Conflict of Inheritance Laws in Hong Kong and PRC

October 2022

The inheritance of assets in Hong Kong by a Mainland resident is always of interest to the Mainland counterparts. It is common for a Mainland resident to have various investments in Hong Kong ranging from landed properties to movable assets like cash at banks and securities. While a Mainland domiciled individual dies leaving assets in Hong Kong and PRC, the inheritance inevitably involves the conflict of laws between the two different jurisdictions.

Basically, due to the conflict of laws, the heir of the deceased has to deal with the probate procedures differently in Hong Kong and PRC. Looking at the right of inheritance, the general rule is that the laws of the place where the real property is situated governs the inheritance of real property and the laws of the deceased’s domicile country governs the inheritance of movable property. Supposing that the deceased is a Mainland resident leaving a real property in Hong Kong, the inheritance laws in Hong Kong, depending on whether the deceased has left a Will, prevails over the PRC inheritance laws. The movable assets of the deceased such as cash at banks and securities will usually be governed by the inheritance laws of PRC. Conversely, if a Hong Kong resident dies in PRC leaving real and movable properties in PRC, the nature of the assets and the domicile of the deceased somehow determine the governing inheritance laws.

The conflicting laws lead to estate planning consideration. The concern affects an individual in deciding where and how to invest and the estate portfolio. The issue affects both Hong Kong and PRC residents. A typical example is that if the deceased domiciled in Hong Kong has left a landed property in PRC, according to the PRC inheritance laws, such property has to be divided and distributed amongst the surviving immediate family members like spouse, parents, children or the surviving siblings if none of them can survive the deceased. This can be largely different from the Hong Kong scenario.

It is suggested that the curing aid for the conflict of laws is by making a Will. Some individuals even make 2 separate Wills in both Hong Kong and PRC, with an aim to resolving any potential conflict. While some cross-border Wills may not be comprehensively drafted, they even create more disputes upon the death of the deceased, noting that the executor has to prove the Wills in Hong Kong and PRC courts. Indeed, one paramount consideration is the domicile of the individual and some wise inquiries may be salient in drafting the Will:

The sound awareness to sort out the inheritance conflict will not only benefit the clients but also their successors.