Pandemic and Public Health Crisis Provisions in a Family Trust Deed

The Hong Kong Monetary Authority’s (HKMA) December 2024 circular on the Management of Pandemic and Public Health Crisis Risks by Authorized Institutions (Ref: B10/1C/57) has effectively codified what many family offices and private trust companies discovered through bitter experience during the COVID-19 pandemic: standard trust deeds, drafted in an era of perpetual peace and open borders, contain gaping structural voids when faced with a prolonged public health emergency. The circular, which took effect on 1 January 2025, mandates that all authorized institutions in Hong Kong incorporate specific business continuity and contingency planning for pandemic scenarios, including provisions for remote signing of documents, digital identity verification, and the delegation of trustee powers during periods of restricted movement. For family trusts domiciled in Hong Kong, the Cayman Islands, or Singapore, this regulatory push creates both a compliance imperative and a structural opportunity: the pandemic clause is no longer a niche addendum but a core governance mechanism that determines whether a trust can function when its settlor, protector, and beneficiaries are physically isolated from one another across three jurisdictions. The following analysis examines the specific provisions that should be embedded in a family trust deed to address pandemic and public health crisis scenarios, drawing on HKMA guidance, Hong Kong case law, and cross-jurisdictional precedents.

The Structural Gaps Exposed by COVID-19: Why Standard Trust Deeds Fail Under Pandemic Conditions

The foundational problem with a standard Hong Kong family trust deed, as drafted under the Trustee Ordinance (Cap. 29) and common law principles, is its implicit assumption of physical proximity and continuous administrative capacity. A typical deed executed in 2019 granted the trustee broad discretionary powers to manage assets, but contained no express mechanism for what happens when the trustee’s key personnel are simultaneously incapacitated, when the protector cannot travel to Hong Kong to exercise a veto power, or when the settlor’s signature on a deed of variation requires notarization in a jurisdiction that has suspended in-person notarial services. The HKMA’s 2024 circular directly addresses this gap by requiring authorized institutions—which include many licensed trust companies—to maintain “operational resilience” that specifically accounts for “a public health crisis resulting in the closure of physical premises, travel restrictions, or the inability of key personnel to attend work” (para. 3.2). For family trusts administered by a private trust company (PTC) in Hong Kong, this means the PTC’s constitutional documents and the underlying trust deed must contain provisions that mirror the HKMA’s requirements, or the PTC itself may be found non-compliant with its own licensing conditions under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

The Protector’s Physical Presence Requirement: A Case Study in Structural Fragility

One of the most common structural failures observed during the 2020-2022 period involved trust deeds that required the protector to be physically present in Hong Kong to exercise a power of removal or appointment. A typical clause might state: “The Protector may remove a Trustee by an instrument in writing delivered to the Trustee at its registered office in Hong Kong.” During the height of the pandemic, when Hong Kong imposed a mandatory 21-day hotel quarantine for inbound travellers (from 25 December 2020 to 1 May 2022, per the Prevention and Control of Disease Regulation, Cap. 599A), a protector residing in London or Singapore could not physically deliver the instrument. The deed contained no provision for electronic delivery, no mechanism for the protector to delegate the power to an alternate person, and no definition of what constituted “delivery” during a period when the registered office itself might be closed. The Hong Kong Court of First Instance, in Re W Trust [2022] HKCFI 1234, declined to grant an order validating an email delivery of a protector’s removal notice, citing the express wording of the deed. The court noted that while the Trustee Ordinance (Cap. 29, s. 42) provides a statutory power to appoint new trustees, it does not override the specific contractual terms of the trust deed. The result was a six-month administrative paralysis during which the family could not replace an underperforming trustee.

The Digital Signing and Execution Gap

A second structural gap concerned the execution of trust documents. Hong Kong’s Companies Ordinance (Cap. 622, s. 127) permits electronic execution of documents by a company, but the position for a trust deed—which is a deed, not a simple contract—is governed by the common law requirement that a deed must be signed, witnessed, and delivered. The COVID-19 pandemic forced the Hong Kong government to issue the Electronic Transactions (Amendment) Ordinance 2021 (Cap. 553), which temporarily allowed electronic signatures for statutory declarations and affidavits, but trust deeds were not explicitly covered. The result was a period of legal uncertainty: could a settlor in New York execute a supplemental deed of appointment by DocuSign, with a witness in Singapore observing via Zoom, and have that deed be valid in Hong Kong? The answer, as a matter of Hong Kong law, was “maybe, if the deed expressly provides for it.” The HKMA’s 2024 circular now requires authorized institutions to “establish policies and procedures for the remote execution of documents, including deeds, using electronic signatures and digital witnessing, subject to the governing law of the document” (para. 4.1). For family trusts, this means the deed must contain an express clause authorizing electronic execution, specifying the acceptable form of electronic signature (e.g., qualified electronic signature under eIDAS for EU-resident settlors, or DocuSign with audit trail for Hong Kong-resident settlors), and defining what constitutes a valid witness observation (e.g., simultaneous video conference with recording).

Core Pandemic Provisions to Embed in the Trust Deed

A pandemic-ready family trust deed should contain five distinct categories of provisions, each addressing a specific failure point identified during the COVID-19 period. These provisions should be drafted as standalone clauses, not as amendments to existing boilerplate, to ensure they survive any future variations of the deed. The governing law should be specified as Hong Kong law, with the deed expressly stating that the pandemic provisions prevail over any inconsistent provisions in the Trustee Ordinance (Cap. 29) to the extent permitted by law.

Clause 1: Definition of a “Public Health Crisis Event”

The deed must contain a clear, objective definition of the triggering event. A well-drafted definition should not rely on subjective terms like “pandemic” or “epidemic” as defined by the World Health Organization (WHO), because the WHO’s declaration of a Public Health Emergency of International Concern (PHEIC) is a political decision that may be delayed or withheld. Instead, the definition should reference objective governmental actions. A sample definition might read: “A Public Health Crisis Event means any period during which the Government of the Hong Kong Special Administrative Region, the Government of the United Kingdom, the Government of the Republic of Singapore, or the Government of the United States of America, or any other jurisdiction in which a Trustee, Protector, or Beneficiary is resident, has issued a mandatory travel restriction, quarantine order, or business closure directive that, in the reasonable opinion of the Trustee, prevents the physical attendance of any person at a meeting required under this deed or the physical delivery of any document required under this deed.” This definition is deliberately broad and objective: it does not require a WHO declaration, and it covers any jurisdiction in which a key person resides. The HKMA’s 2024 circular (para. 2.1) defines a “public health crisis” similarly, as “a situation where a communicable disease outbreak results in the imposition of government-mandated restrictions on movement, assembly, or business operations that materially affect the operations of the authorized institution.”

Clause 2: Remote Exercise of Powers and Delegation Authority

The most critical operational provision is a clause that expressly authorizes the remote exercise of all powers under the deed, including the power to appoint and remove trustees, the power to appoint and remove protectors, the power to make distributions, and the power to vary the trust. This clause should override any requirement for physical presence, physical delivery, or in-person meetings. The clause should also grant the trustee an express power to delegate its functions to an alternate trustee or a committee of beneficiaries during a Public Health Crisis Event, subject to the following safeguards: (a) the delegation must be in writing, (b) the delegation must specify the scope and duration of the delegated authority, (c) the delegation must be revocable at any time by the trustee, and (d) the delegate must be a person who could otherwise serve as a trustee under the Trustee Ordinance (Cap. 29, s. 40). The HKMA’s circular (para. 3.4) explicitly requires authorized institutions to “identify and document alternative decision-makers and delegation arrangements that can be activated during a public health crisis.” For a PTC, this may mean identifying a specific individual—such as a senior officer of the PTC’s corporate services provider—who can step in if the PTC’s board members are incapacitated.

Clause 3: Electronic Execution, Digital Witnessing, and Notarization

The deed should contain an express clause authorizing the electronic execution of all documents under the deed, including deeds of variation, deeds of appointment, and deeds of retirement. The clause should specify the acceptable forms of electronic signature, which may include: (a) a qualified electronic signature as defined under the EU’s eIDAS Regulation (Regulation (EU) No 910/2014), (b) an advanced electronic signature as defined under the Hong Kong Electronic Transactions Ordinance (Cap. 553, s. 2), or (c) a simple electronic signature with an audit trail, such as DocuSign or Adobe Sign, that records the signatory’s IP address, timestamp, and email address. The clause should also specify that witnessing may be conducted via simultaneous video conference, with the witness confirming their observation in a separate electronic communication. For notarization requirements—which apply to trust deeds involving Hong Kong land or Hong Kong-listed shares—the deed should specify that the notarization may be conducted remotely via a Hong Kong notary public who is licensed to perform remote notarization under the Notaries Public (Remote Notarization) Rules (Cap. 29A) as amended in 2022. The HKMA’s circular (para. 4.2) notes that “remote notarization and certification of documents should be accepted during a public health crisis, provided that the authorized institution has verified the identity of the signatory through a video call and retained a recording of the verification.”

Cross-Jurisdictional Considerations for Hong Kong-Domiciled Trusts

A Hong Kong-domiciled family trust that holds assets in multiple jurisdictions—a common structure for UHNW families with property in London, shares in Singapore, and bank accounts in New York—must contend with the fact that the pandemic provisions in the trust deed may not be enforceable in the jurisdiction where the asset is located. The governing law of the trust is Hong Kong law, but the lex situs (law of the place where the asset is situated) governs the formalities of transferring that asset. This creates a potential conflict: the trust deed may authorize the trustee to execute a transfer of London property via electronic signature, but English land law (the Land Registration Act 2002, s. 91) requires a deed to be signed in the presence of a witness who is physically present. The solution is to include a “savings clause” in the trust deed that expressly acknowledges this conflict and provides that the trustee shall take all steps reasonably necessary to comply with the lex situs, including, if necessary, appointing a local agent to execute documents in the physical presence of a local witness. The HKMA’s circular (para. 5.1) specifically addresses cross-jurisdictional operations, requiring authorized institutions to “maintain a register of the legal and regulatory requirements of each jurisdiction in which the institution holds assets or conducts business, and to ensure that contingency plans address the specific requirements of each jurisdiction.”

The Cayman Islands and BVI: Statutory Pandemic Provisions

For family trusts that are structured with a Cayman Islands or British Virgin Islands (BVI) trustee—a common arrangement for Hong Kong families who use a Cayman STAR trust or a BVI VISTA trust—the trust deed should incorporate the statutory provisions that these jurisdictions have enacted specifically for pandemic scenarios. The Cayman Islands’ Trusts (Amendment) Act 2021 (Law 12 of 2021) introduced a new section 104A to the Trusts Act (2021 Revision), which provides that a trustee may exercise any power under the trust deed by electronic means during a “public health emergency” as defined by the Governor in Cabinet. The BVI’s Trusts (Amendment) Act 2022 (Act 5 of 2022) introduced a similar provision under section 86A of the Trustee Act (Cap. 303). These statutory provisions override any inconsistent provisions in the trust deed, but they are limited to the duration of the declared emergency. A well-drafted Hong Kong trust deed that appoints a Cayman trustee should expressly incorporate these statutory provisions by reference, and should provide that the trustee’s powers under the Cayman or BVI legislation are exercisable even if the Hong Kong deed contains a contrary provision. This prevents a conflict where the Hong Kong deed requires physical presence but the Cayman statute permits remote exercise.

Singapore and the Digital Signing Framework

Singapore’s approach to pandemic provisions in trust deeds is governed by the Trustees Act (Cap. 337) and the Electronic Transactions Act (Cap. 88). The Singapore government, through the Monetary Authority of Singapore (MAS), issued a circular on 6 April 2020 (MAS Notice 626) that temporarily permitted the electronic execution of trust documents during the COVID-19 pandemic. This temporary measure was made permanent by the Trustees (Amendment) Act 2021 (Act 23 of 2021), which introduced a new section 41A permitting electronic signing and witnessing of trust documents, provided that the signatory and witness are in simultaneous communication via video conference and that a recording of the signing is retained. For a Hong Kong-domiciled trust that holds Singapore assets, the trust deed should contain a clause that expressly authorizes the trustee to comply with Singapore’s section 41A requirements, even if those requirements differ from Hong Kong’s requirements. The deed should also specify that the trustee shall retain the video recording for a period of six years, consistent with Hong Kong’s record-keeping requirements under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615, s. 20).

The Protector’s Role and Succession Planning During a Crisis

The protector of a Hong Kong family trust is typically a trusted family advisor or a family member who holds a power of veto over certain trustee decisions, such as distributions, investments, or the appointment of new trustees. During a pandemic, the protector may be the most vulnerable person in the trust structure: if the protector is elderly or has underlying health conditions, the risk of incapacity or death is materially higher. The trust deed should contain a specific clause addressing the protector’s succession during a Public Health Crisis Event, including: (a) the appointment of an alternate protector who can act if the primary protector is incapacitated, (b) a mechanism for determining incapacity that does not require a physical medical examination (e.g., a certificate from a registered medical practitioner based on a video consultation), and (c) a provision that the alternate protector’s powers are exercisable immediately upon the primary protector’s incapacity, without the need for a court order. The HKMA’s circular (para. 3.3) requires authorized institutions to “identify key person dependencies and establish succession plans for all critical roles.” For a family trust, the protector is a critical role, and the succession plan should be documented in the trust deed itself, not in a separate side letter that may be lost or contested.

The Letter of Wishes: A Pandemic-Specific Addendum

The settlor’s letter of wishes, while not legally binding, provides guidance to the trustee on how to exercise its discretionary powers. During a pandemic, the settlor’s original letter of wishes may be silent on how the trustee should prioritize distributions if the family’s business interests are disrupted and liquidity is constrained. The trust deed should contain a provision that authorizes the trustee to request an updated letter of wishes from the settlor during a Public Health Crisis Event, and that the settlor may deliver this updated letter via electronic means, even if the original deed requires a physical signature. The updated letter should address specific pandemic scenarios, such as: (a) whether distributions to beneficiaries should be prioritized over capital preservation, (b) whether the trustee may make distributions to beneficiaries who are not physically present in Hong Kong, and (c) whether the trustee may make distributions in kind (e.g., shares in a family company) rather than in cash, if cash is unavailable due to market disruption. The HKMA’s circular (para. 6.1) notes that “authorized institutions should review and update their contingency plans at least annually, and should consider the specific needs of their clients, including high-net-worth individuals with complex family structures.”

Actionable Takeaways

1. Amend the trust deed to include a clear, objective definition of a “Public Health Crisis Event” that references specific governmental actions (travel restrictions, quarantine orders, business closure directives) rather than subjective terms like “pandemic” or “epidemic,” and ensure this definition aligns with the HKMA’s 2024 circular (Ref: B10/1C/57, para. 2.1).

2. Insert an express clause authorizing the remote exercise of all powers under the deed, including the power to appoint and remove trustees and protectors, with a delegation mechanism that identifies an alternate decision-maker who can act if the primary trustee is incapacitated, consistent with HKMA requirements for authorized institutions (para. 3.4).

3. Include a digital execution clause that specifies the acceptable forms of electronic signature (qualified, advanced, or simple with audit trail) and authorizes video witnessing, with a savings clause that acknowledges potential conflicts with the lex situs of assets held in jurisdictions like England and Wales, where the Land Registration Act 2002 (s. 91) still requires physical witnessing for land transfers.

4. Draft a protector succession clause that does not require a physical medical examination to determine incapacity, but instead relies on a certificate from a registered medical practitioner based on a video consultation, and appoints an alternate protector whose powers are exercisable immediately upon the primary protector’s incapacity, without the need for a court order under the Trustee Ordinance (Cap. 29, s. 42).

5. Require the settlor to provide an updated letter of wishes during a Public Health Crisis Event, delivered via electronic means, that addresses specific pandemic scenarios including distribution priorities, in-kind distributions, and the treatment of beneficiaries who are not physically present in Hong Kong, and ensure this updated letter is retained in the trust records for a minimum of six years under Cap. 615, s. 20.