Due the close economic and social connection between Hong Kong and the Mainland China, many Hong Kong resident have assets in the Mainalnd China, such as real properties, bank account, etc. As a result of the ONE COUNTRY TWO SYSTEM, Hong Kong and the Mainland China maintain two different and independent legal system. Hong Kong have a common law legal system inherited from the Britain while the Mainland China have continental legal system. The problem often faced by the Hong Kong residents is, how to deal with their Mainland assets when they are old so that these assets can be passed to their children smoomthly?
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Forum and Procedure to deal with the Mainland Assets left by Hong Kong residents upon their Death
One must bear in mind that in case a Hong Kong resident pass away it is by the Mainland legal procdure and through the Mainland legal system that the deceased’s estate assets left in the Mainland be dealt with. The general principle is that the estate assets shall be dealt with by forum of court where the assets are located. So if the assets are left in the Mainland China, the deceased’s heir will need to go through the inheritance procedure in the Mainland China, even if the deceased is a Hong Kong resident.
Governing law as to the validity of will made by Hong Kong resident to deal with Mainland Assets
First, as the forum of court to deal with the estate assets in the Mainland China, the conflict of law of the Mainland China shall be applied to decided which governing law shall be appliied.
Under the conflict of law of the Mainland China as stipulated by Article 33 of the Law of the People’s Republic of China on Choice of Law for Foreign-related Civil Relationships, the laws of the habitual residence or of the state of nationality when the testament is made or at the time of death of the testator shall apply to the validity of a testament.
For Hong Kong resident, their habitual residence place and their state of nationality shall usually Hong Kong SAR. Therefore, althought the inheritance procedure is dealt with through the Mainland legal system, it is usually by Hong Kong law as governing law to decide the validity of the will.
Making a Will in the Mainland China or in Hong Kong?
Since usually the governing law on validity of the testament will be Hong Kong law, it is advisable that Hong Kong resident make a will to deal with the Mainland assets in Hong Kong, intead of in the Mainland China. There is because Hong Kong solicitor who will usually assist in the making of a Hong Kong will certainly is in a better position to advise client and assist client in drafting and making a valid will under Hong Kong.
How the Mainland authority Ascertain the validity of the Hong Kong will
Since the governing law on the validity of a will to deal with Mainland assets made by a Hong Kong resident is usually the Hong Kong law, and on the other hand the inheritance process will take place in the Mainland China throught the Mainland legal system, a question comes, how does the Mainland authority ascertain the validity of the will since they do not know the Hong Kong law (as Hong Kong does not operate in the Mainland China)?
There are two ways by which the Mainland authority to ascertain the validity of the will made by a Hong Kong resident. One way is that the executor apppinted by the deceased in the will first apply to the High Court of HKSAR for a probate of the will. By a probate of the will, the will be examined by the Hong Kong court and its validity be proved. So if a probate of the will is issued by the Hong Kong court, the Mainland authority can ackenowledge its validity without the need for any further proof. The other way is by a Hong Kong lawyer to issue a legal opinon to comment and confirm the validity of the will under the Hong Kong law. The Hong Kong legal opinion will be used as a evidence of Hong Kong law to prove the validity of the will under Hong Kong law.
The Procedure How Hong Kong resident to inherit Mainland Estate
After the death of the Hong Kong resident who makes a will to dispose Mainland assets, the heirs should follow the following procedure to inherit the Mainland estate:-
- if any of the beneficiaries named in the will is not among the legal heirs as provided under the inheritance law of the mainland China, the beneficiary so nominated need to make a declaration within 2 months after knowing the death of the deacesed to declare his/her willingness to accept the giving in the will. If such a declaration of acceptance is not made within 2 months, there is risk that the law will treat the person as renouncing the gift. On the other hand, if the beneficiaries named in the will are among the legal heirs (such as being the testator’s children, spouse or parents) there is no need to make this declaration of acceptance.
- The exceutor of the will apply to the Probate Registry of the High Court of Hong Kong SAR for a probate of the will. Alternative to the above application of a probate, the heirs appointed in the will may engage a Hong Kong lawyer to draft and issue a legal opinion to state and confirm the validity of the will.
- Notarization of all the documents, including death certificate, probate or legal opinion issued by Hong Kong lawyer and other related documents in Hong Kong by a China Appointed Hong Kong Notary Public.
- Legalization of all the notarized documents by the Office of China Law Service Certre which is an office of the Mainland Judicial Department in Hong Kong.
- After the above process have been done in Hong Kong, it now comes to the Mainland part. The beneficiaries (heirs) may either apply to a Mainland Notary Office where the estate assets are located for a Notarial Certificate of Inheritance Righ, or alternatively make a lawsuit to the court of the Mainland China where the estate assets are located to obtain a court judgment confirming the inheritance right of the heirs.
- The last step is that the heir can collect the estate assets from the instution (such as banks, security brokers, etc) whether the estate assets are kept by showing the Notary Certificate of Inheritance Right. If the estate is real property, the heirs will need go to the real property registration office to register their names as the new title holder to replace the deceased’s name.
For matters regarding Hong Kong resident making will to dispose Mainland assets, please do not hesitate to contact us for inquiry.