The estates of people who die on or after February 11 will not be taxed, Secretary for Financial Services & the Treasury Frederick Ma says.

The move comes after lawmakers today passed the Revenue (Abolition of Estate Duty) Bill 2005.

It is proposed that the estate duty chargeable in respect of deaths occurring on or after July 15 but before February 11 will be reduced with retrospective effect to a nominal duty of $100 for estates of assessed value exceeding $7.5 million.

Any estate duty overpaid will be refunded, Mr Ma said. The nominal duty is needed to ensure all legislative provisions and legal documents making reference to actual charging or payment of estate duty will not be put in doubt during the interim period.

New elements

There are five elements in the new scheme to safeguard beneficiaries: 

* to deter intermeddling with the estate without lawful authority or reasonable excuse, provisions for criminal offence have been included;

* in order not to reduce the existing safeguards for beneficiaries, the new ordinance requires the personal representative to prepare an inventory of the estate;

* to ensure that the family or dependents of the deceased in straits can meet funeral expenses or their own living expenses, the new ordinance amends the Probate & Administration Ordinance. New provisions are added to empower the Secretary for Home Affairs to authorise on application release of money from the deceased's bank account to meet funeral expenses or the maintenance of any person who was dependent on the deceased before his death and has an interest in the estate;

* to provide a set of measures to facilitate inspection of the safe deposit box of the deceased by the personal representative and beneficiaries before issue of the grant; and,

* to include a mechanism to exempt persons dealing with small estates from the intermeddling provisions. This represents a balance between safeguarding the interest of the beneficiaries and obviating an unnecessary burden for the personal representative. 

New powers

To ensure family or dependents will not be affected by the changes in procedure, the law enacted today empowers the Secretary for Home Affairs to perform certain functions.

They include:

* issuing a certificate for release of money to meet funeral expenses and the maintenance of dependents of the deceased who have an interest in the estate;

* issuing a certificate for inspection to inspect the safe deposit box of the deceased. Public officials will witness the inspection process and will assist in the preparation of the inventory of the box where necessary;

* issuing authorisation for removal to enable the holder to remove a specified document or article from the safe deposit box; and,

* issuing a confirmation notice to confirm the receipt of an affidavit from the personal representative declaring that the estate in question is wholly made up of money not exceeding $50,000 in value.

Transitional arrangement

To ensure a smooth transition, the Secretary for Home Affairs will delegate the new powers to the Commissioner of Inland Revenue on commencement of the new ordinance under section 43 of the Interpretation & General Clauses Ordinance. The transitional arrangement is expected to last a year.

The Secretary for Home Affairs will set up a new Estate Duty Unit to take over the relevant functions from the Inland Revenue Department. Part of the staff now servicing the department's Estate Duty Office will be transferred to the new unit.