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In February 2023, WeChat Moments was flooded with the news that an only daughter from Shanghai filed a lawsuit against herself with the court.

In December 2023, two news stories topped the trending search lists: one involves an only daughter in Shanghai, against whom divorce proceedings were initiated after she inherited an estate valued at RMB 200 million; the other involves an 88-year-old elderly person living alone in Shanghai, who donated an estate valued at RMB 3 million to a fruit stall owner.

In practice, the general public may also face the following difficulties:

After the death of an elderly person with no family or dependents, who shall administer his or her estate? How shall the legitimate rights and interests of creditors be protected?

Where an elderly person passes away suddenly leaving behind a large amount of debts, and the heirs waive succession to the estate, against whom shall the creditor assert his claims?

The above cases demonstrate that the dilemma of estate disposition has long persisted. During the period when the *Succession Law of the People's Republic of China* was in force, estate disposition was mostly completed by successors on their own. In the absence of referable procedural guidelines and professional assistance, there was a certain degree of arbitrariness in estate disposition. On the one hand, the efficiency of estate distribution was low: estate succession issues remained unresolved for a long time after the death of the decedent, and there were even circumstances including concealment of estate by some successors. On the other hand, if the decedent had outstanding unfulfilled debts, the interests of his creditors could hardly be protected.

Meanwhile, as China's population aging intensifies and private wealth grows, the number and categories of estates have surged sharply. Legal relationships arising from such matters as estate custody and debt discharge have become increasingly complicated. Against this backdrop, there is an urgent need to promulgate relevant laws and regulations to fill the gaps concerning the aforesaid legal issues, so as to duly administer and partition estates, protect and balance the interests of parties to succession relationships and creditors, and safeguard social stability.

The Civil Code of the People's Republic of China, which came into force on January 1, 2021, provides for the estate administrator system for the first time, stipulating matters including the selection and appointment of estate administrators, appointment of the same by the court, functions and duties of estate administrators, civil liability, and the right to obtain remuneration. However, in practice, there are no operable institutional provisions on the procedures for the court to appoint estate administrators.

The Civil Procedure Law of the People's Republic of China, which entered into force on January 1, 2024, responds to the needs of judicial practice. It adds a new section titled *Cases of Appointment of Estate Administrators* to Chapter XV *Special Procedures*, stipulating the court with jurisdiction over applications for the appointment of estate administrators, the principles that people's courts shall follow when rendering a judgment to appoint an estate administrator, the handling of special circumstances involving estate administrators and other relevant matters, so as to provide clear procedural guidance for the trial of such cases and enhance its operability.

This article conducts a comprehensive analysis from the aspects of relevant legal provisions on estate administrators, applicable circumstances for the appointment of testamentary executors, and key considerations for the selection of testamentary executors, to help you understand the will system and the estate administrator system, arrange and plan family wealth in advance, and select the family wealth planning scheme suitable for you, so as to achieve the dual objectives of avoiding disputes and maximizing the realization of wealth succession.

I. Relevant Laws and Regulations on Estate Administrators

Article 1133 of the Civil Code of the People's Republic of China: A natural person may, in accordance with the provisions of this Code, make a will to dispose of his personal property, and may designate a will executor.

Article 1145 of the Civil Code of the People's Republic of China After the opening of succession, the executor of a will shall be the estate administrator. Where there is no executor of a will, the successors shall elect an estate administrator in a timely manner. Where the successors fail to elect such an administrator, all successors shall act as the estate administrator jointly. Where there are no successors or all successors renounce their succession, the civil affairs department or the villagers' committee at the place of domicile of the decedent before his or her death shall act as the estate administrator.

Interpretation: An estate administrator refers to the subject responsible for sorting out, safekeeping, and presiding over the distribution of the lawful personal property left by the decedent. Upon the commencement of succession, the estate administrator shall be determined in the following order of priority: executor of the will > heir(s) / selected heir(s) > all heirs > civil affairs department or villagers' committee, among which the executor of the will shall automatically become the estate administrator upon the commencement of succession.

Civil Code of the People's Republic of China Article 1147 An estate administrator shall perform the following duties: (1) to sort out the estate and prepare an inventory of the estate; (2) to report the status of the estate to the successors; (3) to take necessary measures to prevent the estate from being damaged or lost; (4) to dispose of the creditors' rights and debts of the decedent; (5) to partition the estate in accordance with the will or the provisions of the law; (6) to carry out other necessary acts related to the administration of the estate.

Interpretation: An estate administrator shall perform its duties in accordance with the law. Where the estate administrator causes damages to heirs, legatees or creditors due to intent or gross negligence, it shall bear civil liability. An estate administrator that performs its duties in accordance with the law may obtain remuneration pursuant to legal provisions or as agreed. This also embodies the long-standing principle of parity between rights and obligations under the law.

The estate administrator system does not explicitly specify the independent right of action of estate administrators. It only stipulates under Article 1147 that estate administrators enjoy rights including administering, disposing of and partitioning estates. However, relevant cases have emerged in judicial practice which recognize that estate administrators have independent litigation status. That said, the independent right of action of estate administrators discussed herein only refers to the independent right of action entitled to estate administrators for the purpose of administering, disposing of and partitioning estates pursuant to Article 1147 of the *Civil Code of the People's Republic of China*. The right of action exercised by estate administrators for their own interests falls outside the scope of this discussion.

Article 194 of the Civil Procedure Law of the People's Republic of China: Where there is a dispute over the determination of an estate administrator, and an interested party applies for the appointment of an estate administrator, the application shall be filed with the basic people's court at the place of the decedent's domicile at the time of death or at the place where the principal estate is located.

The application shall clearly specify the time of the decedent's death, the grounds for the application and the specific claims, and be attached with relevant evidence concerning the death of the decedent.

Article 195 of the Civil Procedure Law of the People's Republic of China: After accepting an application, the people's court shall conduct examination and verification, and render a judgment to appoint an estate administrator pursuant to the principle of facilitating estate administration.

Article 196 of the Civil Procedure Law of the People's Republic of China: Where an appointed estate administrator dies, is terminated, loses the capacity for civil conduct, or is otherwise unable to continue performing the duties of estate administration, the people's court may, upon the application of an interested party or the said administrator, appoint another estate administrator.

Article 197 of the Civil Procedure Law of the People's Republic of China: Where an estate administrator violates the duties of estate administration and seriously infringes upon the lawful rights and interests of successors, devisees or creditors, the people's court may, upon the application of an interested party, revoke his qualification as an estate administrator and appoint a new estate administrator in accordance with the law.

Interpretation: The Civil Procedure Law of the People's Republic of China explicitly provides that:

When appointing an estate administrator, the people's courts shall adhere to the principle of "facilitating estate administration". Proceeding from the purpose of estate protection, this principle enables convenient administration and maintenance of estates, and is conducive to the realization of the rights of all heirs, creditors and legatees.

Cases concerning the appointment of estate administrators fall under special procedures, and the general provisions of special procedures shall apply. That is, the system of final adjudication at first instance applies to such cases, no appeal is permitted, and the trial of such cases shall be concluded within 30 days from the date of case filing.

The competent people's court for cases concerning the appointment of estate administrators shall be the basic people's court at the domicile of the decedent at the time of his or her death, or at the place where the principal estate is situated, which is the same as the competent people's court for succession cases.

Where a party or an interested party deems that there is an error in the judgment or ruling of a case concerning the appointment of an estate administrator, it may file an objection with the people's court that rendered the aforesaid judgment or ruling. Upon examination by the people's court, if the objection is established in whole or in part, the people's court shall render a new judgment or ruling to revoke or alter the original judgment or ruling; if the objection is not established, the court shall make a ruling to reject the objection.

Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Execution

Paragraph 1 of Article 2: Where a natural person serving as the applicant for execution dies or is declared dead, if the estate administrator, heir, legatee of the said natural person, or any other subject that lawfully succeeds to the rights confirmed in the effective legal instrument due to the death or declared death of the said natural person applies for modifying or adding itself/himself/herself as the applicant for execution, the people's court shall uphold such application.

Paragraph 1 of Article 10: Where a natural person as the person subject to enforcement dies or is declared dead, and the applicant for enforcement applies to modify or add the said natural person's estate administrator, heir, legatee, or any other subject that has obtained the estate due to the death or declared death of the said natural person as the person subject to enforcement to bear liability within the scope of the estate, the people's court shall support such application.

Interpretation: Articles 2 and 10 of the *Provisions of the Supreme People's Court on Several Issues Concerning the Change and Addition of Parties in Civil Execution*, as amended on December 29, 2020, explicitly provide that an estate administrator may voluntarily apply for alteration to act as the execution applicant, or may become the person subject to execution upon application. This concurrently corroborates the aforementioned conclusion that an estate administrator enjoys independent right of action.

It should be noted that where an estate administrator is the person subject to execution, he/she shall bear liability only within the scope of the estate. The people's court shall not enforce the self-owned property of the estate administrator, nor shall compulsory measures such as restriction on high consumption be imposed on the estate administrator.

II. Applicable Circumstances for the Appointment of Estate Executors

Pursuant to Article 1145 of the *Civil Code of the People's Republic of China*, a testamentary executor shall automatically become the administrator of the estate upon the opening of succession.

As people's wealth accumulates, inheritance disputes are on the rise, and numerous problems exist in the process of inheritance. In practice, common circumstances such as disputes over the scope of the estate, disputes over the status of heirs, and unclaimed estates may all hinder the smooth partition of the estate. Accordingly, the establishment of the estate administrator system can guarantee the integrity and security of inheritance. Where a will is executed in advance and an executor is appointed thereunder, upon the entry into force of the will, the executor shall have the right to execute the provisions of the will in accordance with the intent of the testator, maintain the value of the estate, and protect the legitimate rights and interests of the obligees to the estate. The appointment of a will executor is applicable under the following circumstances:

1. Scenarios involving a complex scope of estate In estate cases heard in recent years, estates have increasingly featured such characteristics as diversity, complexity and foreign-related elements. Especially for a large number of business owners, in addition to a wide variety of estate assets, their creditor-debtor relationships are rather complicated and involve high amounts. Therefore, to achieve smooth wealth succession, the top priority is to confirm and sort out creditor-debtor relationships and formulate a debt discharge plan. If an heir has no knowledge of the full scope and custody status of the estate, or lacks corresponding estate management capacity and professional expertise, failure to repay debts in a timely manner will easily trigger a debt chain reaction, which will inevitably cause heavy losses to the estate eventually. Appointing one or more persons who are familiar with the estate status and have relevant management experience as the executor(s) of the will can ensure that the scope of the estate and debts is determined in a timely manner after succession opens, and that the debts incurred by the testator during his or her lifetime are discharged in an orderly manner. It can also effectively avoid the adverse consequences of the estate being concealed, transferred or disposed of.

2. Situations where overseas assets are involved in the estate As for whether a testamentary executor needs to be appointed in a will, reference shall be made to the legal provisions of the place where the estate is located. For example, if the estate is located in Hong Kong and the succession matters need to be handled in accordance with Hong Kong laws, pursuant to the provisions of the *Non-contentious Probate Rules* of Hong Kong, when handling such estate succession cases, the qualification of heirs will not be confirmed directly in Hong Kong. The court will first determine the qualification of eligible estate administrators, and heirs have no right to directly administer and dispose of the estate. This is therefore different from the provisions of the succession laws of the mainland of China. Accordingly, if a testamentary executor can be appointed in the will in advance, the Hong Kong court may grant status confirmation to the testamentary executor appointed under the will on this basis, so as to better realize the testator's last wish.

3. Scenarios involving succession by subrogation When a decedent dies intestate, his or her estate shall be inherited by successors first in order, who include spouses, parents and children. Accordingly, if the paternal grandparents and maternal grandparents are still alive at the time of the death of an only child's parents, the aforesaid grandparents shall be entitled to participate in the succession, a scenario commonly referred to as the "upward succession" of the estate. After the paternal grandparents and maternal grandparents who have inherited the relevant estate pass away, their children (namely, the only child's paternal uncles and aunts and maternal uncles and aunts) shall have the right to inherit the estate of the said grandparents, which contains the share of the estate originally belonging to the only child's parents, namely the "collateral succession" of the estate. In more extreme cases, succession by subrogation may occur, where part of the share of the only child's parents' estate may even be transferred to the names of the children of the aforementioned uncles and aunts. The succession relationship will become extremely complicated as this process continues. Therefore, only where the parents make a will designating the only child as the sole successor to their entire estate can the only child succeed to the full estate of his or her parents.

4. Scenarios where the inherited property is intended to be solely owned by one child and not regarded as the community property of the spouses. Article 1062 of the Civil Code of the People's Republic of China stipulates that property inherited by spouses during the existence of their marital relationship shall be the community property of the spouses and jointly owned by them, unless a will specifies that the property shall be owned by only one party. Article 1063 of the Civil Code stipulates that property specified by a will to be owned by only one party shall be the personal property of the said spouse. Accordingly, if a child is already married at the time of inheriting his or her parents' estate and the parents have not made a will, the estate inherited by the child shall be jointly owned by the spouses.

In the case where an only daughter was sued for divorce after inheriting assets worth 200 million yuan, as the only daughter's parents died intestate suddenly, the nine residential properties and commercial shops, over 10 million yuan of bank deposits and wealth management products left by the deceased are, in principle, highly likely to be divided as joint property of the spouses.

5. Circumstances such as those involving childless and infirm elderly people, guardians of persons with limited capacity for civil conduct or persons without capacity for civil conduct, etc. To prevent estate losses and protect the interests of creditors and other property right holders, it is recommended that such persons execute a will in advance and appoint a will executor when they are of sound mind.

Song Ying, an only daughter from Shanghai, lost her mother suddenly. Her father suffers from Alzheimer's disease and has no capacity for civil conduct. As the statutory guardian of her father, she can only file a lawsuit against her father in court. In this case, Song Ying is the only person with full capacity for civil conduct. In other words, this is a litigation between Song Ying herself and "herself".

An 88-year-old elderly person living alone in Shanghai signed a legacy-support agreement with a fruit stall owner who had no blood relation to him prior to his death. The agreement stipulates that the supporter shall assume the obligations of providing for the elderly person during his lifetime and handling his funeral affairs after his death, and shall enjoy the right to accept the bequest. The agreement was notarized at a notary public office, and this legacy-support agreement was upheld by the court.

The highly adversarial family justice practice amply demonstrates that: making proactive legal arrangements for guardianship by agreement and legacy-support for oneself not only safeguards one's freedom and dignity, but also better realizes the designated succession of wealth. Whether for guardianship by agreement documents or designated succession documents (such as wills, legacy-support agreements, trust agreements, etc.), it is most advisable to have such documents executed in the form of notarial instruments, which is the most responsible recommendation for the parties concerned.

III. Factors for Consideration in the Selection of Testamentary Executors

In practice, most testators will give priority to lineal relatives or other heirs with blood relations to serve as estate administrators. Where the estate involves matters such as company equities, relatively complex assets, creditor's rights and debts, it is recommended that professional institutions and personnel such as law firms, notary public offices, accounting firms and tax agent firms may also serve as testamentary executors, giving full play to their respective professional strengths and industry advantages. Where multiple testamentary executors are appointed, work may be divided according to their respective functions, duties and positions. They shall assist and supervise each other to jointly manage and realize the inheritance planning of the parties concerned.

With the continuous growth of private wealth in recent years, the quantity and types of estates have surged sharply, and a large number of estates involve corporate assets and offshore assets. Appointing professional institutions and personnel with professional management competence as testamentary executors can not only better safeguard the integrity and security of wealth succession, but also ensure that the daily operation and capital management of relevant companies remain unaffected following the commencement of succession.

Conclusion:

Although the estate administrator system is still in its infancy in China, it is evident that this system has exerted a profound impact on the fields of succession and family affairs, real estate registration, general civil and commercial affairs, and judicial enforcement in China. Comprehensive and in-depth study and understanding of the estate administrator system will better facilitate our handling of such cases in the future. Meanwhile, we are convinced that the numerous gaps in the estate administrator system will be gradually filled, and the system will play a more significant role in the process of the rule of law advancement in China.