Although it's somewhat in the rearview mirror, the Covid-19 pandemic and the difficult international travel situation caused many of us to reassess our priorities, vis-a-vis the people who depend on us. In uncertain times, we want our families and our assets to be safe and secure should the unexpected occur.
What would happen to our children and / or assets in China should unforeseen circumstances arise?
How can we make sure our children are under immediate protection by the right person(s) in case of an accident?
How can we make sure that assets and will documents established are legally recognized by both foreign and Chinese authorities?
Camille Xu,PRC Estate Administrator and partner of Yingke Law Firm, has extensive experience in Family Law, and she shares her insights on Chinese inheritance laws that are closely related to life of expat and mixed families.
What happens to my assets and money if I die and haven't made any arrangements. Who will get my money?
If you don't have a will (遗嘱), your estate in China (e.g. Chinese real estate, money in your Chinese bank account, money in Alipay or WeChat) is automatically allocated according to the Chinese Civil Code. That is to say, your assets will be equally distributed to all your living legal successors:
- first successors in line: spouse, children and parents;
- second successors in line: brothers and sisters, grandparents (only applicable if none of the first successors in line is alive);
- or it all goes to the Chinese public resource if no successor is found.
So, if you have 1,000 rmb on your bank account the day you die, it will be divided by four and equally distributed to your wife, your kid, your mum and dad.
To claim your estate, your successors will need to accomplish a probate process according to Chinese laws, either through a notary public or before the Chinese Court. The process is quite burdensome and time-consuming.
If you have important assets such as real estate or a large amount of bank savings, accomplishing the probate process would be the only way to legally get the estate. However, if you only have a limited amount of cash in your account, your successor may be able to withdraw the cash on your behalf, if they have your bank card and the password, and with a cap of 50,000rmb per day.
How can an expat establish a will that is legally valid and recognized in China?
Written wills are recognized under Chinese inheritance law. While evaluating the truthfulness and validity of a written will, the Chinese court would focus on the following questions:
- Is the will truly made by the person in question?
- Is the will a reflection of the true intention of the person?
- The person must have full legal capacity and under a clear mind while making the will.
- All content of the will must be in line with the Chinese laws to ensure its legal validity. This is a very tricky part where you need to double-check with your lawyer.
In real-life inheritance disputes, someone's written will could easily be challenged if any of the questions above cannot be proven. Proving the "true intention" or the "clear mind status" of someone already passed away may be difficult and could be arguable.
It is therefore advised to make a will with the help of a Chinese lawyer and have someone to witness the signature of the will. In addition to a written will, we also recommend that you make a video recording to talk about the reasons for making the will. Such a video would be powerful evidence proving your true intention and good mind status.
The most complete Chinese wills are made in supplement to your foreign will — not just a direct translation. This is particularly important for dealing with transfers of assets and bank accounts. In some other cases, such as dealing with the caretaker of children, a translated will that is authenticated by the Chinese consulate or embassy in your home country may suffice.
When it comes to securing your assets and investments, however, you will want to secure a complete Chinese will with qualified legal council.
I already have a foreign will. Is it recognized under Chinese law?
Foreign wills are not directly recognized in China. The language barrier is the first problem. If it's not written and stamped in Chinese, it's not a legal document. Then there are questions of applicable law and enforcement issues.
Therefore, if you have important savings in your Chinese bank account or other investments in China, your heirs would not be able to take out the money by just showing the bank a foreign will in a foreign language. The bank would always require legal documents under Chinese law, including a valid will and relevant Chinese probate documents. In some cases with other types of investments, such as property, the situation may also require a court order.
As mentioned above, in some circumstances, a translated will that is authenticated by the Chinese consulate or embassy may be acceptable, but these circumstances might not be applicable to assets or investments.
We would therefore always recommend our clients to having a formal Chinese will if:
- (1) they have important assets located in China; or
- (2) their family will be living in China for the long term.
Designating Legal Guardianship for Your Children Under Chinese Law
I want to make sure that my children are protected by the right person(s) should I lose capacity. What documents should I prepare?
Due to Chinese tradition and the single-child policy in the past decades, grandparents would have been the only options as guardians of the child (临时监护协议) if both parents lose capacity or pass away. Only in 2017, the new Chinese Civil Law established a new option that offered parents a way to define guardian(s) for their children in an official will if they have other choices than the grandparents.
For expats living in China, the guardianship issue is more complicated, as it may involve a permanent guardian in one's home country and a temporary guardian in China. The permanent guardians are normally close family members, such as the brother or sister of one of the parents. However, if something tragic happens, the permanent guardian may not be able to come to China immediately to fulfil their obligation as guardian. In this case, you need someone in China to put your children under immediate protection. For most expats, that's close friends living in China.
So, what documents do you need to prepare for defining guardian(s) for your children?
If you already have a foreign will defining a permanent guardian, you would only need a Temporary Guardian Agreement (临时监护协议) in China. This is a commitment signed by both the temporary guardian agreeing to take care of the children, and the parents confirming their agreement.
If you have not defined the permanent guardian in your home country, you could establish a Chinese will to designate one. The same Temporary Guardian Agreement would be required for the designation of someone in China to temporarily take care of the children in case both parents pass away or lose capacity.
In addition to the mentioned documents, we also suggest creating and executing a Power of Attorney (授权书), used for regular cases where you are simply not able to come back to China and would like to entrust a trustworthy friend to take care of your children. For instance, in recent years, many foreigners have been blocked from entering China due to Covid-19 restrictions. If your children are still in China, the Power of Attorney would be used to designate a "temporary guardian".
Next Steps: How to Get Wills and Guardianship Sorted
In all these situations — guardianship and correctly securing my assets — what is the process to establish a Chinese will?
For the establishment of the will, the following documents are required:
If the will involves guardianship:
- Passports of the testator, the children, the permanent guardians and temporary guardians
- Marriage certificate of the testators
- Birth certificates of the children
If the will involves assets:
- Property titles or details of assets
If you have a foreign will for either or both situations:
- Copy of foreign wills
A qualified lawyer in this area would gather all the documents, and then discuss with you how you would like to design your will and provide you with a draft. Once the content is confirmed, the official will would be made in front of a notary or a lawyer. There would be a Q&A session, to confirm that you are legally capable, having a clear mind and not forced or deceived by anybody.
The whole process would be recorded by video and the DVD shall be annexed to your written will.
I'm only living in China for a few years. Under what circumstances must I have a Chinese will?
We understand that many expats are living in China for an indefinite term. Is it worthwhile to spend time and money on a will if you might only be living in China for a couple of years?
If you have important assets in China, especially any real estate or other highly valuable assets, a formal will is essential. Such a document would save a lot of trouble for your heirs in the future. If you believe that you would live in China for a long term, a will is also highly recommended for unexpected situations.
If you do not have important assets in China and only focus on the guardianship issue for peace of mind, we could help you find alternatives such as entering into Temporary Guardian Agreements and Power of Attorney.
What's an Estate Administrator?
The concept of estate administrator is newly introduced in China after the promulgation of the PRC Civil Code in 2020. An estate administrator could help to safeguard your will, ensure its execution, protect your estate and help your successors to accomplish the probate process.
The estate administrator could also take special missions such as funeral arrangements, coordinating with religious matters or donation of estate to charity.
As an attorney, Camille Xu is among the first batch of registered Chinese Estate Administrator. You may consult her if you would like to have your will established or nominate an estate administrator.
If you are seriously considering establishing wills and guardianship documents in China, don't wait. You never know when something bad could happen. Now is the time to do it.
This article was created together with:
Camille Xu & Associates
Camille Xu & Associates is a team of English speaking lawyers, operating as a specialist branch of one of China’s most reputable law firms, Yingke Law Firm. Camille Xu is a foreign trained multi-disciplinary lawyer who's well established in Shanghai’s international community for providing legal services to both individuals and SMEs in...