Shakespeare's King Lear famously grapples with complex issues of inheritance involving what lawyers would call mental capacity, undue influence and forgery. The passage of time has not simplified these issues, particularly where cross-border issues are involved.
A recent survey conducted across 12 jurisdictions in Asia shows just how widespread the differences are - particularly in the areas of trusts, estates and mental capacity. The differences can stem from all manner of sources, but cultural and religious considerations are important, as is the impact of colonial history.
India is a good example. One area our survey looked into was the extent to which someone can decide where their assets go when they die - whether they can execute a will. For Indian Christians, the position follows English common law. They have complete discretion how to distribute their estate. On the other hand, an Indian Muslim can only dispose of one-third of his or her estate by a will. The rest has to be distributed in accordance with certain "forced heirship" rules.
To take another example, in India, the general rule is that marriage automatically revokes all wills made by a person before the marriage, which, again, mirrors the English law position. But this provision does not apply to Hindus, Buddhists, Sikhs, Jainas or Muslims.
Forced heirship rules are by no means unique to India. Indonesia - which has roots in Roman-Dutch law, as well as Islamic law - protects the rights of children and parents. In Japan - whose civil code is based on its equivalent in Germany and France - heirs other than siblings are entitled to a legally reserved interest in the estate if they are inadequately provided for. The law in the Philippines - which is strongly influenced by Spanish law, as well as having certain common law features - reserves certain parts of an estate for certain compulsory heirs. In certain scenarios, the deceased has no testamentary freedom at all as the whole estate must be given to "forced heirs".
These forced heirship rules may be of more than just passing interest. Most of the jurisdictions we surveyed follow similar rules on which law governs a deceased's assets:
- For moveable assets (cash, shares or furniture), the law of the deceased's domicile will govern their distribution;
- For immoveable assets (i.e. real estate), the law of the place where the land actually is will govern distribution.
The upshot of this can be that, for example, a holiday home in Indonesia or the Philippines (being an "immoveable asset") could be distributed in accordance with forced heirship rules and not the terms of someone's will. Thus the will may not achieve the desired outcome.
An increasingly important issue in the region is succession disputes. Hong Kong has seen a number of high-profile disputes recently, but it is not alone.
A key aspect of many of these is challenges to wills. Our survey has shown radically different approaches across the region. Hong Kong follows the English common law approach very closely and the main areas for challenge are usually lack of mental capacity, lack of knowledge or approval of the terms of the will or undue influence.
Mental capacity in this instance means that the person making the will:
- Must understand the nature and effects of the documents he or she is signing (i.e. that it is a document that will take effect on death, governs assets and the effect that it will have over those assets);
- Must understand the nature and extent of his/her assets (in broad terms);
- Must understand the people who might have "moral claims" on his/her estate (i.e. the people who might sensibly be considered beneficiaries); and
- Must not be suffering from a "disorder of the mind [that] poisons the Testator's affections, perverts his sense of right or prevents the exercise of his natural faculties".
Malaysia and Singapore follow this principle, too. South Korea takes a different position and appears to apply a lower test to a will than a contract. The person making the will only needs an understanding of his or her own intentions.
Richard Norridge also contributed to this article