Creating a Will in Chinaon Wednesday, 21 November 2012. Posted in Financial Advice, Investing in China, Investments
This article was originally posted on Caterer Goodman’s online blog China Expat Money.
I commonly meet expats with complicated relationships that don’t seem to be prepared for the worst. When I say prepared for the worst, I refer to the need for wills, life insurance, estate planning and other ways to protect the people or organizations you care for after you pass.
Every so often, someone will ask me about one of these situations and while I could take a shot in the dark I’d prefer to refer them to a trusted lawyer. A while ago, I met with Jackson Teng, a lawyer from Co-Effort law firm in China who provide wealth management services which include estate planning, individual wills, family law and other services. They have entered the market for providing expats this service while most other firms have not. Before writing this article, I met with Jackson and asked him a series of questions I thought would be practical for people to know.
In this article, I will use stories and questions from people that I have met as well as add questions that I think are relevant.
I am 55 years old American, just married a Chines
e wife but have 2 boys from a previous marriage in the US. I own two houses back in the states and one in Shanghai. My questions are:
Q. What is the process of setting up a will in China? Is it the same as the US?
A. “There are several forms of wills in China. Generally speaking, there are testator-written wills, drafting wills, recording wills, oral wills and notarial wills. In order to make the will more effective and credible, we strongly suggest you choose notarial wills, which means that you will first prepare this will with the help of a qualified Chinese lawyer and go to a local notary office to notarize your will. That is because if something unfortunate happens to the testator, (the person who has written the will) only a notarized will can make the title transfer smooth in both real estate trading and banks.” (Jackson Teng)
Q. If I pass away here, will all of my assets still go to them?
A. “It is a complicated issue, if you have assets in both China and the US plus family in both countries, you want to make sure the assets are passed along according to your real expectation. It does not mean your American will is invalid, just impractical to enforce within the PRC. Furthermore, only a notarized will from a Chinese notary office can make the title transfer go smoothly from testator to beneficiary. I suggest involving both PRC lawyers and US lawyers to help make sure your will can be valid and executable.”(Jackson Teng)
Q. What happens if my wife and I get into an accident, where do the assets go and what portion does each person receive?
A. It depends on the situation but all asset distribution will be determined by the will. If there is no will in place then certain conditions will apply. The order for inheritance of Chinese Law is like this. First in order are spouse, children and parents. Second in order are brothers/sisters and maternal/paternal grandparents.
“The question of what portion of your assets each person receives depends on who will decease first in that supposed accident. On this condition, there are three cases as follows;
1. If your wife passes before you, her parents and you would each receive 1/3 of her property in China. Also, your children would receive all your real estate assets in China plus the remaining 1/3 of the wife’s property.
2. If you pass away before your wife, your children would receive 2/3 of your China real estate and your wife’s parents would receive the other 1/3.
3. If the hospital can’t tell who died first, then your children would receive all of the real estate in China. “(Jackson Teng)
Q. But I just married my wife and I don’t want all the assets going to her family in case of my death. What can I do?
A. Create a will to specify where the assets go with the help of a lawyer and don’t forget to seek a local notary office to apply for a notarized will in China.
Q. What if my sons are permanent Chinese residents are living with me in China, what Chinese Assets could they receive after my death?
A. “Whether your sons are Americans or permanent Chinese residents, they have legal rights to receive your real estate in China under PRC law. However, they should have a kinship certificate with you, death certificate at that time and other documents to prove the relationship.” (Jackson Teng)
While this may seem a bit overwhelming, it is really just the tip of the iceberg. There are a few other common situations people face that we will dive into with my next article on the subject. Please feel free to comment and ask questions below or via email. Also, see our links page to find the Co-Effort website.