Where succession planning across Hong Kong Mainland

The typical cross-border family has already decided the broad shape of its affairs: a Hong Kong holding entity, Mainland operating assets, offshore accounts and, somewhere in the mix, an expectation that the next generation will receive something orderly when the time comes. What most families have not decided – and what their advisers have often not pressed them on – is how those arrangements actually transfer across two legal systems that share a border but operate on fundamentally different inheritance rules.

Succession planning across Hong Kong and Mainland China involves the simultaneous management of two distinct inheritance regimes. Hong Kong follows the common law, has no forced-heirship requirement, and the Trustee Ordinance (Cap. 29) provides a reformed trust statute applicable to Hong Kong-law governed trusts. Mainland China operates under the Civil Code, which defines a class of compulsory heirs whose minimum entitlement cannot be defeated by a will alone. Since 1 December 2013, Hong Kong's Trustee Ordinance expressly protects a Hong Kong-law trust against foreign forced-heirship claims, but that protection does not extend automatically to Mainland-situated assets.

This analysis sets out the governing position, the cross-border interface where the risk concentrates, the comparative read across the two systems, and where our desk sees the practical exposure sitting now.

What is commercially at stake when a family straddles both systems?

The question is not abstract. A family with an operating company in Guangzhou and a holding company in Hong Kong has assets in two inheritance regimes from the moment of formation. When the principal generation passes, two sets of rules are engaged simultaneously – and they do not produce the same result.

On the Mainland side, the Civil Code provides for a category of close relatives – typically a surviving spouse, children and parents – who hold a minimum inheritance entitlement. A will that attempts to exclude them entirely, or to divert assets to a discretionary trust for other beneficiaries, will be vulnerable to challenge in the people's courts. The challenge is not merely theoretical. Counsel on our desk regularly see post-death litigation in Mainland proceedings where an excluded compulsory heir moves quickly to freeze Mainland assets pending resolution.

On the Hong Kong side, the position is more flexible. There is no forced-heirship rule in Hong Kong law. A testator may, subject to reasonable provision obligations under the Inheritance (Provision for Family and Dependants) Ordinance, leave the estate in any configuration the will specifies. A Hong Kong discretionary trust, governed by Hong Kong law, sits outside that forced-heirship claim entirely – provided the assets transferred into trust are not Mainland-situated assets.

The commercial consequence is straightforward. A family that holds Mainland assets below a Hong Kong holding layer has, in effect, placed those Mainland assets within reach of Mainland inheritance rules. The holding layer does not launder the jurisdictional character of the underlying assets for succession purposes. This is the structural mistake most often made at the planning stage.

How do the two governing regimes interact at the cross-border interface?

The Mainland and Hong Kong are, under the one country, two systems arrangement, separate legal jurisdictions for private-law purposes, including succession. There is no unified cross-border inheritance treaty or regime between the Mainland and the Hong Kong Special Administrative Region. The consequence is that each jurisdiction applies its own rules to the assets and persons within its reach.

For Mainland-situated immovable property – real estate, land-use rights – the applicable law is almost invariably Mainland law, including its forced-heirship provisions. This follows the general conflict-of-laws principle that immovable assets are governed by the law of their situs. A Hong Kong will, even a well-drafted one, will not override that principle. Mainland probate and inheritance procedures apply, and a Mainland court will apply the Civil Code to determine what share the compulsory heirs may claim.

For shares in a Mainland company held by a Hong Kong holding entity, the position is structurally more nuanced. The shares in the Hong Kong holding entity are Hong Kong-sited property. On the holder's death, Hong Kong succession law governs those shares. But the economic value underneath is Mainland. A dispute between heirs over the proper administration of the Hong Kong entity, or an attempt by a Mainland compulsory heir to pierce through the structure to the underlying Mainland assets, can produce parallel proceedings in both systems.

The mutual-enforcement position for civil judgments improved materially when the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) came into force on 29 January 2024. That ordinance allows effective Mainland judgments in civil and commercial matters to be registered in the Hong Kong Court of First Instance, and vice versa. Succession disputes may or may not fall within its scope, depending on how the dispute is characterised. This is a live doctrinal question our desk monitors closely. Parties should verify the current position before acting.

The practical consequence is that a compulsory heir with a Mainland judgment against an estate, or against a trustee, may now have a clearer route to enforcement against Hong Kong-held assets than was previously the case. That is a new pressure point in cross-border succession structures that advisers should be stress-testing against existing plans.

What does Hong Kong's trust regime actually protect – and where does protection stop?

Hong Kong's reformed Trustee Ordinance provides statutory protection for trusts governed by Hong Kong law against foreign forced-heirship claims. The reform, effective from 1 December 2013, removed the rule against perpetuities and the rule against excessive accumulations for Hong Kong trusts, and expressly addressed the firewall question. A trust governed by Hong Kong law is not invalidated merely because a foreign law – including the law of a jurisdiction with forced-heirship rules – would otherwise entitle a person to a share of the settlor's estate.

That protection is meaningful, but its limits are equally important. Three constraints apply in practice.

First, the firewall protects the trust itself, not the underlying assets. Assets that remain situated in the Mainland – real property, equity in Mainland entities held directly rather than through a Hong Kong holding layer – are not wrapped by the Hong Kong trust's governing law. They are reached by Mainland succession rules directly.

Second, the protection requires that the trust be genuinely governed by Hong Kong law. Where a trust document nominates Hong Kong law but has no substantive connection to Hong Kong – no Hong Kong trustee, no Hong Kong administration, no Hong Kong-situated assets – the nomination may not withstand scrutiny in proceedings that examine the substance of the arrangement.

Third, the protection operates at the trust level. If the Mainland-situated assets are held by a Mainland company, and the shares in that company are owned by a Hong Kong entity, and the Hong Kong entity is owned by a Hong Kong trust, the chain is four steps long. Each step introduces its own question of law and its own vulnerability. Experience before the Hong Kong courts indicates that the integrity of the chain is tested at its weakest link – typically the Mainland company level, where Mainland company and succession law applies regardless of what sits above.

A micro-scenario illustrates the pressure. An entrepreneur based in Shenzhen placed his Mainland operating assets into a Guangdong company, held through a Hong Kong company, held through a BVI holding entity, with a Hong Kong discretionary trust at the apex (spring 2025). The trust was well-drafted. The firewall provision applied. But on his death, his surviving parent – a compulsory heir under the Civil Code – commenced proceedings in Guangdong claiming a forced share of the Guangdong company. The structure above the Mainland layer provided no immediate defence. The family faced parallel proceedings in Guangdong and a dispute over trustee authority in Hong Kong.

How does the Mainland Civil Code's forced-heirship regime work in practice?

The Civil Code establishes two tiers of statutory heirs. The first order consists of a surviving spouse, the decedent's children and the decedent's parents. The second order – grandparents – applies only in the absence of first-order heirs. A will that disinherits first-order heirs entirely is not automatically void, but a compulsory heir who receives nothing may challenge the distribution before the people's courts and recover a minimum share.

What triggers practical risk in cross-border planning is the intersection of that regime with two features common to business-owning families. The first is the multi-generational expectation: a principal may intend to pass the business to one child while providing for others through other means. That arrangement, if the providing-for-others mechanism is not Mainland-asset-based, may leave a first-order heir with a facially valid claim against the Mainland business assets. The second is the blended family: second marriages, children from prior relationships and step-children produce a statutory-heir map that may look quite different from the family's intended beneficiary list.

Practitioners advising in this space should expect that any well-advised Mainland compulsory heir will move quickly after the principal's death to identify and freeze Mainland assets. The Chinese courts are generally responsive to applications for interim measures in estate proceedings where an asset-dissipation risk is identified. The window between death and such an application can be short.

Our desk sees a consistent pattern: the succession plan is designed for the family the principal has, not the family the Civil Code defines. Alignment between those two maps is the first analytical task in any cross-border succession review.

What foreign advisers consistently misread about this interface

The most common error – and it is not confined to advisers from non-common-law backgrounds – is to treat the Hong Kong holding structure as a complete succession answer. The logic runs: the family holds Mainland assets through Hong Kong, Hong Kong succession law applies to the Hong Kong layer, and a Hong Kong will or trust therefore governs the outcome. That logic is wrong at the first junction.

Hong Kong law governs the shares in the Hong Kong entity. It does not govern the Mainland assets beneath. A Mainland court that is asked to determine a compulsory heir's entitlement will look at the economic substance of the Mainland assets, not at the legal form of the structure above them. The holding layer is relevant to control and governance during the principal's lifetime. It does not, in itself, relocate the succession jurisdiction for the Mainland assets.

A second misread concerns the mutual-enforcement implications of Cap. 645. Some advisers conclude that because Mainland judgments can now be registered in Hong Kong more readily, the Hong Kong trust layer provides a useful blocking mechanism: the trustee simply refuses to comply and the Mainland court cannot reach the trust assets. That analysis ignores both the mechanics of the registration regime – which operates through the Court of First Instance and is not defeatable by a trustee's refusal – and the possibility that the Mainland judgment is characterised as a civil-commercial matter within the ordinance's scope. Our desk does not offer a confident view on that characterisation without fact-specific analysis.

A third error is to assume that the absence of a Hong Kong forced-heirship rule means there is no family-provision risk in Hong Kong at all. The Inheritance (Provision for Family and Dependants) Ordinance operates separately from forced-heirship. A dependent who is not a compulsory Mainland heir may still have standing to apply to the Hong Kong courts for reasonable provision from a Hong Kong estate. In a cross-border context, both claims may run simultaneously.

For practitioners advising on the intersection of these positions, our analysis of related considerations – including assets and succession instruments in the UAE and matrimonial property plans across borders – is available at our briefing on will and estate plans covering UAE assets and at our briefing on prenuptial and matrimonial property plans in a cross-border family context.

The sequence above describes the standard analytical position. Your family's matter turns on the specific assets, the jurisdictions actually engaged, and the order in which claims are likely to be made – which is where the route is won or lost.

For a structured assessment of your succession position across Hong Kong and the Mainland, write to us at info@lockhartyip.com.

Where does the risk sit now – and where is it moving?

Our desk's read on the current position is that the risk is not increasing on the Hong Kong side. The Trustee Ordinance, as reformed, provides a stable and well-understood platform. Hong Kong courts apply the firewall provision consistently, and the absence of forced-heirship under Hong Kong law is not under legislative pressure. The risk is concentrated on two other fronts.

The first is the enforcement interface. The Cap. 645 ordinance, in force since 29 January 2024, means that a Mainland judgment in a civil-commercial matter can be registered in Hong Kong with greater procedural ease than before. The precise scope of that ordinance in relation to succession-related disputes remains a developing question. As the ordinance beds in and the courts process the first wave of applications, the scope question will be resolved incrementally through decisions of the Court of First Instance. For families with existing plans, this is the single development most likely to change the risk profile of their structures.

The second front is residence. A growing number of principals who built their wealth in the Mainland are now holding Hong Kong permanent residence or other non-Mainland residence status. Residence affects the succession analysis in two ways. It affects the courts' assessment of the principal's habitual residence – a connecting factor that determines which law applies to movable assets in some conflict-of-laws analyses. And it affects the practical question of where the principal is most likely to be advised, which in turn affects where succession documents are executed and which law is nominated.

A second micro-scenario puts the residence question in relief. A Hong Kong permanent resident who maintained a Mainland domicile of origin and held principal business assets in a Fujian company (late 2024) had executed both a Hong Kong will and a Mainland will, with the intention of partitioning the estates. The partition approach – separate wills for separate asset pools – is theoretically sound and often used in practice. In execution, it requires disciplined asset segregation and a clearly maintained documentary record of which assets sit within which estate. Where that discipline breaks down – where assets move between the two pools without corresponding will amendments – the partition produces not clarity but a contest.

A practical decision matrix for cross-border succession structures

The structure of the succession plan should follow the structure of the assets, not the other way around. Three situations recur in practice, and each calls for a different primary instrument.

Where the principal family asset is a Mainland operating company held directly by a Mainland individual, the primary instrument is a Mainland will or a Mainland family agreement, governed by the Civil Code, with specific attention to the compulsory-heir map. A Hong Kong trust at the apex of such a structure adds value primarily at the level of the holding entity, not at the Mainland-asset level. The Mainland succession instrument addresses what the trust cannot reach.

Where the Mainland operating company is held through a Hong Kong holding entity, and the principal holds the Hong Kong entity directly, the primary instrument is a Hong Kong will for the Hong Kong shares, combined with a governance arrangement at the Mainland level that identifies succession of management separately from succession of economic interest. The two are not the same question. A compulsory Mainland heir who receives an economic interest in a Guangdong company does not thereby acquire management rights. Separating those questions in the planning documents reduces the scope for operational disruption.

Where the Hong Kong holding entity is held through a Hong Kong discretionary trust, governed by Hong Kong law, the primary instrument is the trust deed, with a well-considered letter of wishes. That structure, when correctly implemented, provides the most durable protection for Hong Kong-held assets against family-provision and forced-heirship claims. The limitation, as above, is that it does not reach Mainland-situated assets. The Mainland succession instrument remains necessary for those assets, even where the trust is comprehensive in all other respects.

In each scenario, residence and domicile of the principal, the jurisdiction of the principal assets, and the identity of the likely claimants all feed into the timing of the planning exercise. Earlier is almost always better, because the tools available before the principal's decline or death – including lifetime transfers, restructuring and trust formation – are substantially more powerful than the tools available to an estate.

If an earlier filing, structure or succession-planning attempt produced an adverse or stalled result – whether through a dispute with a compulsory heir, a challenge to a trust, or an enforcement action against the estate – a second review can identify the strategic issue and the routes still open.

To discuss how the Mainland–Hong Kong succession interface applies to your family's cross-border position, contact info@lockhartyip.com.

The objection tested: "We have dealt with this through the trust"

The most common objection our desk encounters at the review stage is a version of "we have already dealt with this – we have a trust." The objection is well-intentioned and, in one jurisdiction, correct. In a cross-border context, it requires testing against a simple question: what assets does the trust actually hold, and where are they situated?

If the trust holds shares in a Hong Kong company, and the Hong Kong company holds shares in a Mainland company, and the Mainland company holds real property in Shanghai, then the trust holds none of the Shanghai property. The Shanghai property is reached by Mainland succession law. The trust's firewall operates only on the layer the trust actually governs.

The solution is not necessarily to abandon the trust structure. In many cases it is to pair the trust with a correctly maintained Mainland succession instrument, to ensure the asset segregation is documented and maintained, and to conduct periodic reviews as the asset base changes. Succession structures, unlike corporate structures, do not self-update when assets move.

There is also a practical documentary question. Where the principal is a Mainland national or Mainland resident, the authenticity and proper execution of the Hong Kong succession instruments may need to be established before a Mainland court. The process for authenticating foreign documents for use in Mainland proceedings involves specific procedural steps – verification, authentication and, in some contexts, notarisation. Where those steps have not been built into the original planning exercise, the documentation may not be in a form that a Mainland court will accept without challenge.

Counsel on our desk regularly advise on the documentary requirements for cross-border succession instruments, coordinating with locally licensed practitioners in the relevant jurisdictions to ensure the execution and authentication formalities are met at the outset rather than remedied under pressure after the principal's death.

Related practices

Private Wealth – succession, asset protection and family-office structuring across jurisdictions
Holding Structures – cross-border holding architecture including Hong Kong, BVI and Cayman entities

Frequently asked questions

What does the route look like for succession planning across Hong Kong and Mainland China?

A cross-border succession plan typically involves a Hong Kong-law instrument – a will, a trust deed or both – governing Hong Kong-held assets, combined with a Mainland succession instrument addressing Mainland-situated assets and the compulsory-heir position under the Civil Code. The two instruments must be consistent, with asset segregation clearly maintained. Where a Hong Kong discretionary trust is used, the trust's statutory firewall under the reformed Trustee Ordinance protects Hong Kong-law trust assets against foreign forced-heirship claims, but does not extend to Mainland-situated assets beneath the structure. The sequencing and documentation of both instruments is critical.

Do I need a Hong Kong adviser for succession planning across Hong Kong and Mainland China?

Where the family's asset map includes a Hong Kong holding entity, Hong Kong-sited assets or a Hong Kong will, the Hong Kong succession instruments must be correctly executed and in a form that both Hong Kong courts and Mainland courts can act upon. An international adviser coordinating across both sides of the interface – understanding the firewall provisions, the mutual-enforcement position under Cap. 645, and the documentary authentication requirements – is a structural necessity, not a duplication of effort. Locally licensed practitioners in both jurisdictions handle the jurisdiction-specific execution; the cross-border coordination is a separate function.

What are the main risks in succession planning across Hong Kong and Mainland China?

The primary risks are: (1) assuming that a Hong Kong trust or will governs Mainland-situated assets when it does not; (2) failure to address the compulsory-heir map under the Mainland Civil Code, leaving an excluded first-order heir with a live claim against the Mainland business; (3) poor asset segregation, which causes partition-based plans to collapse when assets move without corresponding document updates; and (4) inadequate authentication of foreign succession instruments for use in Mainland proceedings. The mutual-enforcement position under Cap. 645, in force since 29 January 2024, has introduced an additional pressure point that existing structures should be stress-tested against.

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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 succession planning across Hong Kong and Mainland China stands now