Where succession planning across Hong Kong and the BVI stands now

A family's wealth map rarely aligns neatly with a single legal system. For the principals our desk advises most often – Asian founders, CIS entrepreneurs and Middle Eastern family offices with Greater China exposure – the operating assets sit in Hong Kong, the holding layer floats in the BVI, and the family members hold passports and tax residencies across three or four jurisdictions. That combination raises a precise legal question: when the founder is gone, or incapacitated, which legal system governs what, and does the structure actually deliver what the family intends?

Succession planning across Hong Kong and the BVI requires coordinating two distinct common-law regimes – the Trustee Ordinance (Cap. 29) as reformed with effect from 1 December 2013 in Hong Kong, and the BVI's own trust and corporate statutes – against the family's residence map, the location of assets, and the forced-heirship rules of any civil-law jurisdiction in the picture. The 2013 reform strengthened Hong Kong's position materially: it abolished the rule against perpetuities for Hong Kong trusts and introduced statutory firewall protection against foreign forced-heirship claims. The structure that worked a decade ago may carry exposures that were not visible at the time of drafting.

This analysis sets out the current cross-border position, identifies where the risk actually sits in 2027, and offers a comparative read of what each system contributes to and detracts from a cross-border succession plan.

What is commercially at stake when the structure spans two jurisdictions?

The commercial stakes are higher than many principals realise until something goes wrong. A BVI holding entity is a corporate shell. It owns shares, bank accounts, real property or operating-company stakes in other jurisdictions. When the holder of those BVI shares dies, the question is not simply "who inherits?" – it is which court has jurisdiction to administer the estate, which law governs succession to the BVI shares, and whether a will executed under one system will be recognised and given effect under the other.

In our cross-border practice, the most common gap we see is the assumption that a will drafted in the founder's home jurisdiction will reach across to BVI-held assets without further action. It will not – at least not automatically. BVI succession to shares in a BVI company is governed by BVI law, and recognition of a foreign grant of probate or letters of administration in the BVI requires a separate, local confirmation step before the BVI registrar or court will accept the transfer instruction.

The parallel question on the Hong Kong side is equally concrete. Where a principal has an estate that includes Hong Kong-situated assets – a Hong Kong company, a Hong Kong bank account, Hong Kong real property – the administration of that estate requires a Hong Kong grant or a re-sealed foreign grant. The process is manageable, but delay in obtaining it freezes the assets. For an operating group with a Hong Kong parent or treasury function, that freeze can have real commercial consequences. The timeline is not a trivial matter for a business with ongoing obligations.

What is the practical risk if the family does nothing beyond making a will in their home country? The answer is that the assets in each jurisdiction sit behind their own procedural lock, and unlocking each one requires jurisdiction-specific steps. Without a trust or an appropriate holding structure, the family may face concurrent probate proceedings in three systems simultaneously.

How does the governing framework operate across Hong Kong and the BVI?

Hong Kong trust law is codified principally in the Trustee Ordinance (Cap. 29), as substantially reformed with effect from 1 December 2013. That reform was significant. It removed the rule against perpetuities and the rule against excessive accumulations for Hong Kong trusts – meaning a properly constituted Hong Kong trust can now run indefinitely. It introduced express statutory protection for settlor reserved powers, so a trust is not invalidated simply because the settlor retains certain controls. And it strengthened the firewall: Hong Kong law now provides that a trust governed by Hong Kong law will not be defeated by the forced-heirship or reserved-share rules of another jurisdiction, provided the assets are properly subject to Hong Kong law.

That firewall is not absolute. It operates at the level of the trust itself, not the underlying assets. If real property is situated in a civil-law country that applies its own lex situs (the law of the place where the asset is physically located) to succession, the firewall does not override that country's rules for the property situated there. The structure must account for the asset map, not just the trust instrument.

The BVI operates a separate, self-contained regime. The BVI Business Companies Act governs the corporate vehicle. Succession to shares in a BVI company is a matter of the company's articles, the BVI legislation, and – for the recognition of a foreign grant – the BVI's own rules on what foreign grants it will accept and what confirmation steps are required. The BVI also has its own trust legislation, and BVI-law trusts have their own set of characteristics, including strong firewall provisions under the Trustee Act (BVI).

The interface problem is this: the two systems do not automatically speak to each other. A Hong Kong trust holding BVI company shares will be governed by Hong Kong law at the trust level, but the BVI company below it remains subject to BVI law at the corporate level. Movement of assets, changes to the corporate structure, and eventually the administration of the estate on the death of a shareholder all require steps in the BVI as well as in Hong Kong. Counsel on our desk regularly see structures where the trust deed is excellent but the corporate formalities in the BVI have lapsed, creating a gap between the trust-law position and the operational reality.

For a structured assessment of how the trust and corporate layers interact across your holding structure, write to us at info@lockhartyip.com.

What does the comparative read across the two systems reveal?

Hong Kong and the BVI are both common-law systems, which creates a baseline of compatibility. Courts in each jurisdiction work with similar conceptual tools: trusts are recognised, the law of the place of incorporation governs internal corporate affairs, and foreign grants of probate are capable of being recognised through defined confirmation procedures. That baseline is real. But compatibility is not equivalence, and the differences matter in practice.

On trust duration, Hong Kong's abolition of the perpetuity rule from 2013 puts it in the same category as the BVI and other modern offshore jurisdictions. A perpetual trust is achievable under both systems. Where the two systems diverge more noticeably is on the treatment of forced heirship and the strength of the firewall.

Hong Kong's 2013 firewall provisions apply to trusts governed by Hong Kong law. The BVI's trust statute contains analogous provisions. In both cases, the firewall operates against claims brought under foreign law that would otherwise entitle a person to a share of the trust assets on the basis of their relationship to the settlor. The practical question is which system's firewall is more likely to be effective in the circumstances of the particular family.

For a Mainland Chinese family, the relevant foreign system is PRC civil law. PRC law does not currently have a French-style réserve héréditaire (a mandatory minimum share for close relatives enforced against third parties), but it does have rules on legal heirs that can interact in complex ways with offshore structures, particularly where assets are repatriated or where PRC courts are asked to recognise a foreign estate administration. The question of whether a PRC court will give effect to a BVI or Hong Kong trust structure is not settled, and the risk profile differs from a European forced-heirship claim.

For a European family – say, a founder with French or Spanish residency – the forced-heirship interaction is sharper. The EU Succession Regulation (EU Succession Regulation No. 650/2012, which establishes a default rule that succession to a European national's estate is governed by the law of their habitual residence) applies to EU-resident family members and can pull the governing law back to a civil-law system, overriding the Hong Kong or BVI trust instruments in respect of assets treated as part of the estate. Hong Kong and the BVI sit outside the EU Regulation's scope as the law of the trust situs, but the assets, the family members and the courts that may be asked to rule on the matter are not always so cleanly offshore.

The comparative read, in our view, is this: Hong Kong is a stronger primary trust jurisdiction for Asia-centric families precisely because the courts are common-law, the Trustee Ordinance is modern, and the administration infrastructure – trustees, custodians, private banks – is deep. The BVI contributes flexibility and confidentiality at the corporate layer. The combination works well when the two layers are properly coordinated. It works poorly when they are treated as independent structures that will somehow align when the time comes.

Where does the enforcement and recognition risk sit in the current environment?

Enforcement risk in the succession context means something specific: the risk that the intended succession – the plan the principal drew up – does not actually take effect because a court in a relevant jurisdiction refuses to recognise the instrument or the structure that was supposed to deliver it.

We see this risk in three distinct forms. First, there is the recognition of a foreign grant of probate. When a principal dies with assets in Hong Kong and the estate is administered in another jurisdiction, the foreign personal representative needs a Hong Kong grant before they can deal with Hong Kong-situated assets. That process works, but it takes time, it requires locally admitted counsel, and it can be contested. If the family has not prepared for it – if there is no Hong Kong will, no pre-appointed Hong Kong executor, and no clear chain of authority – the process can be significantly delayed.

Second, there is the risk of competing claims. A succession plan that works perfectly under Hong Kong law may face a competing claim from a family member relying on the law of their own residence jurisdiction. That claim may be brought in a court that has jurisdiction over the claimant, and the resulting judgment may be enforceable against assets in that jurisdiction. The structure does not prevent the claim; it provides a defence to it. The strength of that defence depends on the quality of the drafting and the consistency of the structure with the governing law invoked.

Third, and increasingly relevant for our desk, there is the question of what happens to BVI-held assets when the principal is incapacitated rather than deceased. An enduring power of attorney (a power that survives the donor's loss of mental capacity) executed in one jurisdiction may not be automatically recognised in the BVI or in Hong Kong without further steps. If the principal becomes incapacitated and no BVI- or Hong Kong-valid instrument exists, the family may need to apply to the relevant court for the appointment of a receiver or committee – a costly and time-consuming process that exposes the assets to scrutiny and delay.

If an earlier filing, structure or enforcement attempt produced an adverse or stalled result, a second read of the existing instruments can identify the strategic error and the routes still open. Write to us at info@lockhartyip.com.

What foreign advisers typically miss about the Hong Kong position

The most common error we see from foreign counsel advising on structures with Hong Kong and BVI components is treating Hong Kong as a conduit rather than as a primary jurisdiction. The assumption is that Hong Kong is simply a pass-through – assets flow through it on the way to or from Mainland China, and the "real" structure is either onshore (PRC) or offshore (BVI, Cayman). That view is legally incorrect and structurally dangerous in the succession context.

Hong Kong is a common-law system with its own courts, its own administration-of-estates procedures, and its own rules on what a valid will or trust instrument must look like. A will that is valid under PRC law or under the law of a European civil-law system is not automatically admitted to probate in Hong Kong. The Hong Kong court applies Hong Kong's own rules on the formal validity of wills, and a document that does not satisfy those rules – or that has not been executed before a Hong Kong-admitted solicitor or equivalent – may need to be treated as a foreign will, subject to a separate recognition step.

The second error is assuming that the BVI corporate layer is "transparent" for succession purposes. It is not. A BVI company is a legal person. Its shares are personal property. Succession to those shares is governed by BVI law, not by the law of the jurisdiction where the beneficial owner was resident or domiciled. A will that says "I give all my property to my children" may well reach the BVI shares as a matter of the will's interpretation, but the mechanics of transferring registered title to those shares requires action in the BVI – a confirmation of the foreign grant, a resolution of the company's directors, an update to the share register – that does not happen automatically.

In our cross-border practice, the practical fix for both of these errors is the same: a well-drafted trust at the top of the BVI corporate stack, governed by Hong Kong law, with successor trustees identified, protector provisions in place, and a letter of wishes that the family has actually reviewed in the last three years. The trust intercepts the succession event at the BVI-share level. On death, there is no share transfer to effect because the trustee already holds the shares. The trust administration continues. The family's ownership changes in equity, not at law, and that transition does not require a BVI probate process.

How does the residence map interact with the succession plan?

A succession plan designed for a principal with a single residence and a clear domicile is materially simpler than one designed for a family whose members hold multiple residencies and whose principal might, at the time of death, be considered domiciled in a jurisdiction other than the one in which the structure was designed to operate.

Domicile (the legal concept of a person's permanent home, distinct from residence or nationality, which governs succession to moveable property in many common-law systems) is the key variable. Under common-law private international law, succession to moveable property – which includes shares – is governed by the law of the deceased's domicile at death. If a principal has been living in the United Kingdom, Australia or Canada for the ten years before death and is found to be domiciled there, the succession to their moveable estate – including their BVI shares – will prima facie be governed by the law of that country, not by the law of the jurisdiction where the trust was settled.

Hong Kong's firewall provisions in the Trustee Ordinance address this risk to a significant degree for assets held in a Hong Kong trust: the trust is not invalidated by a claim based on foreign forced heirship, regardless of the domicile of the settlor. But the firewall is a defence to a claim; it does not prevent the claim from being brought, and it does not resolve the question of whether a foreign court – a court in the domicile jurisdiction – will simply apply its own law to the estate and ignore the trust structure.

The residence map matters in another way: for principals who are in the process of relocating. We regularly advise on capital relocation matters – see our private wealth practice for the wider context – and one of the most common errors in relocation planning is failing to update the succession documents in line with the new residence position. A will drafted for a Hong Kong-resident founder does not automatically serve the same principal once they have established residence in the UAE, Singapore or a European country. The governing law of the will, the choice of executor, the tax consequences of the estate in each jurisdiction where assets are situated: all of these require a fresh review when the residence changes.

The decision framework: which instrument, which system, in which sequence?

For principals with Hong Kong and BVI exposure, the succession planning decision turns on four variables: the location of assets, the residence and domicile of the principal, the family map (who are the intended beneficiaries, where do they live, what forced-heirship rules apply in their jurisdictions), and the degree of control the principal wants to retain during their lifetime.

Consider the matrix in practice. A Hong Kong-resident founder with a BVI holding company, operating-company stakes in Mainland China, and children who are resident in France faces the following: the BVI shares are moveable property, succession governed by domicile law (Hong Kong, on current facts); the Mainland assets are subject to PRC succession rules at the operational level; the French-resident children may assert claims under the EU Succession Regulation if any EU assets exist; the Hong Kong trust firewall protects the trust assets from forced-heirship claims. The instruments required are a Hong Kong-law discretionary trust holding the BVI shares, a Hong Kong will for any Hong Kong-situated assets outside the trust, a separate will or succession instrument for any Mainland personal assets, and – if the children are likely to bring claims in France – a French legal opinion on the interaction of the EU Regulation with the offshore trust.

A different configuration: a CIS-origin principal who is now UAE-resident, with a BVI holding company, Hong Kong bank accounts and no plans to return to the home jurisdiction. The succession risk here is different. The UAE does not have a domestic forced-heirship system applicable to non-Muslims in the same way as a European civil-law country, but the principal's personal law (nationality law) may still be relevant in the home jurisdiction if any assets remain there. The BVI and Hong Kong components of the plan operate broadly as described above. The principal question is whether the existing wills cover the UAE-situated assets and whether a UAE-registered will – available through the DIFC Wills Service Centre for non-Muslims – is appropriate for the UAE component.

The point is not that every structure needs to be rebuilt from scratch. The point is that the succession plan must be designed for the family's actual legal map, not for the structure that was convenient at incorporation. A review of the existing instruments against the current residence and asset positions is the beginning of a proper cross-border succession plan. See also our related analysis at succession planning across Hong Kong and the BVI – further analysis and our matter briefing at will and estate plan covering BVI assets for more on how specific matters of this kind are handled in practice.

A micro-scenario: the unreviewed structure

An Asian manufacturing group, controlled by a second-generation founder, had a BVI holding entity at the top of its corporate stack and a Hong Kong intermediate company beneath it. The BVI shares were held personally by the founder. The founder had a will executed in his home jurisdiction, leaving everything to his wife and adult children. No Hong Kong will had been prepared. No trust had been established. The BVI shares were not mentioned specifically in the will, which used a general residuary clause.

When the founder was hospitalised unexpectedly and lacked capacity for a period of several months, the family discovered that neither the wife nor the children had any legal authority to act for the BVI company or for the Hong Kong intermediate company. No enduring power of attorney had been executed in any relevant jurisdiction. The BVI directors – who were a corporate service provider with no independent discretion – declined to act without a court order or a clear principal instruction. The group's banking relationships were effectively frozen at the holding level for the duration of the capacity event.

We were instructed in late 2026, after capacity had been partially restored. The remediation involved a review of the existing will and its interaction with BVI succession rules, the drafting of jurisdiction-specific powers of attorney, a trust structure over the BVI shares to prevent recurrence of the same problem, and a letter of wishes addressing the family's intentions for the operating business. The outcome was a structure that would function both during the founder's lifetime and after it. No figures are cited for obvious reasons, but the commercial cost of the three-month paralysis was substantial.

A second scenario: the forced-heirship challenge

A European family with a multi-generational holding structure – BVI company, Hong Kong trust, operating assets across several Asian jurisdictions – faced a claim from a family member who was resident in a civil-law country and who asserted that the Hong Kong trust had been settled in order to defeat their forced-heirship entitlement. The claim was brought in the family member's home-country court.

The issue, from a cross-border structuring perspective, was whether the Hong Kong trust's firewall provisions would be given effect by the foreign court, and whether any part of the trust assets could be treated as situated in the claimant's jurisdiction for the purposes of the foreign court's analysis. The Hong Kong trust itself was well-drafted and complied with the requirements of the Trustee Ordinance as reformed in 2013. The firewall provisions were clearly engaged.

The foreign court's willingness to recognise and give effect to those provisions was, however, a matter for the foreign court's own private international law rules, not for Hong Kong law. Counsel on our desk worked alongside locally admitted advisers in the claimant's jurisdiction to present the Hong Kong-law position on the trust structure. The matter was resolved without the trust being unwound, but the process took approximately eighteen months and required coordinated legal engagement in three jurisdictions. The outcome confirmed the value of the firewall, but equally confirmed that the firewall does not prevent the claim from being brought.

Where the risk sits now: our current read

The environment in 2027 is more demanding for cross-border succession planning than it was five years ago, for several reasons.

First, the transparency environment has changed. Beneficial ownership registers – in varying forms – now exist in a number of relevant jurisdictions. BVI and Cayman structures that relied on confidentiality as a structural feature are now operating in a different information environment. This does not affect the succession plan directly, but it affects the risk calculus around contested succession: a claimant in a foreign jurisdiction is more likely to be able to identify the assets and the structure than they would have been previously.

Second, the mobility of principals has increased. More of our clients hold multiple residencies, have lived in several jurisdictions over the course of their professional lives, and may have family members who are citizens of entirely different legal systems. The multi-domicile problem is no longer exceptional; it is the norm for the principals our practice serves. A succession plan designed for a single-residence principal is structurally inadequate for this population.

Third, the Hong Kong regime has matured. The 2013 reforms to the Trustee Ordinance have now been in operation for over a decade, and the trust infrastructure in Hong Kong – professional trustees, compliance frameworks, substance requirements – has developed to match. Hong Kong is a credible and well-tested trust jurisdiction. The question is no longer whether to use a Hong Kong-law trust, but how to integrate it properly with the BVI corporate layer and the family's actual residence map.

In our view, the greatest risk in the current environment is not the law. The law is, on the whole, adequate. The risk is in the gap between the structure that exists on paper and the structure that will actually function when it is needed. That gap is typically created by three failures: structures that were never properly implemented at the corporate level, wills that were drafted without reference to the offshore layer, and succession plans that have not been reviewed since the family's circumstances changed. All three are correctable. None correct themselves.

Related practices

• Private Wealth – succession, trusts, family office and cross-border asset protection
• Holding Structures – BVI, Cayman and Hong Kong holding layer design and review

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