CHINA Law and Practice Contributed by: Chengchen Gan (Mark), Commerce & Finance Law Offices
Additionally, widowed daughters-in-law are given priority in inheriting from their in-laws, and widowed sons-in-law are given priority in inheriting from their parents-in-law, provided that they have fulfilled signifi - cant care-giving duties. 2.2 International Planning It is increasingly common for Chinese individuals to purchase properties or settle overseas, acquiring for - eign citizenship in the process. Consequently, this has brought significant attention from high net worth fami - lies to cross-border inheritance involving Chinese ter - ritories or citizens. Challenges of cross-border inherit - ance involving China can be categorised as follows. Part of the provisions regarding the conflict of laws in China concerning succession are as follows. • For legal successions, the laws of the regular resi - dence of the ancestors when deceased shall apply. However, for the legal inheritance of immovable assets, the laws in which the immovable assets are located shall apply. • For the format of wills, the laws of the testator’s regular residence when drawing up the wills or the place of decease, the nationality laws or the laws of the place in which the wills are conducted shall apply and such wills shall be valid. Due to the involvement of multiple jurisdictions and laws from different countries, and the fact that not all situations clearly indicate which law should be applied, choosing a more convenient or advantageous approach for one’s own interests during inheritance without further specifying the applicable law in the will or relevant agreements may create complications in cross-border inheritance. Legal Differences The laws concerning international inheritance involv - ing China are codified in the Chapter 4 “Inheritance” Section of the Law of the People’s Republic of China on the Application of Laws to Foreign-related Civil Relations Decree of President. It stipulates as follows. • Statutory inheritance is governed by the law of the habitual residence of the deceased at the time of
death. For real estate, statutory inheritance follows the law of the location of the real estate. • Testamentary succession is valid if it conforms to the law of the habitual residence of the testator at the time of making the will or at the time of death, the law of the testator’s nationality, or the law of the place where the will was made. The effectiveness of the will is determined by the law of the habitual residence of the testator at the time of making the will or the law of the testator’s nationality. • Matters related to estate administration are gov - erned by the law of the location of the estate. • In cases where there are no heirs to inherit the estate, the law of the location of the estate at the time of the deceased’s death applies to determine the ownership. Due to the involvement of multiple jurisdictions and laws from different countries, not all situations clearly indicate which laws apply. Without further clarification in the will or related agreements regarding the appli - cable laws, choosing a method of inheritance that is more convenient or advantageous to oneself at the time of inheritance may pose difficulties for cross- border inheritance. Restrictions on Asset Outflows The State Administration of Foreign Exchange explic - itly stipulates that Chinese residents must strictly adhere to foreign exchange controls. Whether pur - chasing or remitting foreign exchange, individuals must comply with the annual foreign exchange quota of USD50,000 or its equivalent in other currencies. If exceeding this quota, relevant documentation must be provided to the authorities. According to the “Interim Measures for the Adminis - tration of Foreign Exchange Sales and Payment for Transfer of Personal Property Abroad”, China allows domestic assets inherited by eligible individuals to be remitted abroad, but under certain conditions. • Firstly, the main applicants permitted to remit assets abroad through inheritance are foreign citizens and residents of Hong Kong SAR, Macau SAR, and Taiwan Region. This does not include mainland Chinese residents who have immigrated but have not acquired foreign citizenship, such as
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