Reading the risk in a will and estate plan covering assets in Mainland China

A family that built wealth across Hong Kong and the Mainland faces a succession problem that no single legal system fully solves. The will that works in Hong Kong may be disregarded in a Mainland probate court. The Mainland statutory inheritance rules operate without reference to a Hong Kong testator's intentions. And the asset picture – real property in Tier-1 cities, equity in onshore operating companies, bank accounts held with Mainland branches – sits in a civil-law environment with its own forced-sharing rules, spousal entitlements and registration formalities.

A will and estate plan covering assets in Mainland China must account for two distinct legal systems operating in parallel: the common-law testamentary regime of Hong Kong and the civil-law succession order under the Mainland's Civil Code, which governs all assets situated in the People's Republic. A Hong Kong will does not automatically take effect in the Mainland, and Mainland succession law applies its own distribution hierarchy regardless of what a Hong Kong instrument says. Planning that ignores this interface leaves an estate exposed to conflicting claims, parallel probate proceedings, and asset freezes that can persist for years.

This analysis sets out what is actually at stake, how the two legal systems interact, where the structural exposures concentrate, and how an integrated cross-border plan addresses them. The content is directed at principals, general counsel, and family-office advisers managing wealth on both sides of the boundary.

What is actually at stake: the commercial picture behind the legal problem

For most families with a meaningful Mainland asset base, the succession risk is not abstract. It is a question of who controls the operating company after the founder dies, whether the spouse can access the bank accounts in the days after death, and whether a property acquired decades ago under a name that no longer matches the current family structure can be transferred at all.

Consider what a typical cross-border estate looks like in practice. A founder-owned group may hold its offshore holding through a BVI or Cayman entity, with the Hong Kong intermediate company sitting above a series of wholly foreign-owned enterprises (WFOEs – foreign-invested operating entities incorporated under PRC company law) on the Mainland. The founder's personal estate includes direct equity in Hong Kong-listed or private Hong Kong companies, residential property in Hong Kong, and – critically – direct or indirect interests in Mainland real property registered in the founder's personal name.

That last element is the most common source of difficulty. Mainland real property held personally cannot be transferred by a Hong Kong will without an additional step: either a Mainland probate or succession procedure, or a prior restructuring that moves the asset into an entity whose equity is held above the Mainland level. When the founder dies without having taken either step, the heirs face a process before the Mainland notarial authorities or the people's courts that operates entirely on Mainland succession law terms – and on its own timeline.

Business continuity is a separate exposure. An operating entity whose sole shareholder or controlling shareholder has died does not automatically transfer to the intended successor. Mainland company law has its own provisions for what happens to equity of a deceased shareholder, and the articles of association of the operating entity govern whether the intended successor can step in as a shareholder at all. A will that nominates a foreign beneficiary may encounter additional layers of approval at the registration level.

How the two legal systems meet: the governing instruments

Hong Kong succession law operates under the Wills Ordinance (Cap. 30) and the Intestates' Estates Ordinance (Cap. 73), both modelled on English statute. A validly executed Hong Kong will creates a testamentary disposition of the testator's estate according to Hong Kong law. The Probate Registry of the High Court grants representation, and a grant of probate or letters of administration issued in Hong Kong is recognised by the courts of many common-law jurisdictions.

The Mainland's succession rules are now consolidated in the Civil Code of the People's Republic of China, which came into full effect in 2021. The Civil Code preserves the two-tier statutory inheritance order (first-order heirs: spouse, children, and parents; second-order: siblings, paternal grandparents, maternal grandparents) and continues to apply the principle of equal shares among heirs of the same tier where no valid will governs. A Mainland will – called a yízhǔ (遗嘱), meaning a written testamentary declaration complying with PRC form requirements – can displace the statutory order, but it must be executed in accordance with one of the forms recognised under PRC law: notarised, self-written (holographic), recorded, printed, or audio-visual.

The critical interface rule is the lex situs principle: immovable property is governed by the law of the place where it is situated. This is a general principle of Chinese private international law, confirmed in the Civil Code's provisions on choice of law. It means that Mainland real property passes under Mainland law, full stop – regardless of what a Hong Kong will says, and regardless of where the testator was domiciled. Moveable property follows the law of the testator's domicile, creating a further question about where a founder who lived and worked across both places was actually domiciled at the time of death.

There is no comprehensive mutual recognition regime for probate grants or succession orders between Hong Kong and the Mainland. The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into force on 29 January 2024, covers civil and commercial judgments but expressly excludes succession matters. A Hong Kong grant of probate does not operate automatically in a Mainland court. The Mainland notarial system handles most non-contentious succession, but that system requires its own documentary process and applies Mainland succession law to Mainland assets.

How does the forced-heirship question actually play out?

Hong Kong law has no forced-heirship regime. Under the Trustee Ordinance (Cap. 29), as substantially reformed with effect from 1 December 2013, Hong Kong trusts benefit from strengthened protection against foreign forced-heirship claims, and the rule against perpetuities has been abolished for Hong Kong trusts. A Hong Kong testator can, subject to the Inheritance (Provision for Family and Dependants) Ordinance, leave the entire estate to whomever they choose.

The Mainland position is different in a specific and practically important respect. While the Civil Code does not operate a strict légitime (a French civil-law term for a mandatory minimum share due to protected heirs by operation of law) in the style of French or German law, it does contain a provision protecting heirs who lack the capacity to work and lack an income source. Such heirs must receive a share of the estate, even where a valid will would otherwise exclude them. In practice, this provision has broader reach than it might appear: a dependent elderly parent, a child with a disability, or a surviving spouse in certain circumstances may invoke it.

More practically, the Civil Code's equal-shares default applies whenever there is no valid Mainland will and the statutory order is invoked. A principal who executed a Hong Kong will leaving the entire estate to one child may find that their Mainland assets pass under the statutory order – divided equally among all first-order heirs – because the Hong Kong will was not in a form recognised under PRC law and no separate Mainland will was prepared.

The interaction between Hong Kong trust law protections and Mainland forced-sharing provisions deserves careful analysis. A Hong Kong discretionary trust holding assets above the Mainland level may provide a strong protective structure against a foreign forced-heirship claim under Hong Kong law. But if Mainland assets remain in the founder's personal name at death, the trust provides no protection in respect of those assets. The distinction between what sits inside the trust and what sits outside it is the structural fault line in most plans we review.

Where does the structural risk actually concentrate?

In our private-wealth practice, the recurring exposures in cross-border estates follow a recognisable pattern. They are worth setting out directly, because they are the points where plans that look complete on paper fail in execution.

Directly held Mainland real property. This is the most common and most acute exposure. Property registered in the founder's personal name – whether residential, commercial, or agricultural use – cannot be transferred by a foreign will. The Mainland notarial authority or the people's court will apply Mainland succession law and require Mainland-form documentation from all heirs. Where heirs are scattered across different countries, gathering documentation, apostilles, and translations in acceptable form can take months. During that period, the property cannot be sold, mortgaged, or transferred.

Disputes among heirs are not rare. Where the founder's plan contemplated a different distribution than the statutory default, heirs who benefit from the statutory order have every incentive to invoke it rather than accept a non-Mainland will that would reduce their share. Contentious Mainland succession proceedings before the people's courts can extend the administration process substantially, and an asset freeze on the contested property typically remains in place throughout.

Equity in Mainland-incorporated entities. Where a founder holds equity directly in a PRC-incorporated company – a youxian zeren gongsi (有限责任公司, a Mainland limited-liability company) – the transfer of that equity on death engages both succession law and the company's articles of association. Under PRC company law, the articles may restrict the entry of new shareholders, particularly foreign ones. An intended heir who is not a PRC national may face approval requirements or find that the other shareholders have a right of first refusal on the inherited equity. A plan that does not address these articles-level provisions in advance can strand the intended succession.

Bank and investment accounts. Mainland bank accounts and brokerage accounts are subject to the Mainland's account-freezing and documentation requirements. Access on death typically requires a notarial certificate of succession – a jìchéng quèrèn gōngjèng shū (继承确认公证书), issued by a PRC notary, confirming the identity of the heirs. Where heirs are not in the Mainland, or where the notarial authority contests the scope of the estate, access can be delayed considerably.

Domicile ambiguity. For moveable property, Mainland private international law follows the domicile of the deceased. A founder who split time between Hong Kong and the Mainland – maintaining homes, business registrations, and tax filings in both places – may leave a genuinely ambiguous domicile position. Different conclusions on domicile produce different governing laws for moveable assets. This ambiguity is a planning risk that can be substantially reduced before death by deliberate domicile management, but rarely is.

A cross-border scenario: what a plan failure looks like in practice

A manufacturing group founder based in Guangdong, with a Hong Kong permanent resident identity and a flat in Kowloon, held three assets personally at the time of death in early 2026: a residential apartment in Shenzhen registered in his name alone, a 40% stake in a Shenzhen-incorporated operating company, and a bank account at a Mainland branch of an international bank. His Hong Kong will – a carefully drafted instrument prepared by Hong Kong-admitted solicitors – directed his entire estate to his daughter.

The daughter, based in the United Kingdom, obtained a Hong Kong grant of probate without difficulty. That grant covered the Hong Kong flat and the founder's Hong Kong bank accounts. It had no direct effect on the three Mainland assets.

For the Shenzhen apartment, the relevant Mainland notarial authority required original documentation from all first-order heirs – the daughter, the founder's surviving spouse, and two sons from a prior relationship who had not been included in the Hong Kong will. The sons contested the validity of excluding them. The property was subject to a succession dispute before the people's court in Shenzhen. The dispute, which turned on the absence of a valid PRC-form will, took over a year to resolve. During that period the apartment could not be sold or transferred.

For the 40% stake in the operating company, the articles of association required unanimous shareholder approval for a new shareholder to be admitted. The remaining 60% shareholder – a business partner of the founder – declined to approve the daughter's entry as a shareholder, citing the foreign-national provisions in the articles. The succession of that equity became a separate matter, ultimately resolved by negotiation rather than succession law. The outcome was commercially less favourable than the founder had intended.

Nothing in this scenario was unforeseeable. Each exposure could have been addressed with two to three years of structured preparation: a separate Mainland notarial will for the Mainland assets, a review of the operating company's articles, and a consideration of whether the Shenzhen apartment should remain in personal ownership or be held through a restructured entity. The plan existed. The cross-border dimension of the plan did not.

The comparative read: what Hong Kong offers as the planning hub

Hong Kong occupies a distinctive position in a cross-border succession plan involving Mainland assets. It is a common-law jurisdiction with no forced-heirship regime, a sophisticated trust statute substantially reformed in 2013, and a court system whose grants of probate are widely recognised in common-law jurisdictions. It sits at the gateway to the Mainland legal system in the sense that many cross-border families maintain their primary financial and legal administration in Hong Kong even where their substantive assets are spread more widely.

A Hong Kong discretionary trust, properly settled and documented, provides a strong protective structure for assets held above the Mainland level. The 2013 reforms to the Trustee Ordinance abolished the rule against perpetuities for Hong Kong trusts and strengthened the firewall against foreign forced-heirship claims. A settlor who transfers offshore holding-company equity or Hong Kong-situated assets into a Hong Kong trust before death removes those assets from the scope of the Mainland succession process. The trust does not eliminate the Mainland problem for directly held Mainland assets, but it contains the problem by reducing the estate that passes through the Mainland succession system.

A Mainland notarial will – prepared by a PRC-qualified notary, in Chinese, complying with PRC form requirements, and covering only Mainland-situated assets – is the standard instrument for addressing the Mainland portion directly. A bifurcated will structure (a Hong Kong will for Hong Kong and offshore assets, a Mainland notarial will for Mainland assets) is widely used by advisers who have thought through the interface. What makes this structure work is not the existence of two documents but the precision with which each document is confined to the assets governed by its governing law, and the coordination between the two instruments so that no asset falls into a gap and no asset is addressed twice.

Singapore is the other commonly considered planning hub in this region. Its trust regime is well-regarded and its professional services market is deep. For families whose primary holding and operating structure runs through Singapore, it may offer certain administrative advantages. But for families whose Mainland interface is direct and whose Hong Kong operational base is established, the cost of relocating the planning hub to Singapore typically outweighs the marginal benefit. The fundamental Mainland succession law problem exists regardless of where the holding structure sits; it is the Mainland assets themselves that require the Mainland instrument.

Our desk sees a recurring pattern in which families consider a Singapore trust as an alternative to a Hong Kong trust, only to find that the substantive difference for Mainland succession purposes is negligible. The question is not which offshore or near-shore hub holds the trust; it is whether the Mainland assets remain in personal name at the testator's death.

Where we think the risk sits now: our read

Three developments make the cross-border succession risk more acute today than it was a decade ago.

First, the Civil Code consolidation. Before the Civil Code took effect in 2021, Mainland succession law was governed by a 1985 statute that had been interpreted and supplemented over decades by judicial guidance. The Civil Code consolidates and in some respects modernises those rules. The provisions on succession are clearer in some respects – the recognition of video and audio-visual wills is new – but the absence of a formal mutual recognition mechanism with Hong Kong has not changed. The Civil Code confirms the lex situs rule for immovables and the domicile rule for moveables. For planning purposes, the statutory landscape is now more settled, which makes the planning argument – that you cannot rely on a Hong Kong will to govern Mainland immovables – harder to contest.

Second, the reciprocal enforcement regime for judgments. The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) came into force on 29 January 2024 and extended the scope of mutual recognition for civil and commercial judgments significantly. But succession is expressly excluded. The exclusion is not a policy accident; it reflects the structural differences between the two systems and the absence of a Mainland-HK succession treaty. Advisers who suggest that the new judgment-recognition regime simplifies cross-border estate administration are reading the exclusion incorrectly. It changes nothing in the succession context.

Third, family complexity. The generation that built wealth across the Pearl River Delta in the 1990s and 2000s is now in its sixties and seventies. Many of these founders have complex family structures: remarriages, children from prior relationships, children who have emigrated, and – increasingly – children who have acquired foreign nationalities. Each layer of family complexity multiplies the risk that Mainland succession proceedings will be contested, that the statutory default will produce a distribution different from the founder's intention, and that a Mainland operating company's articles will create an entry barrier for a foreign-national heir.

The urgency is not synthetic. The combination of ageing founder generation, complex family structures, and directly held Mainland assets that have not been restructured creates a foreseeable and addressable succession crisis for many families. The planning window exists; it closes at death.

The sequence of steps matters more than the existence of instruments. A bifurcated will structure is necessary but not sufficient. What makes the structure effective is the prior work: identifying every Mainland asset in personal name, assessing the company-law and articles-level issues for each equity holding, reviewing the trust structure to confirm which assets sit inside and which remain exposed, and – where a Mainland notarial will is prepared – ensuring it covers the identified Mainland assets precisely and is updated when those assets change.

The integration question: how private-wealth planning connects to holding structure and tax

Succession planning for a Mainland-exposed estate does not sit in isolation. It connects directly to the holding structure above the Mainland, the tax-residence position of the founder and the intended beneficiaries, and – where there is an operating business – the transition plan for the business itself.

A holding structure review conducted with succession in mind asks a different question from a structure review conducted with annual effective tax rate in mind. The succession question is: if the founder died today, what would the surviving family need to do to access and transfer each asset, and how long would that take? The answers to that question frequently reveal that the structure has been optimised for operational efficiency and tax minimisation at the expense of succession simplicity.

The connection to tax is direct. Where a Hong Kong trust is used to hold offshore equity or Hong Kong assets, the foreign-sourced income exemption regime – in force from 1 January 2023 – and the Hong Kong minimum top-up tax applicable to in-scope groups for fiscal years beginning on or after 1 January 2025 both affect the tax position of the trust and its beneficiaries. A succession plan that moves assets into a trust without considering the tax consequences of that restructuring may create a problem in one dimension while addressing one in another.

The family-office principal who is considering both the succession question and the tax position will want a coordinated read across both. In our cross-border practice, we regularly work alongside tax advisers and locally admitted counsel to produce that coordinated analysis. The instrument-by-instrument approach – a Hong Kong will here, a Mainland will there, a BVI trust somewhere else – produces a collection of documents rather than a plan.

The sequence in our experience is: structure audit first, then instrument preparation. Knowing which assets are in which names, in which jurisdictions, under which governing laws, is the precondition for preparing effective instruments. Preparing instruments without that audit produces a plan that addresses the assets as they were described rather than as they actually are.

For guidance on structuring private assets across the Hong Kong–Mainland interface, see our overview of the Private Wealth practice. For a consideration of trust structures for family assets in a cross-border context, the guide on private trusts and family assets sets out the structural options in detail. Our earlier analysis of succession planning across the Hong Kong–Mainland interface is available at the succession-planning matter note.

The sequence described above – structure audit, instrument preparation, coordination review – is not a one-time exercise. Family assets change. The Mainland property portfolio grows. A business is acquired or sold. A child emigrates or changes nationality. A spouse who was a non-heir becomes one. Each change requires a review of whether the existing instruments still cover the asset map accurately and whether the distribution they produce still reflects the founder's intentions.

The families whose cross-border estates administer cleanly are not those with the most sophisticated instruments. They are those who reviewed their instruments regularly and updated them when the underlying asset picture changed. That discipline is, in our observation, the most underrated element of cross-border estate planning.

The sequence above describes the standard position. Your matter turns on the assets actually in personal name, the family structure at the date of preparation, and the governing law of each asset class – which is where the analysis is won or lost.

To discuss how the cross-border succession interface applies to your family's specific asset map, write to us at info@lockhartyip.com.

The objection-handler: what principals get wrong about cross-border succession planning

The most common misconception we encounter is that a Hong Kong will, prepared by experienced Hong Kong solicitors, addresses the full estate. It does – for the Hong Kong portion. For the Mainland portion, it does not, and the solicitors who prepared it typically said so in their engagement letter. The problem is not the quality of the Hong Kong instrument. It is the absence of the Mainland instrument.

A related misconception is that a trust eliminates the succession problem. A trust eliminates the succession problem for the assets that are inside it. Assets that remain in the founder's personal name at death pass through the applicable succession law regardless of the existence of a trust. The trust is not a blanket; it is a container. Only assets transferred into it are protected by it.

A third misconception, specific to families with cross-border operations, is that company law does not affect succession. The articles of association of a PRC-incorporated operating entity are a succession instrument in effect. They govern what happens to the equity when a shareholder dies. Where those articles were drafted years ago with operational rather than succession considerations in mind, they may produce outcomes at odds with the founder's intentions. A succession review that does not include the articles of every Mainland operating entity in which the founder holds equity is incomplete.

Finally, there is the timing misconception: that succession planning is something to address at retirement. The people's courts do not observe a founder's preferred timeline. The planning window is available now; it closes at death, incapacity, or a family dispute that makes collective agreement impossible. Families that have completed the structural preparation before either of those events administer their estates in months. Families that have not administer them in years, sometimes with significantly different outcomes than the founder intended.

If an earlier structure or instrument has left a gap – or if a prior succession matter produced an adverse outcome that left assets stranded – a second read can identify the routes still open and the instruments required to close the gap.

To assess your current plan against the Mainland succession exposure, email info@lockhartyip.com.

Related practices

• Private Wealth – succession, trusts, asset protection and family-office structuring across Hong Kong and offshore centres
• Holding Structures – BVI, Cayman and Hong Kong intermediate holding reviewed for both operational and succession purposes
• Tax Positions – FSIE, Pillar Two and cross-border residence analysis for founders restructuring ahead of succession

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• Private Wealth
• Private Trust Family Assets United Kingdom Uk Guide
• Succession Planning Across Hong Kong Mainland China Mainland 3

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