Reading the risk in forced-heirship and cross-border succession risk

A family with assets in three jurisdictions and heirs in two more does not have a succession plan. It has a succession dispute waiting to happen. The question is not whether the plan will be tested – it is which legal system will do the testing, and whether the instruments in place can withstand that scrutiny.

Forced-heirship rules – statutory reservations of estate shares for defined classes of heir, found in civil-law and Islamic-law systems across Continental Europe, the Middle East, Latin America and parts of Asia – represent one of the most consequential and under-analysed risks in cross-border private wealth planning. Where assets, settlors, trustees, and heirs are distributed across multiple jurisdictions, a rule operative in one country can reach into structures governed by another. Hong Kong, with its common-law trust law substantially reformed with effect from 1 December 2013, sits as both a structuring hub and a potential forum for the resolution of these conflicts.

This analysis sets out the commercial stakes, the governing instruments, the comparative position across the principal legal systems engaged by our clients, and our current read on where the live risk sits.

What is actually at stake: the commercial stakes of succession conflict

Succession disputes cost more than the legal fees. They cost time, continuity, and the operating cohesion of family-controlled businesses and investment portfolios. A forced-heirship claim filed in one jurisdiction can freeze assets, suspend corporate distributions, and block refinancings across an entire cross-border structure – well before any court reaches a conclusion on the merits.

The clients who come to our desk with succession exposure are rarely families who ignored the problem. They are families whose planning was designed for one legal environment and is now being tested in another. A founder structured a Cayman holding entity in the early 2010s under English-law advice, with succession considerations focused on the UK. A decade later, the founder is resident in the UAE, the children are resident in France and Singapore, and operating assets have expanded into the Mainland. Each of those connections brings a legal system with its own view on what the estate comprises and who must receive a share of it.

The commercial exposure is not abstract. Where a forced-heirship claimant obtains an order from a civil-law court with jurisdiction over immovable property or the domicile of the deceased, that order may found an enforcement application in Hong Kong if the claimant can establish the necessary connection. The question becomes: what does the structure actually protect, and what does it leave exposed?

Our cross-border practice regularly advises on this intersection. The families most at risk are those whose legal map – the assets held, the jurisdictions of residence, the governing law of each instrument – has not been reviewed since the original structure was put in place.

How does the forced-heirship regime actually operate across legal systems?

Forced-heirship is not a single rule. It is a family of doctrines, operative in different legal systems under different names and with different triggers, quantum, and procedural mechanisms. Understanding the relevant system – and whether it can reach the structure – is the first task in any cross-border succession review.

In most civil-law systems – France and the wider EU applying the réserve héréditaire (the mandatory share of the estate reserved by statute for descendants and, in some systems, ascendants) – the reservation is expressed as a fraction of the estate, graduated by the number of qualifying heirs. Gifts and lifetime transfers that diminish the reserved portion are subject to réduction (clawback), meaning that dispositions made years or decades before death can be unwound if a forced heir brings a claim. The statute of limitations on such claims varies by jurisdiction and is frequently long.

Islamic succession law, operative across a range of jurisdictions in the Middle East and Southeast Asia, applies a distinct system of mandatory shares – the fara'id (fixed Quranic inheritance shares) – applicable to a Muslim's estate subject to local rules on whether non-residents, converts, or holders of assets in secular jurisdictions are within scope. The interaction between fara'id and common-law trust structures is one of the genuinely unsettled areas of private-international-law practice.

Some civil-law systems – notably those in parts of Latin America and certain Mainland Chinese provisions applicable to residents – also impose mandatory reservation rules, though with distinct mechanics and different connections tests.

What these systems share is the mechanism of claim: a forced heir asserts that the estate – or a deemed portion of the estate, including transfers that diminish it – must be reconstituted and redistributed in accordance with the mandatory share. The reach into offshore and common-law structures depends on whether the lex situs (the law of the place where an asset is situated), the lex domicilii (the law of the deceased's domicile), or the lex fori (the law of the forum hearing the claim) is applied to each asset class.

The cross-border interface: where Hong Kong meets the civil-law and Islamic-law systems

Hong Kong sits in this landscape as a common-law jurisdiction with a well-developed trust law, no forced-heirship regime of its own, and a statutory firewall specifically designed to protect Hong Kong-law trusts against foreign forced-heirship claims. The Trustee Ordinance (Cap. 29), as substantially reformed with effect from 1 December 2013, provides that a trust governed by Hong Kong law is not invalidated or affected by any foreign forced-heirship rule, and that the validity, effect, and administration of such a trust are determined by Hong Kong law regardless of any foreign-law claim.

That firewall is meaningful. But it operates within limits that practitioners must understand precisely. It protects the trust itself – its validity, its internal operations, the trustees' powers and discretions. It does not, of its own force, prevent a foreign court from exercising jurisdiction over assets situated in that foreign jurisdiction, or from reaching a judgment that a forced-heirship claim is satisfied by the settlor's beneficial interest in the trust, where such an interest is characterised under the foreign lex domicilii as part of the estate.

The cross-border interface bites in three ways. First, if the settlor retained control – powers of revocation, extensive letters of wishes with evidenced compliance, sole protectorship, or director roles in underlying companies – a foreign court may re-characterise the trust assets as remaining within the estate under sham or retained-control doctrines. Second, if assets of the structure are situated in a civil-law jurisdiction that applies its own forced-heirship rules to immovables without reference to the governing law of the trust, the firewall does not affect the foreign court's jurisdiction over those assets. Third, if a forced-heirship judgment is obtained in a jurisdiction that has a reciprocal-enforcement arrangement with Hong Kong – or that can establish common-law enforcement grounds – it may be brought before the Court of First Instance, requiring the Hong Kong court to assess whether enforcement is consistent with local public policy and the firewall provisions.

This third scenario is the one our desk watches most closely. The introduction of the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), in force since 29 January 2024, extends the reach of Mainland judgments into Hong Kong across a wide category of civil and commercial matters. Succession matters are excluded from Cap. 645's direct scope. However, where a Mainland court makes findings about the ownership or character of assets in the context of succession proceedings, and those findings generate secondary commercial claims, the interplay with the registration regime warrants careful analysis.

For a deeper review of related trust and structuring considerations, our Private Wealth practice overview sets out the firm's approach to succession planning across multiple jurisdictions, and our briefing on private trust structures and family assets in the UAE context addresses one of the jurisdictions where the civil-law and Islamic-law interface is most acute.

The sequence above describes the standard position. Your matter turns on the specific assets, the jurisdictions actually engaged, and the governing law of each instrument – which is where the risk is won or lost. For a structured assessment of your family's succession exposure across the relevant jurisdictions, write to us at info@lockhartyip.com.

The comparative read: four jurisdictional positions a family map encounters

No two families have the same legal map. But the cross-border combinations that generate the most acute forced-heirship risk follow recognisable patterns. The following comparative read addresses four positions that arise regularly across our practice.

France and the EU Succession Regulation. The EU Succession Regulation (known in practice as Brussels IV, though we name it here by its function) allows a testator domiciled in an EU member state to elect the law of their nationality to govern their succession. This election can, in some cases, point away from French law and its mandatory reservation. But the election does not bind French courts in respect of French immovable assets; for those, the lex situs will apply unless the Regulation's conflict rules produce a different result. A family with French real property and a Hong Kong trust holding an underlying French société civile immobilière (a French civil property-holding company) faces questions that span three legal systems simultaneously.

The UAE. The UAE has a layered succession position. Federal legislation applies Islamic succession rules to Muslim residents and, in some configurations, to non-Muslim residents. The Abu Dhabi Global Market and Dubai International Financial Centre each offer their own common-law regimes, under which a registered will or trust can displace the default Islamic-law position for assets situated within those financial-centre jurisdictions. The interaction between DIFC or ADGM instruments and a Hong Kong trust holding assets across both sides of that jurisdictional boundary requires precise mapping of which assets are governed by which regime.

Mainland China. The PRC Civil Code includes succession provisions that establish a category of mandatory heir (direct lineal descendants, parents, and spouses in specified circumstances) with a protected interest, though the mechanism differs from the civil-law réserve. The international private law rules applicable in Mainland courts – governing which law applies to a succession involving a non-Mainland element – are not uniform across asset classes. Real property on the Mainland is generally governed by Mainland law regardless of the governing law of the wider structure. For families with Mainland operating assets held through a Hong Kong or BVI holding entity, the question is whether the underlying real-property interests can be captured by a Mainland succession claim that a Hong Kong trust does not, of itself, insulate.

Common-law jurisdictions without forced heirship. Hong Kong, the BVI, the Cayman Islands, and Singapore share the absence of a forced-heirship regime. Trust structures governed by the law of any of these jurisdictions and holding only assets situated within them present the lowest forced-heirship risk. The analysis shifts when the structure holds assets in civil-law jurisdictions, or when beneficiaries or heirs are domiciled in systems that assert broad in personam jurisdiction over their residents.

What do planners and their advisers consistently underestimate?

In our experience, three recurring miscalculations drive the most serious forced-heirship exposure in cross-border structures.

The first is the retained-control problem. A settlor who acts as sole protector, gives extensive and consistently followed letters of wishes, and retains the power to remove and replace trustees has, in the eyes of a number of civil-law courts, retained an interest in the trust assets sufficient to constitute them part of the estate. The Hong Kong firewall protects the trust's validity under Hong Kong law. It does not prevent a French or Spanish court from characterising the settlor's relationship with the trust differently under its own conflict rules, and reaching the asset through that characterisation.

The second is the residence drift problem. A structure built for a settlor resident in a low-risk jurisdiction – say, a common-law system with no forced-heirship rules – does not automatically recalibrate when that settlor becomes resident or domiciled in France, Spain, Italy, or a Gulf state. The applicable succession law in many systems follows domicile, not the governing law of the trust. Annual or biennial reviews of the family's legal map – covering the jurisdictions of residence, domicile, and asset location – are the basic prophylactic.

The third is the immovable-assets blind spot. Trusts are highly effective in managing succession of movable assets such as cash, listed securities, and shares in holding companies. The position on immovable assets – real property, agricultural land, certain classes of intellectual-property rights in some systems – is materially different. Many civil-law systems apply the lex situs to immovables and will not give effect to a trust or choice-of-law clause that purports to take those assets outside the mandatory-share regime. Planning that treats all asset classes identically misses this distinction.

If an earlier filing, structure, or enforcement attempt has produced an adverse or stalled result, a second read can identify the strategic error and the routes still open. Write to us at info@lockhartyip.com to discuss how the current position can be assessed and remedied.

How does Hong Kong's trust firewall actually work in practice, and what does it not do?

The trust firewall in Hong Kong law, introduced as part of the 1 December 2013 reforms to the Trustee Ordinance (Cap. 29), is one of the most important features of the jurisdiction for wealth-planning purposes. Its effect, precisely stated, is that the validity, construction, effects, and administration of a trust governed by Hong Kong law are determined exclusively by Hong Kong law – and that no foreign forced-heirship, family-property, or estate rule will affect those questions.

This is a stronger position than exists in many competing common-law jurisdictions, which offer similar firewalls with varying legislative precision. The Hong Kong firewall applies regardless of whether the settlor or beneficiaries are connected to a forced-heirship jurisdiction, and regardless of the lex domicilii of the settlor.

What the firewall does not do is extend to assets outside the trust. A family home in Paris sits outside the Hong Kong trust unless it is held through a company whose shares are trust assets. Even then, the French courts may look through the corporate layer under their own conflict-of-laws analysis and treat the beneficial interest in the property as part of the French estate. The firewall also does not bind foreign courts exercising jurisdiction over assets in their own territory. It is a rule about Hong Kong law governing the trust; it is not a rule that foreign courts must apply.

A further practical point: the statutory protection for a settlor's reserved powers – another feature of the 2013 reform – means that a Hong Kong trust is not invalidated by the settlor retaining certain powers. This addresses the sham-trust risk under Hong Kong law. However, the foreign-court retained-control analysis we described above is a separate question, governed by the foreign court's own conflict rules, and is not resolved by the Hong Kong statute alone.

A micro-scenario: the family with a European principal and an Asian holding structure

A European family principal, domiciled in France and operating a manufacturing group through a BVI holding company with Hong Kong subsidiary operations, established a discretionary Hong Kong-law trust in the mid-2010s. The trust held the BVI shares and, through those shares, the underlying Hong Kong and Mainland assets. The principal also retained a French country estate in direct personal ownership, outside the trust.

At the principal's death, two children resident in France filed a réserve héréditaire claim in the French courts. The French court had clear jurisdiction over the French country estate as an immovable situated in France. The claimants also sought to bring the value of the BVI shares within the French estate on the basis that the trust was a sham – pointing to the principal's consistent role as adviser to the trustees and the factual compliance with extensive letters of wishes.

The trustees engaged us to assess the Hong Kong-law position. The trust was well-drafted. The Hong Kong firewall applied to questions of validity and administration. However, the retained-influence argument before the French court was not a question about the trust's validity under Hong Kong law – it was a characterisation question under French private international law. The matter required coordinated engagement across the French and Hong Kong proceedings, with the Hong Kong advice focused on documenting the genuine trustee discretion exercised over the period of the trust's operation.

The lesson from this pattern is consistent: the legal map must be read as a whole. No single instrument, in any single jurisdiction, resolves the analysis for a family with assets and connections across multiple systems.

A second scenario: succession and cross-border enforcement from a Gulf-connected structure

A family principal resident in the UAE, with assets in an ADGM-registered structure and separately a Hong Kong trust holding Mainland and Southeast Asian investments, faced a forced-heirship claim from a sibling and parent following the principal's death. The claim was brought in a UAE federal court under Islamic succession rules applicable to Muslim residents.

The ADGM instruments were clear: the principal had registered a will under the ADGM Wills Regulations, providing for distribution outside the default Islamic-law position for assets within ADGM's jurisdiction. The Hong Kong trust held the cross-border investment portfolio. The claimants sought to bring the value of the Hong Kong trust assets within the UAE federal court's calculation of the estate.

The interaction between the UAE federal succession rules and the Hong Kong trust firewall produced a complex procedural position. The Hong Kong-law answer was that the trust was valid and the assets were trust assets, not estate assets. The UAE federal court's characterisation of the principal's interest in the trust – whether as a trust beneficiary with a discretionary interest or as the effective owner of the assets through retained control – was a question of UAE private international law and the factual record of the trust's administration.

This scenario illustrates the enforcement dimension that practitioners must address at the structuring stage, not at the dispute stage. Succession-related judgments from UAE courts are not within the current scope of Cap. 645, but enforcement through common-law grounds at the Court of First Instance remains a live question. Our briefing on private trust structures and family assets in the UAE context addresses the current state of this analysis.

Where does the risk sit now, and what is our view on direction of travel?

The risk is not static. Several developments across the past five years have shifted the analysis in ways that practitioners and families need to understand.

The EU Succession Regulation has produced a substantial body of case law in member-state courts addressing the interaction between the nationality election and the mandatory reservation. French courts, in particular, have taken a narrow view of the election's capacity to displace the réserve for assets with a French connection. Families with French assets or French-resident heirs who structured on the assumption that a nationality election would provide a clean exit from the réserve should verify that assumption against current case law through French-qualified counsel.

In the UAE, the development of the DIFC and ADGM common-law succession regimes has created a genuine alternative to the default position, but the interaction between those regimes and the UAE federal courts – particularly in respect of assets outside the financial-centre perimeters – continues to evolve. The practical effectiveness of DIFC and ADGM registered wills and trusts for assets in the UAE federal jurisdiction remains a question of the federal courts' approach to those instruments.

In Hong Kong itself, the inward company re-domiciliation regime that commenced in 2025 creates new structuring possibilities for families considering moving a holding entity to Hong Kong. The trust law – with its strong firewall and its long-settled abolition of the rule against perpetuities since the 2013 reform – remains among the more clearly stated positions available in the region.

The direction of travel, in our read, is towards greater claimant sophistication. Forced-heirship claimants and their advisers have become markedly more willing to engage with offshore structures – analysing the trust deed, the letter-of-wishes record, the trustee-decision documentation, and the settlor's de facto relationship with the structure – in order to build the retained-control or sham-trust argument before a civil-law or Islamic-law court. The quality of the trust's internal governance record is now a first-order consideration, not a secondary one.

Families and their advisers who have not reviewed the legal map in the past three years should treat that gap as a material risk. The practical question is not whether the structure was well-designed at inception. It is whether it has been maintained in a way that will withstand the cross-border scrutiny it will face.

For a detailed read on how philanthropy and charitable structuring interact with succession planning across jurisdictions, our matter note on philanthropy and charitable structure through Hong Kong addresses the structuring options available where a family wishes to direct a portion of the estate through a charitable vehicle.

Related practices

• Private Wealth – succession planning, trust structures, and family-office advice across jurisdictions
• Holding Structures – cross-border holding entity design, BVI and Cayman structures, re-domiciliation
• Disputes & Arbitration – enforcement of foreign judgments and awards before the Hong Kong courts

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Related

• Private Wealth
• Private Trust Family Assets Uae Uae Briefing
• Philanthropy Charitable Structure Hong Kong Matter

This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.