July 2023
Pei-Ching Ji and Julian Lai
Family business founders, to prevent disputes over inheritance or control of the business after their passing, which may potentially affect the stability of the family business and its sustainable development, typically perfect inheritance planning in advance, such as establishing a closed company or setting up trust funds and formulate wills, in order to concentrate family equity and to institute clear arrangements for future management and asset distribution. Among these, the validity of will is of crucial importance to family business founders, as it ensures the founder’s assets to be distributed according to his will and ensures the successful transfer of the business control.
Regarding the validity of will and its derived issues, a recent controversial case is the validity of the will of the founder of Evergreen Group, Chang Yung-Fa. In this case, founder Chang, in the form of a sealed will[1], designated Chang Guo-Wei, the son to his second wife, to inherit his entire estate. Chang Guo-Chung, the third son to the first wife, was dissatisfied and claims: 1. Chang Yung-Fa lacked testamentary capacity at the time of making his will; 2. Chang Yung-Fa did not personally sign the sealed will; 3. Chang Yung-Fa did not designate at least two witnesses; 4. Chang Yung-Fa did not make an oral statement to his public notary; 5. Chang Yung-Fa did not declare the name and domicile of his draftsman. A lawsuit was thus filed to the Taipei District Court to confirm the invalidity of the will by Chang Guo-Chung. After the second-instance judgement, the 109 Chongjia-Shang-Zi 47 Civil Decision of the Taiwan High Court upheld the first-instance ruling and confirmed that Chang Yung-Fa’s sealed will was valid. The following briefly introduces the main issues in the court’s handling of the validity of will in the case of Chang Yung-Fa.
1. Testamentary Capacity
The court held, though Chang Yung-Fa announced in February 2012 that he will be donating his entire estate to charity, in addition to frequent hospitalization before and after his sealed will was made on December 17th of 2014, the draftsman and three witnesses testified that Chang was well conscious and able to state his intent at the time of notarization when the sealed will was notarized. Additionally, Chang was able to gift $100 million NTD in savings to his spouse as of September 2014 as well as transfer equity worth a total of $146,754,694 NTD to Chang Guo-Wei between October and November 2014. The above proves Chang Yung-Fa to have the ability for sufficient verbal communication at the time of notarization and making the will, as well as the capacity to independently handle affairs from the time of September through November of 2014. Thus, the court held thatChang Yung-Fa had testamentary capacity at the time of making the sealed will.
2. Personal signature
The court entrusted the Ministry of Justice Investigation Bureau to conduct a forensic handwriting analysis, to which results indicate the signature on the sealed will matches those from the board meeting minutes of Chang Yung-Fa Foundation throughout 2011 to 2015 and various consent forms from the National Taiwan University Hospital, with consistent graphology, structural layout and writing habits. Thus, the sealed will is ruled to be signed by Chang Yung-Fa himself.
3. Appointing two or more witnesses
The court determined that Article 1192, Paragraph 1 of the Civil Code does not require the testator to appoint the witnesses before the public notary. Where the witness is indeed appointed by the testator, and the testator makes the identity of the witness clear to the public notary by gesturing or conversing between the testator and the witness, it will meet the requirement for appointing the witnesses. Chang Yung-Fa had appointed witnesses to his sealed will in advance to notarization, along with identification of witnesses to the notary public by confirming identification certificates on the day of notarization, which met the requirements of “designate at least two witnesses”.
4. Declare one’s will
The court points that the term “declare before a public notary that it is his will” for “sealed will” solely requires the testator to indicate the will was his own, with no requirements to address the contents of the will. The manner of statement is not limited to orally stating “it is my will” Declaration in the form of writing statement or a statement on the will cover are also accepted. Chang Yung-Fa did not verbally inform the public notary at the time of notarization, but he had the draftsman provide the sealed will signed by himself and witnesses before notarization. Chang Yung-Fa personally confirmed to the public notary, saying “one original copy, one reserved copy”, and answered “yes” to the public notary’s question if the presented document represented the testator’s intentions. Assertive, proactive and direct initiative on behalf of Chang Yung-Fa in identifying himself as the owner of the will meets the requirement of “declare before a public notary that it is his will”.
5. Declare the name and domicile of the draftsman
The court held that according to Article 1192, Paragraph 1 of the Civil Code, if the sealed will was not made by the testator himself, the name and domicile of the draftsman should be stated by the testator, The purpose of this requirement is to inquiry in the event of future dispute. In the situation where the purpose of indicating the draftsman has been achieved, despite the incomplete statement of domicile, the validity of the will shall not be affected. Though Chang Yung-Fa had incomplete statement of draftman’s domicile, the draftsman’s identification certificate was submitted to the notary public Yang Zhao-Guo, which stated the address on the notarial certificate, suffices the requirement to identify the draftsman for inquiry in the event of future dispute, hence meeting the requirement for sealed wills of declaring the name and domicile of the draftsman.
According to the ruling above, regarding disputes on validity of will, the court comprehensively examines the entirety of the will making process and the objective situation at the time of will making, to determine if individual cases meet the criteria of a valid will. Therefore, it is of utmost importance for the testator, how to effectively make a will that will implement one’s wish to the fullest.
[1] Sealed will requires the testimony of witness and public notary for authenticity, containing the advantage of content secrecy. Therefore, whenever the testator may wish the will content to remain confidential prior to his death, yet wishes the will to have stern evidentiary force, he/she may utilize the method of sealing the will.
The contents of all materials (Content) available on the website belong to and remain with Lee, Tsai & Partners. All rights are reserved by Lee, Tsai & Partners, and the Content may not be reproduced, downloaded, disseminated, published, or transferred in any form or by any means, except with the prior permission of Lee, Tsai & Partners.
The Content is for informational purposes only and is not offered as legal or professional advice on any particular issue or case. The Content may not reflect the most current legal and regulatory developments. Lee, Tsai & Partners and the editors do not guarantee the accuracy of the Content and expressly disclaim any and all liability to any person in respect of the consequences of anything done or permitted to be done or omitted to be done wholly or partly in reliance upon the whole or any part of the Content. The contributing authors’ opinions do not represent the position of Lee, Tsai & Partners. If the reader has any suggestions or questions, please do not hesitate to contact Lee, Tsai & Partners.