Where a private trust for a family with assets CIS

The question on the table is not whether a private trust works for a family with assets scattered across the Commonwealth of Independent States. It is whether the trust structure chosen five or ten years ago still holds – and whether the family's legal map matches the economic reality of where their wealth actually sits today.

A private trust established under Hong Kong or offshore law can protect CIS-connected family assets against forced-heirship claims, provide succession continuity across multiple jurisdictions, and isolate wealth from political and creditor risk – but only where the governing instrument, the trustee's jurisdiction, and the asset-holding structure are aligned with one another. The Trustee Ordinance (Cap. 29), substantially reformed with effect from 1 December 2013, abolished the rule against perpetuities for Hong Kong trusts and strengthened firewall protection against foreign forced-heirship claims, making Hong Kong a more viable succession seat than many CIS-connected families recognise. Whether that protection actually reaches the family's assets depends on how the trust is built and where those assets are held.

This analysis covers the commercial stakes, the cross-border interface between Hong Kong trust law and the CIS legal environment, the comparative risk read across residence and succession regimes, and our assessment of where the exposure sits now for families in this position.

What is commercially at stake for a CIS family using a private trust?

Wealth structured through a private trust is not a passive legal arrangement. It is an active claim over assets that is tested at three moments: when the settlor loses capacity or dies, when a creditor or authority attempts enforcement, and when the family disagrees about the plan.

For families with assets in the CIS – whether in real property, operating businesses, listed or unlisted securities, or cash held through onshore and offshore accounts – each of those testing moments carries a jurisdiction-specific risk that does not disappear because a trust has been established. The trust must be able to reach the asset, and the legal system governing the asset must recognise, or at least not actively negate, the trust's claim.

In our cross-border practice, we regularly advise families whose CIS asset base includes a combination of Mainland or Asian operating exposure alongside legacy property or business interests in Russia, Kazakhstan, or Ukraine. The common thread is that the trust structure was built for a world that has since changed. Sanctions designations, currency controls, asset freezes, and accelerated emigration have shifted where principals actually live, which assets are reachable, and which succession rules now govern the estate.

That is the commercial position. The legal position follows directly from it – and the interface between the two systems is where the risk concentrates.

How does the cross-border interface between Hong Kong trust law and the CIS legal environment actually bite?

The CIS jurisdictions do not share a single trust law. Several – most prominently Russia and Kazakhstan – operate civil-law systems that have no direct equivalent to the common-law trust. The legal concept of splitting beneficial ownership from legal title, which lies at the heart of any English-origin trust, is not natively recognised in these systems. That does not make a Hong Kong or offshore trust ineffective. It does mean that a trust's protection has a defined perimeter, and that perimeter ends where CIS domestic property law begins.

What this means in practice: assets that remain registered in the name of the settlor in a CIS jurisdiction are not, from the perspective of that jurisdiction's courts, held on trust. A trust deed executed in Hong Kong or the BVI does not, of itself, change the title position under Russian or Kazakh property law. If the settlor dies while still the registered owner of a Moscow apartment or a Kazakh business interest, that asset will fall into the estate and be distributed under the applicable succession law – which, in most CIS jurisdictions, includes mandatory provisions for close relatives that function like forced heirship.

The interface bites at three specific points. First, at the moment of asset transfer into the trust: a genuine transfer of beneficial and legal title must occur, which typically requires the interposition of an offshore holding structure – a BVI or Cayman company – that can hold the CIS-situated asset as the registered legal owner. The trust then holds the shares of that company, not the underlying asset directly. Second, at the moment of CIS succession proceedings: where local courts treat the settlor as the economic owner at the date of death, the trust's interest in the shares of the holding company may be challenged as a sham or as a device to defeat mandatory succession rights. Third, at the moment of enforcement by a CIS authority: where an asset is subject to a government freeze or regulatory seizure, the trust's claim as equitable owner must be asserted in a system that may not recognise equitable ownership at all.

None of these risks is new. What has changed since 2022 is their probability. The sequence from emigration to succession planning to cross-border enforcement has accelerated for a large number of CIS-connected families, and structures that were adequate for a lower-risk environment are being tested at a higher rate.

What does the Hong Kong trust regime actually offer this family?

Hong Kong's trust statute, the Trustee Ordinance, was substantially reformed with effect from 1 December 2013. The reform made three changes that are directly relevant to CIS-connected families.

The rule against perpetuities – which historically capped the duration of a trust – was abolished for Hong Kong trusts established after the reform date. A Hong Kong trust can now run indefinitely, which matters for families whose succession planning spans multiple generations and whose assets in the CIS are likely to remain in dispute or in transition for an extended period.

Statutory protection was introduced for settlor reserved powers. A trust is not invalidated under Hong Kong law simply because the settlor has retained certain controls – for example, the power to direct investments or to replace the trustee. This directly addresses a concern that arises frequently in CIS-connected structures: the principal who is unwilling to relinquish control but wishes to achieve succession protection. Under the reformed ordinance, that position is workable, provided the reserved powers are clearly defined and do not amount to a full retention of ownership.

The firewall provisions were strengthened. Hong Kong law now provides explicit protection for Hong Kong-law trusts against foreign forced-heirship claims. Where a CIS court purports to apply its own mandatory succession provisions to a Hong Kong trust's assets, Hong Kong law does not recognise that claim as a ground to set the trust aside. The practical value of this protection depends on where the assets are held – it operates most strongly where the assets are outside the CIS jurisdiction asserting the claim – but it provides a meaningful structural defence that was not as clearly available before the 2013 reform.

Hong Kong also has no forced-heirship regime of its own. There is no domestic rule requiring a portion of the estate to pass to any particular class of relatives. This makes Hong Kong an unusually clean succession seat for a settlor whose home jurisdiction imposes mandatory succession rights, because the trust is governed by a legal system that respects testamentary freedom.

How do the CIS succession rules interact with the trust, and where does the forced-heirship risk actually sit?

The civil codes of most CIS states include mandatory succession provisions. These typically grant close relatives – a surviving spouse, minor children, disabled parents – an absolute minimum share of the estate that cannot be defeated by will or, in the view of some CIS courts, by trust.

The critical question is not whether those provisions exist. They do. The question is whether they can reach the assets held through a Hong Kong or offshore trust structure. That analysis turns on three variables: the classification of the asset (moveable or immoveable), the location of the asset, and the characterisation of the trust by the court asserting jurisdiction.

Under most conflict-of-laws rules applied in civil-law systems, immoveable property – land, registered real estate – is governed by the law of the place where it is situated. A Moscow apartment registered in the settlor's name at the date of death will be governed by Russian succession law, regardless of any trust. A share in a BVI company that holds that apartment sits in a different position: it is a moveable asset, and its governing law is the law of the BVI (where the company is incorporated), which may then defer to Hong Kong law if the company's shares are held in a Hong Kong trust. That layered structure is how offshore succession planning actually works – and why the interposition of an offshore holding company is not an optional refinement but a structural necessity for families in this position.

The forced-heirship risk for a CIS family is therefore concentrated in two places. First, in any immoveable asset still registered directly in the settlor's name in a CIS jurisdiction. Second, in any challenge to the holding-company layer as a sham designed to defeat mandatory succession rights. Both risks are manageable, but managing them requires the structure to be built correctly from the outset – and, where it was not, rebuilt before the succession event occurs.

A manufacturing family with operations in Kazakhstan and a residential property portfolio in Russia came to our desk in late 2025. The trust had been established through a Cayman holding structure, but the Russian properties remained registered in the principal's name pending a transfer that had been delayed by currency controls. The succession risk in that gap was significant. We advised on the interposition of a Russian operating entity capable of holding the property, with its shares transferred to the Cayman holding structure, as an interim step while the primary residence and domicile position was clarified. The transfer did not resolve the succession question immediately, but it moved the risk from direct exposure to a more defensible structure. The outcome on succession was qualitatively stronger as a result.

What is the residence angle, and why does it matter more now than it did before?

Succession law and residence are not independent variables. For a CIS principal who has relocated to another jurisdiction – the UAE, Cyprus, the United Kingdom, or Hong Kong itself – the question of which succession law governs the estate depends in part on where that person was domiciled at the date of death.

Domicile, in the common-law sense, is a legal status that does not change simply because a person has moved. A person born in Russia who moves to Hong Kong retains a Russian domicile of origin unless and until they establish a domicile of choice – which requires both physical presence and an intention to remain permanently. Many CIS principals who relocated after 2022 have not established a domicile of choice in their new jurisdiction. They remain, in the legal sense, domiciled in their country of origin. That means that, on death, the succession to their moveable estate – including their interest in offshore companies and trust structures – may be governed by the law of the original domicile, not the law of the new residence.

This is one of the most common misconceptions we encounter. The family believes that because the principal has lived in Dubai or Nicosia for two years, the Russian succession rules no longer apply. They may be wrong. The question turns on the intention element of domicile, which is fact-sensitive and jurisdiction-specific. Hong Kong's own law of domicile follows the common-law position, and Hong Kong courts will apply it to determine which succession law governs the estate of a settlor connected to this jurisdiction.

The residence angle also matters for the trust itself. Where a trust's protector, trustee, or letter of wishes identifies a particular jurisdiction as the centre of the family's life, that reference can be used by an opposing party in succession litigation to argue that the family's connection to Hong Kong or the offshore trustee jurisdiction is not genuine. Substance matters – in trust law as much as in tax.

The sequence above describes the standard position. Your matter turns on the specific asset map, the current domicile and residence position, and the order in which those questions are resolved – which is where the structure succeeds or fails.

To assess the succession and residence position for your family across the relevant jurisdictions, write to us at info@lockhartyip.com.

What do advisers and families most commonly get wrong in this structure?

The most frequent error we see is treating the trust establishment as the end of the process rather than the beginning. A trust deed signed, a trustee appointed, and a holding company incorporated does not, without more, protect the family's assets. The assets must actually be transferred into the structure. The transfer must be valid under the laws of every jurisdiction through which it passes. And the structure must be maintained – meaning the trustee must genuinely exercise its functions, the holding company must have substance, and the letter of wishes must reflect the family's current intentions.

The second error is structuring for the wrong legal environment. A trust designed for a family whose primary risk was tax efficiency in a Western European context is not the same as a trust designed for a family whose primary risk is forced-heirship exposure in a civil-law CIS jurisdiction combined with potential creditor claims from a political or commercial dispute. The instruments are similar; the architecture is different. In our experience, families that built structures for the former purpose and are now facing the latter risk have a gap that is not always obvious until the succession event or enforcement action occurs.

The third error – less common but more serious – is relying on a trust clause that purports to apply Hong Kong or BVI law to assets that are, in substance, immoveable property in a CIS jurisdiction. The choice-of-law clause in a trust deed does not change the property law of the place where the land sits. A well-drafted trust will acknowledge this and will deal with immoveable assets through a separate mechanism – typically an onshore holding structure interposed between the land and the trust – rather than assuming that the trust's governing law resolves the conflict.

What does foreign counsel frequently get wrong? They underestimate the significance of the domicile question and overestimate the reach of the trust's governing law. Common-law advisers experienced in UK or US trusts sometimes assume that the trust structure, once established, creates a ring-fence around the assets. In a CIS context, that ring-fence exists only where the assets are outside the CIS jurisdiction's reach – which requires the structure to have been built with that specific objective, not as a by-product of tax planning or estate administration in another context.

Where does the risk sit now, and what is our read on the current position?

Three converging pressures are currently testing private trust structures connected to the CIS more severely than at any prior point in the last two decades.

The first is the enforcement environment. CIS authorities in several jurisdictions have moved aggressively against assets held through offshore structures, characterising trust and holding-company arrangements as devices to conceal beneficial ownership rather than legitimate succession planning tools. The Significant Controllers Register (the beneficial-ownership register required for Hong Kong-incorporated companies since 1 March 2018) is part of a global transparency trend that has reached the offshore centres as well. BVI and Cayman holding companies are subject to their own beneficial-ownership registers. Where a CIS authority can obtain that information through mutual legal assistance or through its own domestic register, the protective value of the offshore layer depends on the validity of the underlying structure, not on secrecy.

The second pressure is the sanctions environment. Hong Kong implements United Nations sanctions and does not give domestic effect to unilateral measures of other states. That is the legal position. The practical position for a CIS-connected family is that the trustee – who is typically a regulated entity in Hong Kong or an offshore centre – must conduct its own sanctions screening. Where a settlor, protector, or beneficiary appears on a relevant sanctions list, the trustee may be constrained in how it acts on that person's behalf. The structure does not dissolve; but the trustee's ability to follow instructions, distribute assets, or engage counterparties may be affected. This is a compliance question, not a circumvention question, and it requires careful management.

The third pressure is succession litigation. The volume of contested estate proceedings involving CIS-connected families has increased significantly across Hong Kong and offshore courts. Where the principal has died, or lost capacity, while the structure was incomplete or inconsistently maintained, the litigation risk is high. The trust's validity, the genuineness of the transfers, and the trustee's exercise of discretion are all in play. Families that maintained their structures properly – regular reviews, updated letters of wishes, genuine trustee engagement – are in a materially better position than those that did not.

Our read is this: the legal tools available to a CIS-connected family using a Hong Kong trust are strong, and the 2013 reform to the Trustee Ordinance has made Hong Kong a more protective succession seat than it was previously. But the tools only work if the structure has been built correctly and is being maintained actively. A trust that was adequate in 2018 may have gaps that are now consequential. The review question is not optional – it is, at this point, a risk-management necessity.

If an earlier structuring attempt has produced an incomplete result, or if the family's asset map and residence position have changed materially since the trust was established, a structured review can identify the exposure and the routes still available.

To discuss a second read on your existing structure, or to assess the options for a new one, contact us at info@lockhartyip.com.

The decision matrix: which position calls for which response?

Not every CIS-connected family faces the same risk profile. The appropriate structural response depends on where the assets are, what the family's succession objectives are, and how much of the earlier work has actually been done.

Where all CIS assets have been transferred into an offshore holding structure and the trust is current, the primary question is maintenance: whether the trustee is genuinely engaged, whether the letter of wishes reflects current intentions, and whether the beneficial-ownership and substance positions are compliant with the requirements of the trustee's jurisdiction. A periodic review at this stage is a low-disruption, high-value exercise.

Where CIS assets remain registered in the principal's name – particularly immoveable property – the exposure is immediate. The succession risk is unmitigated, and the window to restructure before a succession event or a creditor claim closes is finite. The steps required are: identification of the assets, assessment of the transfer options under local law, interposition of a suitable onshore holding vehicle, and integration of that vehicle into the existing trust structure. The sequence is fact-specific and requires both offshore counsel and locally licensed practitioners in the relevant CIS jurisdiction.

Where the trust itself is defective – whether because it was not properly constituted, because the settlor retained too many powers, or because the asset transfers were not completed – the options are more limited but not exhausted. A resettlement, an amendment of the trust deed, or a restructuring of the holding layer may each address different parts of the problem. The approach depends on what the defect is and what the family's succession timeline looks like.

Where the principal has died and the trust is in dispute, the question shifts entirely to litigation strategy. The trust's governing law, the jurisdictions in which the contest is being run, and the sequence of proceedings across those jurisdictions each become primary variables. We regularly advise on cross-border succession disputes of this kind, working alongside locally licensed firms in the relevant courts.

For related guidance on the succession and asset-protection position across other asset-rich jurisdictions, see our analysis of estate planning for assets in the UAE and the current CIS private trust briefing. Our broader private wealth practice covers the full range of cross-border succession and asset-protection work.

Related practices

Private Wealth – succession, trust, and asset-protection structuring across Hong Kong and offshore centres
Holding Structures – BVI, Cayman, and Hong Kong holding architecture for cross-border families

Frequently asked questions

Do I need a Hong Kong adviser for a private trust for a family with assets in the CIS?

A Hong Kong adviser is not legally required, but is structurally important where the trust is governed by Hong Kong law or where a Hong Kong entity forms part of the holding structure. Hong Kong trust law – particularly the firewall and reserved-powers protections introduced by the Trustee Ordinance reform effective 1 December 2013 – requires interpretation by counsel who understands the cross-border interface with CIS succession rules. Matters of Hong Kong law itself are handled with locally licensed Hong Kong firms; the cross-border and international law dimension is where independent international counsel adds direct value.

What is the first step in a private trust for a family with assets in the CIS?

The first step is an honest asset map: a complete picture of what the family owns, where it is registered, and in whose name. That map drives every subsequent decision – which assets can be transferred into trust, which require an intermediate holding vehicle, and which face constraints under local CIS law that must be addressed before the trust structure can reach them. Without an accurate asset map, the trust structure will have gaps, and those gaps are where the succession and creditor risk concentrates.

What are the main risks in a private trust for a family with assets in the CIS?

Three risks are most common. First, immoveable CIS assets that remain in the settlor's name and fall outside the trust's reach on death. Second, a domicile position that has not been updated to reflect the family's actual relocation, leaving CIS forced-heirship rules in play for the moveable estate. Third, a trust structure that has not been maintained – outdated letters of wishes, inactive trustee engagement, or incomplete asset transfers – that is vulnerable to a sham challenge in succession litigation. Each risk is addressable, but the intervention must happen before the succession event, not after.

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

Where a private trust for a family with assets in the CIS stands now