Just yesterday a good friend of mine died. It was a bit of a shock.
He was only in his mid 60’s and until recently worked out at the gym regularly. But after listening to stories from health insurance brokers like Carsten, it is important to remember that sometimes the unexpected does, unfortunately, happen.
Did you know that, for men, the annual death rate is 1.3% a year at 55?
It only goes up from there.
Many expatriate managers are in this range, so this raises the question: are you and your family prepared for the worst?
If you aren't, probate can be a paperwork nightmare.
Here are a few questions we raise with clients when discussing plans and scenarios:
Does your spouse know how to access your bank and investments?
Do you have enough life insurance for your family and their commitments?
Can your spouse or partner access your phone and email if something were to happen? For both banking, email but also the photos.
Do you understand China’s rules of inheritance?
Do you have a properly registered will in China?
If you own a company, what’s the plan if you (or your business partner) were to die unexpectedly?
Every situation is different, and the complexity is multiplied when working across different languages, and legal jurisdictions. Having a non-resident alien spouse when dealing with assets in the UK and US can lead to different tax rules.
This is just the beginning of the potential complexities.
None of the following is legal advice. Your situation is unique.
You should discuss your plans with your loved ones and properly qualified professionals.
Having said that, here are some general principles.
Keep a central list of bank accounts and investments like 401Ks, pensions, stock market accounts and insurance details, possibly with a copy held with a trusted family lawyer. This isn’t just to make it easier for your executor or loved ones (although that’s a great reason!), but also so they aren’t lost. We have several accounts on our books where we haven’t been able to find the owner for years. We have no working contact details. For a few, based on their age, we suspect they have died. But in an expatriate world where people move countries and jobs on a regular basis, we just don’t know for sure. Hopefully they get in touch!
Eventually, after many years, these accounts will be surrendered to authorities. Tens of millions of dollars are surrendered to governments this way, every year. Make sure your family benefits and not some distant government.
Emergency money – Do you have enough cash both spouses names? As you probably already know, China doesn’t allow joint bank accounts in RMB so consider a US dollar account back home or a joint investment account back home. Even if you are organized, the government process for probate, and insurance company payouts, can take many weeks or months. Be sure you can access cash in emergencies.
Make a will for every country where you have assets. Many countries, like China, often don’t recognize wills or court rulings made under different systems. A will made in the US won’t comply with Chinese laws and vice versa. This will help reduce the likelihood of costly disputes and expedite the distribution of assets.
Review your life insurance on a regular basis. As you age and accumulate wealth it might be possible to reduce your term insurance coverage, which gets more costly as you age. But also don’t forget to ensure your family is taken care of. Do allow for inflation, future education expenses and future repatriation costs amongst others.
Consider a trust, if you have significant assets in a common law country. These include places like the United States, United Kingdom, Australia etc, where there can be significant advantages to moving assets into a trust. These include reduced taxes, increased certainty and control as well as ease of distribution to beneficiaries. There are however costs in established and running trust. Plus there are rules for trusts and access to assets placed within by the grantor, so this is an area that must be discussed with an appropriately skilled lawyer to ensure your plan works for both you and your loved ones.
There are advantages to getting a marriage certificate. We regularly meet long term couples from western countries who believe “it is just a piece of paper.” That piece of paper can come in handy! Not every country recognizes de-facto relationships. A marriage certificate can be the difference between a world of paperwork pain, that can last years (and even then, have a bad outcome), and a much smoother and more certain path.
Properly register your will in China with a lawyer. Yes, it costs money. But Chinese courts take the proper registration of wills seriously. Some have been known to ignore wills on technical grounds and pass assets based on the “rules of intestacy”. This might mean assets a share of assets goes to grown-up children from a first marriage, rather than your current partner, for example.
This is far from a comprehensive list or actions, or issues.
Every country has its own system and a related list of its strengths and flaws. Use the above list as a starting point and not the end.
Yes, it is a gloomy subject, but how you prepare is a big influence on how painful the process will be later. Let your legacy be one of sadness (or celebrations for a life well lived) rather than curses for a year's-long paperwork nightmare.
R.I.P. Warren. Thanks for your advice and friendship.
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