This article will highlight some considerations Canadian advisors may want to ponder when advising clients with assets in China. Cross-border estate and Will planning involving China is complex thus, I must admit the information is high level and based on my personal experience.

Will Planning

Clients residing in Canada with property in China may erroneously believe their Will executed in China will be held valid in Canada. Is this the case? Also, is their Canadian Will to be recognized and held valid in China?

Advisors should appreciate that there are some discrepancies as to what constitutes a valid Will in Ontario and China.  Under the Civil Code of the People’s Republic of China, a Will can be:

• A notarial Will (made by the testator through a notary agency),
• A holographic Will that is signed by the testator and includes the date,
• A written Will that is signed by the testator with two or more witnesses,
• A Will made in the form of sound-recording that is witnessed by two or more witnesses, and
• In an emergency situation, a testator may make a nuncupative Will (oral expression of the testator’s wishes as to the disposition of his or her property) that is witnessed by two or more witnesses.

It is questionable whether the Ontario Court would recognize the validity of a sound-recording Will or a nuncupative Will (if made while the client resided in China).  Such a Will would likely be held invalid if made while residing in Ontario.

Approaching Estate Planning

When discussing estate and Will planning, advisors should be mindful of the cultural nuances that may exist.  In China, estate planning is intrinsically tied to family values; family is the most important part of an individual’s life and there is respect toward elders, parents and children.  Although China does not have forced heirship rules, a testator must provide for their spouse and their heirs who are dependent on the testator (under China’s law, an unborn fetus is considered a dependent of the testator).  It is common for elders to also be provided for under the Will. The Court in China can nullify a Will (in part or in whole) if the testator fails to properly provide to their spouse and dependents (and possibly elders) on the basis that it is in violation of public policies and good customs.

The relevancy of this is key to estate and Will planning discussions.

Further, in keeping with these traditional values, some people may believe that discussing death is deemed to bring bad luck. Therefore, the topic of estate planning must be broached cautiously. Also, as with any estate planning discussion, there may be privacy concerns about disclosing personal assets and financial affairs (some cultures are more private on these points) so advisors must be mindful of such when approaching the subject of tax and estate planning with their clients who have ties to China.

I would suggest presenting the topic of tax and estate planning as a way to preserve wealth for their family and loved ones. It is those small discrepancies in approaching Will and estate planning that can really make a difference to our clients.