Update: forced-heirship and cross-border succession risk

Families with assets, residences and heirs spread across multiple jurisdictions are encountering a familiar but sharpening risk: the forced-heirship rules of one country reaching into assets held or structured through another. For principals using Hong Kong as a holding or residence hub, the interaction between Hong Kong trust law and the succession regimes of civil-law home jurisdictions has become one of the most active pressure points in our private-wealth practice.

Hong Kong law has no forced-heirship regime and, following substantial reforms that took effect on 1 December 2013, the Trustee Ordinance (Cap. 29) provides explicit statutory protection for Hong Kong-law trusts against foreign forced-heirship claims – a firewall provision (a statutory rule that prevents foreign succession law from overriding the terms of a validly constituted local trust). That protection is real. It is also limited: it applies to assets held on trust under Hong Kong law, and does not automatically shield assets situated in, or entities governed by, jurisdictions that apply their own mandatory succession rules.

This briefing sets out what is driving the current advisory volume, who is most directly affected, and what immediate steps are available.

What is generating the current pressure?

Two dynamics are converging. First, greater regulatory transparency across banking and ownership-disclosure regimes has made it easier for heirs and courts in civil-law jurisdictions to identify offshore and cross-border asset holdings. Assets once obscured behind nominee or multi-layer structures are now visible. That visibility translates directly into succession claims.

Second, a growing number of families that relocated to Hong Kong during the post-2020 period are reaching the point of estate planning for the first time in their new environment. Their succession map often spans a civil-law home jurisdiction – France, Germany, Spain, a Gulf state, a CIS country – alongside BVI or Cayman holding entities, Hong Kong operating companies, and real property in the United Kingdom or elsewhere. Each of those assets sits in a different legal system, and each system may apply a different rule on what share a forced heir can claim.

The interaction is not theoretical. We regularly see files where a principal has structured assets through a Hong Kong trust, believing the Trustee Ordinance firewall to be comprehensive, without examining whether the trust has been funded with assets that remain situated in a forced-heirship jurisdiction. A trust that holds shares in a BVI company, which in turn holds property in a civil-law country, may find that the final layer of assets remains exposed to the foreign succession law – irrespective of what the trust deed says.

Who is affected across the corridor?

The risk is most acute for three categories of principal. First, individuals who are tax-resident or domiciled in a civil-law jurisdiction while holding significant assets through Hong Kong or offshore structures. Second, principals who have relocated to Hong Kong but whose domicile of origin (the legal domicile assigned at birth or acquired under the law of the home country, which some systems treat as irrevocable) remains in a forced-heirship jurisdiction. Third, families where heirs are themselves resident in civil-law countries and may commence proceedings there to enforce a reserved share.

For principals with United Kingdom exposure, the position is distinct. English law has no forced-heirship rule for adults, but UK-situated assets may attract UK inheritance tax and are subject to English succession law on intestacy. Our guide on asset protection for principals with United Kingdom exposure addresses that interface in detail.

The cross-border element matters in a specific way: enforcement of a foreign succession judgment or order against Hong Kong assets depends on whether a Hong Kong court would recognise the foreign proceeding. Under the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into force on 29 January 2024, certain Mainland civil and commercial judgments – including those in non-excluded civil matters – are now registrable in Hong Kong. Succession matters are among the excluded categories under Cap. 645, but parties should verify the current scope of that exclusion before relying on it for planning purposes.

The immediate action

Three steps warrant attention before the next estate event – whether that is a family member's death, a change of residence, or the acquisition of a new asset in a new jurisdiction.

First, map the succession law that applies to each asset class in each jurisdiction where the family has exposure. The applicable law for movable assets typically follows the law of the owner's domicile at death; for immovable assets, the law of the lex situs (the law of the place where the asset is situated) generally applies. That distinction alone can split a single estate across three or four legal regimes.

Second, review the trust structure for funding gaps. A Hong Kong-law trust benefits from the Trustee Ordinance firewall only to the extent that the assets are validly constituted into the trust and are not themselves situated in a jurisdiction whose succession law will override the trust. Holding-entity layers in BVI or Cayman structures may address this, but only if properly funded and maintained with adequate substance.

Third, check residence and domicile status. Principals who relocated to Hong Kong should take advice on whether their domicile of origin has been displaced by a domicile of choice, and what that means under the succession law of the home jurisdiction. Some civil-law systems attach their forced-heirship rules to nationality rather than domicile, which can make a change of residence irrelevant to the succession outcome.

For a structured review of your succession position across the relevant jurisdictions, our private-wealth desk is available to assess the structure, identify the exposure and model the available options. Write to info@lockhartyip.com.

Guidance on how the private-wealth practice applies to structuring and succession is set out on our Private Wealth practice page. For an illustration of how a cross-border succession matter runs in practice, see the related matter note.

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Related

• Private Wealth
• Forced Heirship Cross Border Succession Risk Matter
• Asset Protection Principal United Kingdom Exposure Uk Guide

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