Update: a private trust for a family with assets in Mainland China

Families holding wealth across the Hong Kong–Mainland China corridor face a structural question that has become more pressing: whether their existing trust arrangements can withstand cross-border enforcement risk, succession challenges under Mainland rules, and the absence of any forced-heirship protection in Hong Kong law. For families with operating assets, real property, or investment portfolios on the Mainland side, the legal interface is not theoretical. It is a live point of exposure.

A private trust governed by Hong Kong law offers significant succession and asset-protection advantages, including the abolition of the rule against perpetuities and a statutory firewall against foreign forced-heirship claims, both introduced by reforms to the Trustee Ordinance (Cap. 29) that took effect on 1 December 2013. For families whose assets sit partly or wholly in Mainland China, however, the trust structure alone is not sufficient. The Mainland side of the position requires its own sequencing, and the two systems must be read together.

This briefing sets out what has changed in the operating environment, who it affects, and the immediate steps a cross-border family should consider.

What Has Changed – and What the Exposure Is

The enforcement environment across the Hong Kong–Mainland corridor shifted materially when the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) came into force on 29 January 2024. That regime covers monetary and non-monetary civil judgments. It does not, however, extend to succession matters, matrimonial proceedings, or most insolvency-related determinations – all of which sit at the heart of a family trust dispute.

That exclusion is deliberate, but it creates a gap. A Hong Kong trust instrument that functions well on the common-law side may produce no enforceable outcome in the Mainland when a family member asserts a claim to Mainland-situated assets. The two systems – Hong Kong common law and the Mainland civil-law regime, with its own rules on succession, gifts, and asset registration – do not automatically translate across the boundary.

Families who established trust structures before the 2024 regime, or whose structures were designed around the older 2008 choice-of-court model, should treat the current environment as a prompt to review. The old exclusive-jurisdiction requirement that underpinned the previous mutual-enforcement arrangement has been replaced by a connection-based test. That change has practical implications for how disputes involving trust assets might be framed and where they might land.

At the same time, the Mainland's own rules on succession – including provisions that may operate as a form of forced-heirship protection in practice, even without a formal reserved-share regime – mean that Mainland-situated assets held through or alongside a Hong Kong trust may be treated differently on the Mainland side from how the trust deed intends. Counsel on our desk regularly see this mismatch emerge when a family's primary assets are commercial properties or equity interests in Mainland operating companies held above a Hong Kong intermediate holding layer.

Who This Affects

The exposure is sharpest for families in several positions. First, families with the settlor or primary beneficiaries resident in the Mainland, where the question of which legal system governs the succession of Mainland assets has not been formally addressed. Second, families using a Hong Kong or offshore trust as the holding layer above Mainland-operating entities, without a clear plan for what happens to those entities on the death or incapacity of the key principal. Third, families relying on a trust that predates the 2013 Trustee Ordinance reforms and has not been reviewed since – particularly where the trust deed contains a perpetuity period that became redundant after the abolition of the rule against perpetuities for Hong Kong trusts.

Does your existing structure account for the succession treatment of assets on both sides of the boundary, not only the Hong Kong side? That is the question the current environment requires families to answer directly.

Hong Kong's statutory firewall – which protects a Hong Kong-law trust from being unwound by foreign forced-heirship claims – applies to the trust assets under Hong Kong law. It does not reach into the Mainland and alter how Mainland law treats Mainland-situated assets that have not been properly transferred into the trust structure. The sequence and completeness of asset transfer is therefore critical.

What to Do Now

Three immediate steps are worth considering. First, identify which assets are Mainland-situated and how they are currently held – directly by the settlor, through a Hong Kong company, through an offshore vehicle, or already within the trust. The legal treatment on the Mainland side differs for each. Second, review the trust deed against the current Trustee Ordinance position to confirm that the firewall provisions and the absence of a perpetuity period are properly engaged. Third, map the succession position for Mainland-situated assets separately from the trust analysis, and consider whether any additional instruments – a Mainland will, a marital property agreement, or a restructured holding layer – are needed to close the gap.

In our cross-border practice, we advise families to treat the Hong Kong trust and the Mainland succession plan as two components of a single structure. Optimising one without addressing the other leaves the overall position exposed.

For related context on succession planning across jurisdictions, see our matter note on succession planning across Hong Kong and Cyprus and our guide on forced-heirship and cross-border succession risk. Our full Private Wealth practice covers succession, residence and asset-protection structuring across the family's map.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the structure is won or lost. For a structured assessment of your trust position across the Hong Kong–Mainland corridor, write to us at info@lockhartyip.com.

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