Emily Chueh, Jolene Chen, Tiffany Hsiao
In the global village, modern people may more or less acquire assets overseas or reside in foreign countries for business or study purposes. If it is necessary to plan after life matters, how a will can be made so that it is legally effective and enforceable will be an issue that merits our attention.
The starting point of this article is the scenario involving the Taiwanese who ordinarily reside in Taiwan but have property both in Taiwan and mainland China (e.g., real estate such as the use right to state-owned lands and ownership of housing units) to discuss matters that should be noted for the preparation of a will and the future execution of the will by the inheritors.
I. Place where a will is established and the governing law:
1. Firstly, since the property of the parties involve property in mainland China and has foreign elements, the Law Governing the Choice of Law in Civil Matters Involving Foreign Elements (hereinafter, the “Law”) in Taiwan applies. Pursuant to Article 60 of the Law, a will is formed and effective as long as it is prepared in the manners prescribed under the Civil Code of Taiwan, such as a holograph under Article 1190 of the Civil Code or a notarized will under Article 1191 of the Civil Code. Therefore, a testator may conduct his/her planning in Taiwan with respect to his/her property in Taiwan and mainland China pursuant to the Civil Code of Taiwan.
2. Pursuant to Articles 32 and 33 of the Law of the People’s Republic of China on Choice of Law for Foreign-related Civil Relationships, the manners in which a will may be formed and its effects may be governed by the law of the place where the heir ordinarily resides upon formation of the will or at the time of death or the law of the country of nationality. Since the place of ordinary residence of the Taiwanese is assumed to be Taiwan in this article, the validity of such will should be governed by the Taiwan law. Therefore, if the will is formed and effective under the Taiwan law, mainland China will also recognize the validity of the will. However, a will is required to be notarized and verified pursuant to practices and laws and regulations in mainland China so that the inheritor will be able to apply for real estate amendment registration by presenting the will in the future (as more specifically discussed later). It is therefore recommended that the testator should make a separate will for the property in mainland China when making the will.
II. A will shall not undermine any compulsory portion:
Please note, in particular, that although the heir may dispose of his/her property through a will, still the spouse and inheritor are both protected by law to inherit a certain percentage of the estate unless they are subject to any circumstance where they have lost their inheritance right or abandoned the inheritance. This is known as the requirement for the compulsory portions for all inheritors under the Article 1223 of the Civil Code of Taiwan. The testator is free to dispose of the estate only to the extent that he/she is not in breach of the compulsory portions.
III. Enforcement of property in mainland China:
1. The “inheritance notarization” system has been abolished:
The Ministry of Justice of mainland China announced on July 5, 2016 the repeal of the Joint Circular of the Ministry of Justice and the Ministry of Construction on Strengthening Notarization in the Administration of Real Estate Registration. In particular, Article 2 of the Joint Circular concerning the “inheritance notarization” is also no longer applicable.
2. After the “inheritance notarization” system is abolished, a person who obtains real estate by way of inheritance or bequeathal shall be permitted to apply to the local registration agency of the place where the real estate is located for registration pursuant to law by presenting the notarized and verified will, materials supporting the death of the heir, materials indicating the kinship with the heir and other inheritance supporting documents (see Article 14 of the Detailed Rules for the Implementation of the Provisional Regulations on Real Estate Registration of mainland China). In practice, however, the real estate registration agencies in different parts of mainland China have their respective requirements for real estate amendment registration. Therefore, it is necessary to separately confirm this with authorities in the places where the real estate is located.
3. Assuming that the real estate is in Shanghai City, for example, the authors learned after checking with the Shanghai Real Estate Trading Center that for a valid will made in Taiwan by the testator pursuant to law, if it involves real estate in Shanghai, as long as the will goes through relevant notarization and the document delivery and document verification procedures of the Strait Exchange Foundation (hereinafter, the “SEF”) and the Association for Relations Across the Taiwan Straits (hereinafter, the “ARATS”), the inheritors will be able to register the amendment (transfer) of real estate by presenting the notarized and verified will and the legally required materials.
1. In conclusion, if the will arrangement by a Taiwanese ordinarily residing in Taiwan involves real estate in mainland China, since the practice and laws and regulations in mainland China require the will to be notarized and verified in order to conduct the amendment (transfer) registration of real estate, the testator should prepare the will in a will notarization manner required under the Taiwan Law and complete the relevant verification procedures through the SEF and ARATS in order to facilitate the effective execution of the will. If the testator’s regular residence has been moved to mainland China, the testator may consider making a notarized will directly in mainland China for the property in mainland China
2. Please note, however, past practical opinions in Taiwan suggest that whether the arrangements of a will undermine the compulsory portions of the inheritors will be calculated by combining the testator’s aggregate property in Taiwan, mainland China or elsewhere in the world. Therefore, it is recommended that when the arrangements of a will are being made, it is necessary to conduct proper planning by consulting professional legal experts to avoid lawsuits filed by the ultimate inheritors concerning the compulsory portions. Otherwise, not only the original property planning of the testator cannot succeed but also rifts and litigation between the children may even be resulted.
The authors are lawyers at Lee, Tsai & Partners and Shanghai Lee, Tsai & Partners. However, the contents of this article merely reflect personal opinions and do not represent the position of the law firms.