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Sunday, November 1, 2009

Inheritance

I always thought that inheritance is such a straightforward issue. Just name your heirs, how you want your assets to be distributed, and when you die, your heirs get your assets.

In traditional Chinese families, even without a will, it's understood that such assets generally go to males only, and usually the eldest male. Well, at least that's how I understand it. The eldest son not only inherits the estate, he also inherits the responsibilities of being the head of the family.

In modern culture, however, sons and daughters, at least legitimate ones, are treated the same, with equal shares in the estate. The surviving spouse gets half of the whole estate (assuming properties are conjugal since he/she legally owns half of it even if his/her spouse was still alive) AND an equal part of the estate with the legitimate heirs. This is what is being followed, unless you made a WILL prior to your demise. Without a will, Chinese traditions won't be followed and the modern, legal way will be the one followed.

One more thing, before I wasn't aware that there is a large tax associated with inheritance. That's the reason why families who are land rich but cash poor go into debt after inheriting a large piece of valuable land, because the valuation of the land is so high that they do not have the cash to cover it.

While I would love to have real estate assets, I now know enough that I should have some sort of estate planning with life insurance, so my kids won't incur a lot of taxes and face a lot of problems with the government if in case they inherit my properties.

Of course that is still a long way off since I do not have the properties yet for my kids to inherit (LOL).

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