Chinese Civil Code explicitly stipulates that China practices a “monogamous” system, and marriage registration requires “a man and a woman” to register at the marriage registration authority. This means that China explicitly does not recognize same-sex marriage in its laws.
However, can same-sex marriages registered and recognized in foreign countries be acknowledged in China? Although China generally recognizes foreign marriages, same-sex marriages are often denied recognition by Chinese courts on the grounds of “violation of public order and good customs” or public policies. Therefore, in any case, same-sex marriages are not able to be recognized in China.
On the other hand, with the wave of globalization and world wide rainbowl activism, same-sex marriage has gained momentum of being accepted and legalized in more countries, for instance Thailand as a recent case, and an increasing number of same-sex couples involving Chinese nationals are choosing to marry outside of China. This inevitably raises legal issues: what happens to their properties in China? How will such properties be handled during the marriage? And how will they be dealt with upon death of one partner?
Marital Property: Property Agreement During Cohabitation
It is evident that same-sex couples in China cannot claim rights over marital property through the orthodox system of “community property regime”. Taking real estate as an example, Chinese courts often do not consider the “relationship foundation” between same-sex partners but rather determine property ownership based solely on financial contributions, adopting a purely transactional approach. In fact, in most property disputes involving same-sex couples, Chinese judges refrain from analyzing the nature of the same-sex relationship itself.
However, the cohabitation dynamics of same-sex couples are not fundamentally different from those of traditional married couples from a practical perspective. A partner who did not financially contribute to purchasing a house does not necessarily mean they made no contributions to the household. In some cases, the non-financial contributing partner may have made even greater sacrifices for the family. Ruling property ownership solely based on financial input can often lead to unjust outcomes.
Considering this occasion, it is essential for same-sex couples to enter into a “property agreement”, something similar to a prenuptial agreement, beforehand to govern and regulate their financial matters. Such an agreement should clearly define the ownership and disposition of properties involved, thereby preventing unnecessary disputes. Indeed, a private agreement is crucial for same-sex couple in China in avoiding disputes over assets and property. For example, substantial money gift shall be documented as an agreement to prevent the gift-giver from eating his or her own words when relatioship sours.
Estate: Statutory Succession or Bequest?
If one partner in a same-sex relationship intends to inherit the estate of their deceased partner in China, statutory succession is certainly not an option. As previously mentioned, China does not recognize same-sex marriages, including those legally registered abroad. This means that same-sex partners do not hold the legal status of “spouses” in China. According Civil Code, the first-order heirs include: spouses, children, and parents; the second-order heirs include: siblings, grandparents, and maternal grandparents, which clearly indicates that it is impossible for same-sex partners to inherit the estate of their deceased partner through statutory succession.
However, this does not mean there are no other ways to inherit the estate of a deceased partner.
In addition to statutory succession, Civil Code allows for testate succession, which includes inheritance by will. Fortunately enough, under Chinese inheritance laws, a testator has a high degree of freedom in disposing his or her estates as he or she wishes, as China doesn't have the forced heirship rules. From the perspective of testate succession, since same-sex partners are not considered statutory heirs, bequest becomes a viable option for estate planning between same-sex couples.
However, testamentary gift to a non-family related partner involving property transfer is subject to a deed tax, with rates ranging from 3% to 5%. For real properties with high market values, this can amount to a significant sum. In contrast, succession or inheritance between family members does not require payment of the deed tax. Further more, after successful succession by your partner of your estate, when he or she sells it, there could be a good chance to pay hefty income tax upon resale of such properties in China.
To avoid those taxes, high net worth individual in same-sex or other non-traditional relationship shall think of addtional estate planning tools such as living or testamentary trusts (not necessarily in China but also in overseas jurisdictions) to achieve your planning goals with proper taxation consideration.
Love takes many forms, yet concerns about property are universal. Within Chinese current legal framework, while same-sex marriage is not recognized, this does not mean that partners’ rights and interests are entirely unprotected. Through careful planning of property agreements and clear arrangements for intended inheritance, same-sex couples can proactively build a solid line of defense for their future within the gray areas left unaddressed by the law.
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