Update: a private trust company for a multi-generational family

For multi-generational families with assets across Greater China, the Gulf and European holding centres, the question of who holds the trustee function has moved from a governance preference to a structural risk point. A private trust company (a bespoke trustee entity established by the family itself rather than a licensed professional trustee) can consolidate decision-making authority, embed succession instructions, and insulate the structure from the turnover risk that comes with institutional trustees. But the regime governing that entity – and the trust it administers – has real compliance dimensions that a number of families are currently mis-mapping.

Hong Kong law, through the Trustee Ordinance (Cap. 29) as substantially reformed with effect from 1 December 2013, provides a robust statutory base for family trusts that includes abolished perpetuity rules, statutory protection for settlor-reserved powers, and an express firewall against foreign forced-heirship claims – making Hong Kong a credible and well-tested jurisdiction for holding the trust deed even where the private trust company is incorporated offshore.

This briefing flags the recurring compliance trigger, identifies who across the family's corridor is affected, and sets out the immediate action.

What the trigger is – and why it is pressing now

The core issue is regulatory exposure at the intersection of three systems: the law governing the trust, the law of the jurisdiction where the private trust company is incorporated, and the residence and succession laws of the family's principals.

Several developments have sharpened this exposure in the current period. First, the Foreign States Immunity Law (PRC) took effect on 1 January 2024, altering the enforcement environment for cross-border asset-holding structures with Mainland-connected assets or principals. Second, the Hong Kong inward company re-domiciliation regime commenced in 2025, creating a route for eligible non-Hong Kong companies – including, in principle, an offshore private trust company – to re-domicile to Hong Kong while preserving their legal identity. Eligibility and procedural conditions should be verified before any reliance is placed on this route.

Third, forced-heirship (mandatory inheritance rights granted by civil-law systems to certain heirs) remains an active concern across the family corridor. Families with principals resident in or with connections to Gulf civil-law jurisdictions, continental Europe, or the Mainland are regularly surprised to find that a trust holding assets in Hong Kong does not automatically neutralise a forced-heirship claim originating in another system.

In our private wealth practice, we see this pattern repeatedly: a structure that was correctly set up has not been reviewed since the family's residence map changed, or since a new generation became legally significant. The gap between the original structuring logic and the current fact pattern is where the exposure sits.

Who is affected across the corridor

The trigger is not confined to families already using a private trust company. It affects three groups.

Families operating an existing structure need to confirm that the private trust company's constitution, the trust deed, and the family's current residence and domicile map still align. Where a principal has re-domiciled since the structure was established, or where a next-generation member has acquired new residence rights, the forced-heirship firewall built into Hong Kong law may need to be re-tested against the newly applicable succession law.

Hong Kong law has no forced-heirship regime. The 2013 reform to the Trustee Ordinance strengthened protection of Hong Kong-law trusts against foreign forced-heirship claims. But that protection is not absolute, and it operates through the conflict-of-laws rules of the jurisdiction where enforcement is sought. A family whose assets or heirs sit partly in a civil-law system cannot rely on the Hong Kong firewall alone.

Families planning a new structure face the entity-establishment and tax-residence questions simultaneously. Whether the private trust company is incorporated in the BVI, the Cayman Islands, or – under the new route – Hong Kong itself carries consequences for economic-substance compliance, directors' residence, and the jurisdiction of administration. Each of these interacts with Hong Kong's territorial profits-tax basis and, for in-scope groups, with the Pillar Two minimum top-up tax effective for fiscal years beginning on or after 1 January 2025 for groups with consolidated revenue at or above EUR 750 million.

Families with a UAE or dual-corridor map face an additional layer. Our matter involving a will and estate plan covering UAE assets – addressed in our UAE estate planning matter note – illustrates how the Gulf succession position must be mapped against the trust's governing law before the structure is finalised. The private trust company's place of incorporation shapes which courts can supervise the trustee and which succession law claim it will resist.

What to do now

The immediate action is a structured review of three documents: the trust deed, the private trust company's constitutional documents, and the family's current residence and domicile map. Where these have not been reviewed against each other in the last two years – or since a material change in the family's geography – the review should be treated as overdue.

The review should address: whether the trust deed's governing-law and jurisdiction clause reflects the current asset map; whether the forced-heirship firewall language under the Trustee Ordinance is operative for the family's current succession-law exposure; and whether the private trust company's board composition and place of administration meets any economic-substance requirement in its jurisdiction of incorporation.

For families considering whether to consolidate the structure through Hong Kong – either through an existing entity or through the inward re-domiciliation route – the analysis set out in our analysis of single family offices structured through Hong Kong provides the baseline. The private-trust-company question and the family-office structuring question are frequently addressed in the same engagement.

Our private wealth practice at Lockhart & Yip covers succession, asset protection and trust structuring across Hong Kong, the principal offshore centres and the family's origin jurisdictions, working alongside locally licensed firms on matters of Hong Kong law. To discuss the position of your structure, write to us at info@lockhartyip.com.

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Related

• Private Wealth
• Will Estate Plan Covering Assets Uae Uae Matter
• Single Family Office Structured Through Hong Kong Analysis

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