Where a will and estate plan covering assets Mainland

A family with property in Shanghai, an investment account in Shenzhen, and a holding company run through Hong Kong sits at one of the more demanding intersections in cross-border private wealth. The question of what happens when the principal dies is rarely answered cleanly by the will they have already signed. In our private wealth practice, we see this pattern often: a will drafted in one system that encounters an asset regime governed by another.

A will and estate plan covering assets in Mainland China must account for two distinct legal systems operating in parallel. Under the current cross-border position, Hong Kong and Mainland China apply separate succession laws, different rules on forced heirship, and different mechanisms for validating and executing a foreign will. The governing instruments on the Mainland side include the Civil Code of the People's Republic of China, which consolidated and replaced earlier inheritance provisions, and the relevant administrative procedures of the Mainland's notarial and judicial system. The interface between the two systems does not resolve automatically, and the sequencing of steps across both jurisdictions is where the outcome is typically determined.

This analysis sets out what is commercially at stake, how the cross-border interface operates in practice, where the systems diverge in ways that matter, and where the current risk is concentrated for families with this profile.

What is commercially at stake for a family with Mainland assets?

The stakes are straightforward to state and considerably harder to manage. Mainland real property, bank accounts, equity interests in domestic enterprises (Mainland-registered operating or investment companies), and securities accounts held with Mainland brokers all sit outside the reach of a Hong Kong or offshore will until a deliberate cross-border recognition step is taken. If that step is not anticipated at the drafting stage, the assets may be frozen pending local probate, the succession may be decided by Mainland intestacy rules, and the timeline can extend well beyond what the family expects.

The commercial exposure compounds in several directions at once. A Mainland real-property asset frozen for an extended period generates costs, may have mortgage or management obligations that cannot easily be discharged, and may depreciate or require maintenance decisions that no one is authorised to take. Equity in a domestic enterprise raises governance questions immediately: who votes the shares? Who authorises distributions? Who signs the directors' resolutions? These are not abstract legal concerns. They are operational problems that arrive within days of a principal's death.

For families with a Hong Kong holding entity above a Mainland operating structure, the picture is more layered still. The succession question may appear to sit at the Hong Kong level – who inherits the Hong Kong company shares? – but the economic substance often rests on the Mainland assets underneath. Getting the Hong Kong succession right while leaving the Mainland layer unaddressed produces a result that is legally tidy at the holding level and practically unworkable at the asset level.

How do the two legal systems actually govern succession, and where do they diverge?

Hong Kong applies common-law succession rules, with testamentary freedom as the default position and no general system of forced heirship (a civil-law mechanism requiring that defined portions of an estate be reserved for specific relatives regardless of testamentary wishes). A properly executed Hong Kong will can, in principle, direct Hong Kong-situated assets – including shares of a Hong Kong company – to any beneficiary the testator chooses, without any mandatory share for children, parents, or siblings. The Trustee Ordinance (Cap. 29), substantially reformed with effect from 1 December 2013, reinforces this approach. The 2013 reform explicitly strengthened protection against foreign forced-heirship claims for Hong Kong-law trusts, meaning that assets settled into a Hong Kong trust are difficult to reach under a Mainland forced-heirship argument.

The Mainland applies a different architecture entirely. The Civil Code of the People's Republic of China, which came into force in 2021 and consolidated decades of civil and inheritance legislation, preserves a system of statutory succession (intestacy by rank of relationship) and imposes obligations in relation to certain dependants. The concept of bixiu jicheng fen – a reserved portion for dependants who lack the capacity to work and have no income – can restrict testamentary freedom where qualifying dependants exist. This is not the same as the broader European forced-heirship systems, but it is a constraint that a pure testamentary plan must account for.

Beyond forced-heirship concerns, the two systems diverge on the formalities of execution, the rules governing which law applies to which assets, and the administrative mechanisms for proving and executing a will. A will valid under Hong Kong law is not automatically treated as valid on the Mainland. The Mainland's notarial system requires its own process for recognising a foreign will, and the requirements are applied by local notarial offices with some variation in practice. This is not an academic difference. A family that has taken careful Hong Kong advice and produced a well-drafted will may find that Mainland execution requires a separate and time-consuming procedure that the original plan never addressed.

How does the cross-border interface actually bite?

The Hong Kong and Mainland legal systems operate independently in private law matters. There is no automatic recognition mechanism for wills or grants of probate moving between the two jurisdictions. A grant of probate issued by the Hong Kong High Court does not run as a matter of right in the Mainland. A Mainland court or notarial authority dealing with Mainland-situated assets will apply its own rules and will typically require that a foreign document be authenticated through the applicable authentication or apostille channel – though the precise requirements depend on the nature of the asset, the relevant Mainland authority, and how the document originates.

The 2023 accession of both Mainland China and Hong Kong to relevant international private law instruments has created some procedural paths, but the practical picture for estate administration remains one of parallel processes rather than a single unified procedure. In our cross-border practice, we regularly advise on estates where Hong Kong probate has been obtained efficiently – within a matter of months under a well-documented application – while the Mainland assets remain in administrative limbo because the complementary steps were not prepared in advance.

The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) – in force since 29 January 2024 – improves the recognition of civil and commercial judgments between the two jurisdictions, but its scope excludes succession and matrimonial matters. Families and their advisers should not assume that the improving civil-judgment architecture extends to estates. It does not. The succession interface operates under its own regime, which remains materially separate.

A second bite point is the rule on which law governs succession to different categories of asset. The Mainland applies a connecting factor that directs succession to immovable property – real estate – to the law of the situs (the place where the asset is situated). For Mainland property, that means Mainland law governs succession to that property regardless of what a foreign will says. A Hong Kong will cannot override this. The only question is whether the foreign will can be recognised as a valid instrument through which the Mainland rules are then applied – and that recognition requires the notarial procedure described above.

What foreign counsel and in-house teams most commonly get wrong

The most persistent error we encounter is the assumption that a single, well-drafted will – governed by Hong Kong law, executed before a Hong Kong solicitor – solves the problem for all assets in the family's map. It does not. For Mainland-situated assets, it creates one part of the solution and leaves the other part unbuilt.

A related error is the assumption that holding Mainland assets through a Hong Kong company removes the cross-border succession problem. It changes the nature of the problem rather than eliminating it. The succession question moves from "how do I transmit this Mainland property" to "how do I transmit the shares of the Hong Kong company that sits above the Mainland assets." That second question is more tractable: Hong Kong company shares are situated in Hong Kong, Hong Kong probate applies, and the Trustee Ordinance trust structures are available. But it introduces a structural step that must be maintained with proper substance and governance, and which carries its own tax and regulatory implications – particularly under the foreign-sourced income exemption (FSIE) regime in force from 1 January 2023, which imposes economic-substance conditions on passive income flowing through Hong Kong entities.

A third error is conflating the succession plan with the estate administration plan. A will is a document of intent. The estate administration process – gathering assets, paying liabilities, distributing to beneficiaries – requires operational steps that must be capable of being taken in each jurisdiction where assets sit. A plan that is legally correct but operationally unexecutable in the Mainland is not, in practice, a complete plan.

We also see families who have addressed the Mainland real-property question but overlooked the Mainland securities or investment account. The procedures differ by asset type, and the relevant Mainland institutions – whether banks, brokers, or property registries – apply their own administrative rules. A comprehensive plan maps each category of Mainland asset to the specific administrative procedure that will apply at death.

The structural options and how they interact with the succession question

Four structural approaches appear regularly in our cross-border practice for families in this position. Each has a different legal mechanism, a different relationship with the Mainland succession rules, and a different set of ongoing compliance obligations.

The first is the pure testamentary approach: a well-drafted will with Mainland-specific provisions, prepared with attention to the formality requirements that the Mainland notarial procedure will apply, and supplemented by a separate notarised document specifically addressing Mainland assets. This approach works for families with a relatively simple Mainland asset profile and no significant forced-heirship exposure. It is the baseline, and it is often underprepared in practice.

The second is the holding company interposition: placing the Mainland economic interest above a Hong Kong company so that the succession question becomes a question of Hong Kong-company-share succession. This is a well-trodden path for Mainland real estate and equity interests capable of being held through a foreign-invested structure. It shifts the succession problem into a more manageable Hong Kong-law context but requires that the holding structure be validly established, properly maintained, and consistent with the applicable Mainland rules on foreign investment in the relevant sector.

The third is the Hong Kong trust: settling the Hong Kong holding company – or other Hong Kong-situated assets – into a Hong Kong-law trust governed by the Trustee Ordinance. The 2013 reforms to the Trustee Ordinance abolished the rule against perpetuities for Hong Kong trusts, protected the settlor's ability to reserve certain powers without vitiating the trust, and strengthened the firewall against foreign forced-heirship claims. A Hong Kong trust does not directly address the Mainland-situated assets, but it provides a stable ownership and distribution structure for the Hong Kong and offshore layer above them. For the full analysis of trust structuring in an offshore context, see our related briefing on private trusts and family assets in the Cayman Islands.

The fourth is the combination: a trust above, a holding company in the middle, and a Mainland-specific testamentary instrument or administrative designation at the asset level. This is the most comprehensive approach and the one most commonly needed where the family's Mainland asset base is diverse or substantial. It requires coordination across the Hong Kong legal adviser, the trust structuring adviser, and – critically – Mainland-qualified advisers who can map the asset-level administrative requirements. Lockhart & Yip works alongside allied counsel admitted in the relevant jurisdictions for the Mainland-law execution steps.

The structural question also has a tax dimension that cannot be separated from the succession planning. The Hong Kong minimum top-up tax and the Income Inclusion Rule under Pillar Two apply to in-scope multinational groups with consolidated revenue of EUR 750 million or above for fiscal years beginning on or after 1 January 2025. Most private families are not in that category, but the FSIE regime applies more broadly: passive income flowing through a Hong Kong entity from a foreign source must meet economic-substance conditions to qualify for exemption. A holding company interposed purely for succession convenience may inadvertently create a FSIE compliance requirement that the family has not anticipated.

For a full analysis of private wealth structuring options available through Hong Kong and the offshore centres, see our private wealth practice page. For the specific UAE dimension in cross-border estate planning, see our analysis of wills and estate plans covering assets in the UAE.

Where the risk is concentrated now: the current position

The risk profile for this type of estate plan has two concentrations. The first is structural: families who have a well-developed Hong Kong and offshore plan but have not addressed the Mainland asset layer with equivalent rigour. The administrative and legal requirements on the Mainland side are not trivial, and they require Mainland-specific steps that a Hong Kong-only plan does not produce.

The second concentration is temporal. The cost of addressing the succession structure during the principal's lifetime is modest in comparison with the cost of an unplanned estate. On the Mainland side, an unplanned estate may require a court process, a notarial recognition procedure conducted under time pressure, and – where family members disagree – the prospect of contested Mainland proceedings that run on a timeline entirely outside the family's control.

In our cross-border practice, we see two recurring scenarios. The first is a family that has a Hong Kong will and a Mainland property, where the Mainland property was acquired before the Hong Kong will was drafted and was never considered by the drafting adviser because it was not on their radar. The result, at death, is a Hong Kong probate that proceeds without difficulty and a Mainland property that stalls in the notarial recognition queue while the family bears the carrying costs. The second scenario is a family that has a holding structure above the Mainland assets but has not maintained the substance and governance of the holding company, creating an argument that the holding structure should be disregarded. Neither scenario is exceptional. Both are preventable with a structured review.

The regulatory exposure is also shifting in one direction. The Mainland's administrative requirements for dealing with foreign-connected estates have become, if anything, more procedurally detailed in recent years. Families and advisers who have not revisited a plan prepared more than three or four years ago should not assume that the procedural landscape is the same. The steps that worked in a prior administration may require updating.

What does this mean for the family sitting at this intersection today? The succession plan must be built across both systems simultaneously, with asset-level specificity on the Mainland side and structural flexibility on the Hong Kong and offshore side. A plan that is coherent in Hong Kong and silent in the Mainland is a plan that is half-built.

The comparative read: Hong Kong, the Mainland, and the offshore layer

Placing the two systems in comparison clarifies where a well-structured plan can extract practical advantage and where it must simply manage a constraint.

Hong Kong's testamentary freedom, the absence of forced heirship, the 2013 trust reforms, and the common-law probate process are all features that a cross-border plan can actively use. A family that consolidates the transmissible layer of its wealth into Hong Kong-law instruments – shares, trust interests, receivables – is placing that layer in a system that is relatively predictable, relatively fast, and relatively accessible to international executors and trustees. Hong Kong also has no inheritance tax and no capital gains tax, which means that the transmission of value through Hong Kong instruments does not itself generate a tax event.

The Mainland system is less flexible at the asset level, but it is not hostile to properly prepared foreign-connected estates. The notarial recognition procedure, while time-consuming, is a defined administrative process with known requirements. The key is preparation: documents that satisfy the authentication and translation requirements, instructions prepared in advance for the Mainland notarial authority, and – where the asset base is material – a Mainland-qualified legal representative whose appointment is documented before the principal's death.

The offshore layer – typically a BVI or Cayman holding structure above the Hong Kong company – adds a further dimension. It can provide asset protection and confidentiality features that a Hong Kong company alone does not, and it allows the trust structure to sit above a corporate layer that is familiar to institutional trustees and bank counterparties. The economic-substance regimes that apply in both the BVI and Cayman Islands must be factored into the ongoing maintenance of any such structure, but for a properly maintained entity, these requirements are manageable.

The comparative read is ultimately this: Hong Kong is the most tractable layer for succession purposes; the Mainland layer requires the most specific preparation; and the offshore layer provides structural flexibility that is valuable but not a substitute for addressing the Mainland asset question directly.

A micro-scenario: the mid-market principal with mixed assets

Consider a principal – a CIS-originating entrepreneur with Mainland Chinese residence and a mix of assets including Shanghai residential property, a Shenzhen equity interest, and a Hong Kong company holding offshore receivables – who comes to us having recently executed a Hong Kong will. The will was carefully drafted and validly executed. It addressed the Hong Kong company shares. It did not address the Mainland property or the Shenzhen equity interest, because the Hong Kong adviser had not been instructed on those assets.

The first step in our analysis is to map each asset to its legal category – immovable property, equity interest in a domestic enterprise, offshore receivable – and to the governing rule for succession to that asset. The Hong Kong company shares are transmissible under the Hong Kong will once probate is obtained in Hong Kong. The Shanghai property is governed by Mainland succession law as the law of the situs: the will can be presented to the Mainland notarial authority as a foreign will for recognition, but the form, authentication requirements, and timing must be managed as a Mainland administrative procedure rather than a Hong Kong one. The Shenzhen equity interest raises an additional layer: the transfer of equity in a domestic enterprise to a non-Mainland heir may require regulatory clearance or restructuring, depending on the sector and the form of the enterprise.

The approach we took was to prepare a supplementary Mainland-specific testamentary instrument, coordinate authentication of the Hong Kong will for Mainland use, and prepare a pre-death mandate for a Mainland-qualified representative. We also reviewed the FSIE position of the Hong Kong company, identified that one income stream required attention, and documented the substance position in the company's records. The overall plan did not require the principal to change their existing will; it required the plan around the will to be completed. This is the typical structure of the work on a matter of this kind.

The objection handler: "my affairs are too simple to need this level of planning"

The most common objection we hear from principals in this position is that their Mainland assets are straightforward – one property, one bank account – and that the existing Hong Kong will is sufficient. The objection has some surface logic. For a simple asset base, the required Mainland steps are not numerous. But "not numerous" is different from "not necessary." The property must still be transmitted through the Mainland notarial procedure. The bank account must still be closed or transferred through the relevant bank's internal estate procedure, which differs by institution and may require documentation that neither the family nor the executor has prepared.

The question is not whether the assets are complex. It is whether the administrative procedure for dealing with them at death has been identified and prepared for. A one-property family that has identified the procedure and prepared the documents is in a strong position. A one-property family that assumes the Hong Kong will is sufficient and has prepared nothing for the Mainland procedure will encounter delay and cost at the worst possible time.

The other dimension of the objection is the assumption that the position is static. A plan prepared when the principal had one Mainland asset may not reflect the current position: additional acquisitions, changes in the form of the asset (from equity to real property, for instance), or changes in the composition of the family. We recommend that a cross-border succession plan be reviewed at least every two to three years and whenever there is a material change in the asset base or the family's circumstances.

Related practices

Private Wealth – succession, trusts, family-office structuring and cross-border asset protection
Holding Structures – Hong Kong and offshore holding entities for cross-border asset and investment portfolios
Tax Positions – FSIE regime, territorial profits tax, and cross-border tax structuring for private groups

Frequently asked questions

How does the cross-border element affect a will and estate plan covering assets in Mainland China?

A will effective in Hong Kong does not automatically govern Mainland-situated assets. Mainland China applies its own succession rules to assets on its territory, and a foreign will must be formally recognised through the Mainland notarial system before it can be used to transmit Mainland property or equity interests. The practical result is that a cross-border estate plan requires parallel and coordinated steps in both jurisdictions: probate or equivalent recognition in Hong Kong, and a separate recognition and administrative procedure in the Mainland for each category of Mainland asset. The sequencing of those steps – and the preparation of the correct documentation in advance – is where the outcome is determined. Families who have addressed only the Hong Kong side of this interface carry unquantified exposure at the Mainland level.

What are the main risks in a will and estate plan covering assets in Mainland China?

The primary risk is procedural incompleteness: a Hong Kong will that has not been prepared for recognition in the Mainland, and a Mainland asset base for which no dedicated succession instrument or administrative preparation exists. The secondary risk is structural mismatch: a holding company or trust arrangement that was designed for tax or operational purposes but that interacts unexpectedly with the Mainland succession rules – for instance, where the holding entity's substance has not been maintained, creating an argument that it should be looked through. A further risk, particularly relevant for principals with dependants who lack capacity or income, is the Mainland's reserved-portion rules under the Civil Code, which can constrain the testamentary distribution of Mainland assets regardless of what a foreign will instructs.

What is the first step in a will and estate plan covering assets in Mainland China?

The first step is an asset-by-asset mapping exercise: identifying each Mainland-situated asset, categorising it by legal type (immovable property, equity interest in a domestic enterprise, bank account, securities account), and mapping the succession procedure applicable to each category under Mainland law. That mapping exercise determines which assets are directly transmissible under a recognised foreign will, which require a separate Mainland succession instrument, and which may require regulatory clearance or structural steps before transmission is possible. Without the mapping, a plan cannot be designed. With it, the gaps in any existing arrangement become visible and can be addressed systematically. Parties should verify the current administrative requirements with Mainland-qualified counsel before acting, as procedural requirements can vary by locality and asset type.

Speak with Lockhart & Yip

For a scoped view of your matter, contact info@lockhartyip.com. Discuss your matter →

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

Where a will and estate plan covering assets in Mainland China stands now