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You might need multiple wills for offshore assets

Elizabeth Wang  |  08 Jun 2018Text size  Decrease  Increase  |  
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If you're an Australian citizen who has lived abroad and have accumulated offshore assets, you may need to have separate wills for your local and international affairs.

A recent court case in Victoria, Australia addressed several issues that arose when the deceased had assets in both Australia and China.

The deceased was an Australian citizen who resided in China. Although, the majority of his personal estate was held in China, the deceased held some personal assets in Australia. These assets included two bank accounts, which he left to his mother in a hand-written note. The note – which was penned in Chinese – did not name an executor and was not witnessed. In other words: it did not meet the formal requirements to be considered a will in Victoria. 

The deceased’s mother sought a grant of “letters of administration with the will annexed”. This is similar to a grant of probate, but differs in that there is no executor. She argued that:

  • the handwritten note was effectively the deceased’s will for his Australian assets
  • she was the sole beneficiary; and
  • the money was for her personal use.

One of the main issues was whether the validity of the note should be determined under Chinese or Australian law. This was a crucial consideration, as it would establish the potential beneficiaries – his mother, who lived in Victoria, or his estranged wife and a son living in China, who the deceased’s mother was unaware of. The specific party who would benefit from the deceased’s estate depended entirely upon which law applied.

At the hearing the trial judge held – among other things – that Chinese law applied to the document.

The Appeal Court said the choice of whether Australian or Chinese law applied to this note about the Australian assets was to be decided based on a whole raft of factors, including:

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  • where the deceased was domiciled
  • where the assets were located
  • where the beneficiary lived
  • what Chinese law had to say about the issue; and
  • the degree of complexity involved in interpreting and applying Chinese law.

The Appeal Court held that it was entitled under the Wills Act to hold that, although the note was not executed in the correct manner, it could be admitted to probate if the Court was satisfied that the deceased intended the document to be their will – even if only over part of their assets.

The court found for the mother, who as a result, inherited her son’s Australian assets.

Aussie will, foreign will

The case highlights the importance of ensuring that if a person has assets in other jurisdictions as well as Australia, they should have an Australian will to deal with their Australian assets and a foreign will in that other jurisdiction. This can help ensure that foreign assets are dealt with in the appropriate jurisdiction, and that other other international laws don't accidentally revoke or conflict with their Australian will.

Without such wills, there can be highly complex issues to resolve, such as which law applies to the assets, and how that law would operate. Those issues will delay the administration of the estate for a long time and add unnecessary costs.

 

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Elizabeth Wang is a solicitor with Townsends Business & Corporate Lawyers. This is a financial news article to be used for non-commercial purposes and is not intended to provide financial advice of any kind. Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of Morningstar as a result of using different assumptions and criteria.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.

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