The modern Chinese family is spread across the world. A grandmother dies in Melbourne. One son lives in Hong Kong, a daughter is in Singapore, and a grandson is studying in London. A brother she supported for years is still in Fujian. Each beneficiary has to be identified, verified, informed and paid, under different laws, in different currencies and often in different languages.
The practical problems
- Documents. Overseas beneficiaries and executors may need to sign affidavits, consents and releases before a notary or an Australian consular officer. Mainland China and Hong Kong use the Apostille system. Mainland China joined in November 2023, which has made legalising documents simpler. Other places still require consular legalisation.
- Identity and payment. Banks apply anti-money-laundering checks to overseas payees. Payments may be delayed until the beneficiary’s identity and bank details are verified.
- Translation. A will in English, a beneficiary who reads only Chinese and a death certificate from overseas all need certified translation for the court.
- Tax. When some assets pass to a foreign-resident beneficiary, such as shares that are not Australian real property, a capital gains tax event can arise in the deceased’s final return. Executors who do not plan for this can be left personally exposed.
- Minors and vulnerable beneficiaries overseas. Paying a minor’s share to a parent overseas may not be possible or wise. A trust in Australia may be needed.
What a good executor does
They establish early where every beneficiary lives and what tax residency they have. They choose the order of distributions and the form of payment, cash or the asset itself, with tax advice in hand. They also keep beneficiaries informed in their own language. In practice, many overseas beneficiaries’ biggest complaint is simply not knowing what is happening.
For the person planning
If your beneficiaries live in other countries, say so in your will instructions. It affects whether to leave assets outright or in trust, which assets go to whom, and who should be executor. A family member overseas is often a poor choice to run an Australian estate.
Frequently asked questions
Can a beneficiary who lives overseas inherit from an Australian estate?
Yes. Beneficiaries can inherit from an Australian estate wherever they live. The executor must identify, verify and inform each beneficiary, and payment can be delayed by banks’ anti-money-laundering checks, document requirements and translation. Tax and the beneficiary’s residency can also affect how and when assets are distributed.
How do overseas beneficiaries sign Australian estate documents?
Affidavits, consents and releases are usually signed before a notary or an Australian consular officer. Documents from places that use the Apostille system, which includes Hong Kong and, since November 2023, mainland China, can be authenticated with an apostille. Other places still require consular legalisation.
Can capital gains tax arise when an overseas beneficiary inherits Australian assets?
Yes, it can. When some assets, such as shares that are not Australian real property, pass to a foreign-resident beneficiary, a capital gains tax event can arise in the deceased’s final tax return. Executors should obtain tax advice before distributing, because they can be left personally exposed if they do not plan for it.
Should I appoint a family member who lives overseas as my executor?
Often it is not the best choice. Running an Australian estate from overseas means dealing with Australian courts, banks and tax at a distance. Tell your lawyer where your beneficiaries live, because it affects whether assets are left outright or in trust and who is best placed to act as executor.
Chua Tan Associates advises families, executors, trustees and their professional advisers on estate planning, estate administration and estate disputes, in Australia and across borders. To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry. Advice is available in English, Mandarin and Cantonese.
Justin Chua (蔡智勋), lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice. Victorian law unless stated otherwise.
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