Inheritance Laws in Taiwan
In Taiwan, inheritance laws are primarily governed by the Civil Code, which sets the rules for both testate and intestate succession. The system allows individuals to create wills for the distribution of their estates but also ensures that close family members (such as children, spouses, and parents) are protected through forced heirship rules.
Here’s an overview of inheritance laws in Taiwan:
1. Testate Succession (With a Will)
In Taiwan, individuals are allowed to create a will (also known as a testament) to specify how their assets will be distributed after their death. However, there are some restrictions to ensure that certain family members receive a minimum portion of the estate (this is called forced heirship).
1.1 Types of Wills in Taiwan
- Written Will: A will written by the testator and signed in the presence of a witness, who may also need to sign it.
- Notarial Will: A will made in the presence of a notary public, offering a higher level of legal security.
- Oral Will: In certain circumstances, an oral will may be valid (typically when the person is in danger of death).
1.2 Freedom of Testation
- Taiwan's inheritance law allows individuals a significant degree of freedom to decide how they wish to distribute their estate. However, there are limitations when it comes to forced heirs, such as children and the surviving spouse, who are entitled to a portion of the estate by law.
1.3 Reserved Portion (Forced Heirship)
Taiwan’s inheritance system guarantees reserved portions to certain heirs:
- Children: Children, including adopted children, are entitled to half of their share of the estate if there is a will, regardless of any provision to the contrary in the will.
- Spouse: The surviving spouse is entitled to a share of the estate. If there are no children, the spouse can inherit one-half of the estate. If there are children, the spouse will inherit one-third of the estate.
- Parents: If the deceased has no children, the surviving parents may inherit part of the estate.
The reserved portion for forced heirs is calculated based on two-thirds of the estate. Forced heirs cannot be completely disinherited through a will, as they must receive a minimum portion of the estate.
1.4 Testamentary Freedom
If the testator wishes to leave assets to persons other than forced heirs (for example, friends or charities), they may distribute up to one-third of the estate in accordance with their wishes, provided that they respect the reserved portion for forced heirs.
2. Intestate Succession (Without a Will)
If a person dies intestate (without a will), the estate is distributed according to Taiwan's laws of intestate succession, which prioritize the deceased’s family members. The distribution is generally structured as follows:
2.1 Order of Priority for Heirs
- Children: Children, including adopted children, inherit the estate in equal shares. If there are multiple children, the estate is divided equally among them.
- Spouse: The surviving spouse is entitled to a portion of the estate. In cases where the deceased has children, the spouse will inherit one-third of the estate. If there are no children, the surviving spouse will inherit half of the estate.
- Parents: If the deceased has no children, the parents will inherit the estate. Each surviving parent would receive an equal share. In the absence of children and parents, the estate may pass to siblings and other more distant relatives.
2.2 Spouse and Child Share
The surviving spouse will always receive a share of the estate, but the amount depends on whether there are children.
- If children exist: The spouse receives one-third of the estate.
- If no children exist: The spouse receives one-half of the estate.
Children will inherit the remaining portion of the estate if there is a surviving spouse. If there are multiple children, the estate will be divided equally among them.
2.3 Inheritance of Property
- Both moveable and immoveable property (such as real estate) are treated the same under Taiwanese inheritance law. All heirs have an equal right to inherit the deceased’s property.
3. Inheritance of Real Property
Real estate in Taiwan is inherited along with other types of property under the same rules. However, the inheritance of real property may be subject to certain land use restrictions, and in some cases, it may involve more formal processes like land registration to transfer ownership to the heirs.
4. Inheritance Taxes
Taiwan has an inheritance tax system that applies to the transfer of assets upon death. The tax is levied on the value of the estate that exceeds the tax-free allowance. The tax rates are progressive, depending on the value of the inherited estate.
4.1 Exemption Limits
- For spouses and children, a significant exemption limit is provided. The tax-free allowance is relatively high, but once the value of the estate exceeds this allowance, inheritance tax applies.
- Tax Rate: The rate varies depending on the value of the estate and can range from 10% to 20% on the portion of the estate that exceeds the exemption.
4.2 Threshold for Inheritance Tax
The inheritance tax exemption amount depends on the relationship to the deceased, and as of the latest updates, the tax-free threshold for children and spouses is around NT$12 million. If the estate’s value exceeds this threshold, the excess is taxed according to the applicable rates.
5. Probate Process
The probate process in Taiwan involves several steps, including:
- Declaration of Death: The family must register the death with the local authorities and obtain a death certificate.
- Court Procedure: If there is a dispute over the will or the division of the estate, the case may be brought before a court. In many cases, the probate process can be simple if there is no dispute.
- Executor or Administrator: If the deceased has left a will, an executor will be appointed to carry out the terms of the will. If there is no will, a court-appointed administrator may manage the estate.
- Distribution of Assets: The estate will be divided according to the will (for testate succession) or according to the laws of intestate succession if no will exists.
6. Disputes Over Inheritance
Disputes can arise over issues such as:
- The validity of the will (e.g., if it was not properly executed).
- The division of assets, especially if the estate is large or complicated.
- Claims against the estate, such as creditors seeking payment from the deceased’s estate.
In the case of a dispute, the matter is typically handled in Taiwan’s civil courts.
7. Renunciation of Inheritance
Heirs have the right to renounce their inheritance if they do not wish to accept it. This is common if the estate is heavily encumbered by debt. Renouncing inheritance must be done formally in writing before the court, and the renouncing heir will be treated as though they predeceased the decedent.
8. International Inheritance Issues
Taiwan follows international private law for cases where the deceased was not a Taiwanese citizen or had assets abroad. In such cases, the laws of the country in which the deceased was a resident may apply. Cross-border inheritance may require the application of both Taiwanese law and the laws of the country where the assets are located.
Summary of Key Points:
- Testate Succession: Individuals can make a will to distribute their estate, but they must respect the reserved portion for forced heirs (children and spouse).
- Intestate Succession: In the absence of a will, the estate is divided among children, spouse, and parents, with children inheriting first.
- Inheritance Tax: Inheritance tax applies on the portion of the estate above a certain threshold, with a progressive tax rate.
- Probate Process: The probate process involves court procedures for distributing the estate, and a court may intervene in cases of dispute.
- Disputes: Inheritance disputes are resolved in civil courts.
- Renunciation of Inheritance: Heirs can renounce their inheritance if they do not wish to accept it.
Conclusion:
Taiwan’s inheritance laws provide a balance between freedom of testation and the protection of close family members, particularly children and spouses, through forced heirship rules. The system ensures that certain family members receive a guaranteed share of the estate while still allowing individuals to leave part of their estate to others through a will. The probate process is fairly structured, with inheritance taxes applied to estates exceeding the tax-free allowance.
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