is diagnosed with schizophrenia and has been having problems finding a permanent job, hence he has only had temporary jobs. He’s also got an elderly mother and a younger sister. Mr. Chan is not willing to receive medical treatment and take medication regularly. How can Miss Chan (Mr. Chan’s sister) manage his condition and assets?


Except in emergency situations, medical practitioners may refuse to perform treatment or routine medical procedure on the person concerned. The Guardianship Board of the Social Welfare Department can issue a guardianship order and appoint a guardian pursuant to the terms of the Mental Health Ordinance. The guardian can accept medical (and dental) treatment on behalf of their mentally incapacitated ward. At the same time, the guardian is authorised to use small amounts of money from the assets of the person concerned. At the moment, the monthly limit is HK$12,000.


In general, relatives, friends and social workers can apply for such an order. The application is relatively simple: people can obtain the form from the Secretariat at the Guardianship Board or online.  A solicitor’s input is not required for the application.


The Guardianship Board will consider whether Mr. Chan’s mental condition limits him to make reasonable decisions on matters relating to his own personal circumstances.  When considering whether to issue the guardianship order, the Board can also consider if there is any more suitable means to assist Mr. Chan; for example, elderly services, or mental health services provided by the government and NGOs. Until the Board is clear that it is in Mr. Chan’s interest and/or welfare or for the protection of others that a guardianship order will not be issued.


Therefore, the guardianship order may not be suitable for all mentally incapacitated people. Since the financial limit is not very high.  In general, this is only appropriate for those who require includes medical services and moderate amount of daily expenses.


Large asset holders or long term management


Example 2: Ms. Wong, who has three children, is around 80 years old and suffers from Alzheimer's Disease. Her husband passed away recently, and leaving her with substantial assets. She also has various equity stocks, real estate and significant savings.


Since Ms. Wong is mentally incapacitated and she owns substantial assets, her children can seek help from the court to appoint a “Committee”.


Typically, a relative may be appointed as the Committee.  Apart from the relatives, the Director of Social Welfare, official solicitor (government department) or guardian can also apply on behalf of the concerned party. The applicant must prove that the concerned party is mentally incapacitated and consequently cannot deal with and manage his/her assets and personal affairs. Two medical reports of the concerned person by registered medical practitioners must be submitted together with the application, and one of which has to be an approved medical practitioner.


Should the court authorise Ms. Wong’s children to be the Committee, they will be granted substantial powers, including: 



  1. To look after Ms. Wong’s domestic life;

  2. To look after dependent members of Ms. Wong’s family ;

  3. To pay Ms. Wong’s daily expenses, tax and medical expenditure;

  4. To make investment decisions for Ms. Wong;

  5. To look after Ms. Wong’s wealth;

  6. To perform all directions and orders made by the court;

  7. To receive all income and social welfare on behalf of Ms. Wong;

  8. To manage Ms. Wong’s properties;

  9. To administer Ms. Wong’s tax affairs.

Relevant expenses can be paid out of Ms. Wong’s estate.


Right of inheritance


This is the same as that for any person.  Although Ms. Wong is mentally incapacitated, it does not affect her rights to inherit Mr. Wong’s assets. The management of these additional assets warrants careful consideration.


Preparing a will


Since the Guardianship Order will cease to have any effect after the mentally incapacitated person passes away or recovers.  If a mentally incapacitated person wants to execute a will, the court has the right to authorise the Committee to execute a “statutory will” on behalf of the mentally incapacitated person where it is appropriate.  The two main  considerations for the court to make such a direction are:



  1. The concerned person must be an adult;

  2. The court accepts that the concerned person cannot execute a valid will for himself.

In terms of the provisions of the will, the court will consider the objective elements (not subjective elements) in determining the terms of the statutory will.  The Court will make assumptions that the patient, acting reasonably would have made with the benefit of sound legal advice if notionally restored to full mental capacity, memory and foresight.


Should you have any questions on Guardianship Order and Committee, please contact our firm.


 


Albert Lam
July, 2012