How to approach succession planning across Hong Kong and the UAE

A family with assets in Hong Kong and the UAE faces a legal question that neither jurisdiction resolves on its own. The family's residence sits in Dubai or Abu Dhabi. The investment holding company sits in Hong Kong or the BVI. The matriarch or patriarch holds a portfolio of regional real estate, equity positions and liquid capital across both systems. When succession becomes live – by death, incapacity or a planned generational transfer – two legal regimes, two sets of courts and two entirely different philosophical approaches to family and inheritance law must interact. Getting that interaction right is the whole task.

Succession planning across Hong Kong and the UAE requires mapping the governing law of each asset, identifying where forced-heirship rules apply, selecting the right structural vehicle – trust, foundation or testamentary instrument – and sequencing the steps so that Hong Kong and UAE documents are mutually reinforcing rather than in conflict. The Trustee Ordinance (Cap. 29), as reformed from 1 December 2013, provides the primary Hong Kong structural tool; UAE personal status law and the DIFC Wills Service Centre provide the primary UAE instruments.

This guide sets out the decision the family and its advisers face, the sequence of steps with the gate at each stage, the most common structural mistake, and a practical checklist before the file is opened.

Why does succession planning across Hong Kong and the UAE produce structural complexity?

The UAE operates a dual system for succession purposes. For Muslim nationals, Sharia succession law (the Islamic law of inheritance) governs the distribution of the estate unless specific structures are placed above it. For non-Muslim expatriates, the UAE now permits the application of home-country law to their estates – but that election must be made formally, using the right mechanism, before death. In the DIFC (the Dubai International Financial Centre), an entirely separate common-law regime applies, including a will registry that allows non-Muslims to record wills effective in the DIFC and across the UAE more broadly.

Hong Kong sits on the opposite end of that spectrum. There is no forced-heirship regime under Hong Kong law. A testator in Hong Kong may leave assets to whomever they choose, subject only to family provision claims by financially dependent family members under the Inheritance (Provision for Family and Dependants) Ordinance. The 2013 reform of the Trustee Ordinance further strengthened the position: a trust governed by Hong Kong law will not be invalidated by foreign forced-heirship claims. That statutory firewall is meaningful when UAE-resident family members assert inheritance rights that would, under their personal law, extend to Hong Kong-sited assets.

The practical problem is that most families have not drawn a clean jurisdictional map. Assets are held in a mix of names – personal, corporate, joint – without a deliberate analysis of which law governs each asset on death. The result is that the estate faces simultaneous, and potentially conflicting, claims under two legal systems.

Step 1 – Map the asset register and the governing law of each holding

The first step is a complete asset register with a legal characterisation against each line item. This is not the same as an accounting balance sheet. The question for each asset is: which law governs its transfer on death, and does that law impose a forced distribution?

Three factors determine the governing law for succession purposes. First, the lex situs (the law of the place where the asset is physically or legally situated) governs immovable property in most systems. A Dubai apartment follows UAE succession law. A Hong Kong real property holding follows Hong Kong law. Second, movable property – shares, bank accounts, liquid assets – generally follows the law of the domicile of the deceased at the time of death. Third, assets held through corporate or trust structures are one step removed: the question becomes whether the vehicle itself holds the asset or the individual does.

For UAE-resident principals, this distinction is critical. If the individual holds shares in a Hong Kong private company directly, the position on those shares at death is linked to domicile. If the shares are held through a BVI or Cayman holding entity, the deceased holds shares in the offshore company rather than the underlying Hong Kong asset directly. The succession position on the offshore shares is then a different question again. None of these answers is self-evident without analysis.

The gate at this step: before any structural work begins, every asset must be categorised by type, situs and current titleholder. Without this register, the adviser cannot determine which instruments to use or in which jurisdiction to use them first.

Step 2 – Identify which assets are exposed to UAE forced succession rules

Once the asset register is complete, the second step is to identify which assets are at material risk of forced succession under UAE personal status law or Sharia rules. This analysis differs depending on the family's religious and nationality profile.

For non-Muslim expatriates resident in the UAE, the relevant question is whether a home-country law election has been made and registered. Without a registered will at the DIFC Wills Service Centre or an equivalent instrument, UAE courts may apply the default rules of the UAE Personal Status Law to movable and, in some cases, immovable property. The DIFC Wills Service Centre – operating under DIFC law, which is common-law in foundation – provides a mechanism for non-Muslims to register wills covering DIFC-sited assets and, under a broader registration option, UAE-wide assets. This is the correct instrument for UAE-side testamentary planning for non-Muslim principals.

For Muslim family members, Sharia succession rules impose fixed shares on the estate regardless of testamentary wishes. Structural planning can operate above the estate layer – assets that pass through a trust or a foundation established during the principal's lifetime may not form part of the estate for Sharia succession purposes, depending on the structure and the jurisdiction of the asset. This is a live and legally sensitive area. Blanket assertions that a trust defeats Sharia succession entirely are incorrect. The analysis must be done on the specific structure, the specific asset and the specific jurisdiction.

The gate at this step: for each asset identified in Step 1 as potentially UAE-exposed, a legal opinion should address whether a lifetime structure or registered will can lawfully and effectively alter the succession outcome. This is not a desk analysis. It requires specialist input under UAE law.

Step 3 – Structure the Hong Kong layer using the Trustee Ordinance and the firewall

For assets that are to be held through Hong Kong, or where Hong Kong is to serve as the trust jurisdiction, the Trustee Ordinance (Cap. 29) in its post-2013 form is the primary instrument. The 2013 reform introduced several features directly relevant to cross-border succession planning.

The rule against perpetuities and the rule against excessive accumulations were both abolished for Hong Kong trusts. This means a Hong Kong trust can, in principle, continue indefinitely across generations – a feature that matters for family offices intending to preserve wealth across more than one generational cycle. The settlor may also reserve certain powers – investment directions, powers to change trustees, powers over distributions – without those reservations causing the trust to be invalidated or collapsing back into the estate.

The anti-forced-heirship firewall is the most significant feature for the Hong Kong–UAE interface. The 2013 reform provides statutory protection so that a Hong Kong trust will not be set aside on the basis that it defeats a forced-heirship claim arising under a foreign law. For a UAE-resident settlor with family members who might assert Sharia succession claims against the trust fund, this firewall is material. It does not make the planning immune from challenge in UAE courts against UAE-sited assets; it provides protection for the trust assets held under Hong Kong law and, where applicable, BVI or Cayman law trusts governed by similar provisions.

In practice, the Hong Kong structure typically involves a discretionary trust holding shares in a BVI or Cayman private trust company, which in turn holds the operating and investment holding companies. The settlor may sit as a protector (a role with defined veto or appointment powers, separate from the trustee) during their lifetime, with protector succession built into the deed. The letter of wishes – a non-binding but practically influential document held with the trustee – is the mechanism for communicating distribution preferences without those preferences becoming legally binding commitments that may attract forced-heirship arguments.

The gate at this step: the trust deed, the protector deed and the letter of wishes must be prepared and executed before the Hong Kong layer is treated as effective. Signed term sheets or heads of terms do not constitute a trust. Execution is the gate.

The sequence above describes the standard position. The documents, the family's residence profile and the exact asset mix determine which of these tools applies in your situation – and the order in which they are put in place is where the route succeeds or fails.

To discuss the Hong Kong structuring options for your cross-border succession position, write to us at info@lockhartyip.com.

Step 4 – Align the UAE testamentary instruments with the Hong Kong structure

The fourth step is alignment: ensuring that the UAE-side documents and the Hong Kong-side structure do not conflict, do not create double-transfer events and do not inadvertently bring assets back into the estate.

The most common misalignment is a DIFC will that purports to deal with assets already transferred to a Hong Kong trust. If an asset has effectively passed into the trust – the legal owner is the trustee, not the settlor – it does not form part of the settlor's estate and the will cannot operate on it. A DIFC will drafted without reference to the trust structure may attempt to bequeath assets that the deceased no longer legally owns. This creates confusion at probate and, in some cases, contested litigation about the boundary between the estate and the trust.

Equally, the residuary clause in the DIFC will must be calibrated to catch only estate assets – not trust assets. The appointment of executors and the grant of probate in the UAE proceeds through the UAE courts (or the DIFC courts for DIFC-registered wills) on the basis of the estate that exists at death. If the estate has been substantially transferred to the trust structure during the settlor's lifetime, the probate estate may be small or nominal. That is the intended outcome. The DIFC will should reflect it accurately.

For assets sited in the UAE that are outside the trust structure – direct real estate holdings, UAE bank accounts held personally – the DIFC registered will is the correct testamentary instrument for non-Muslim expatriates. For Muslim family members, the position is more complex and turns on the specific structure. Wasiyya (a testamentary bequest under Islamic law) may be available for up to one-third of the estate net of debts; the balance distributes according to fixed Sharia shares among heirs of the deceased.

The gate at this step: the DIFC will (or UAE notarial will) must be reviewed in light of the completed Hong Kong trust structure. A will drafted before the trust is put in place requires updating. The order of steps matters: structure first, then align the testamentary instruments.

What is the most common mistake – and how is it avoided?

In our cross-border private wealth practice, the single most common error is sequencing: the family obtains a will – often a DIFC registered will – and treats succession planning as done. The Hong Kong holding structure, the offshore entity layer and the trust deed are either absent or drafted without reference to the UAE instruments.

The result is a partially planned estate. UAE-sited assets are covered. Hong Kong and BVI assets are not. When a principal dies or becomes incapacitated, the family discovers that the Hong Kong private company shares pass under the succession law of the domicile – which may be UAE law, or the law of a third country, depending on the domicile analysis. The will may not cover those shares, or may conflict with an existing trust deed. The estate then requires contested probate or court proceedings to resolve the gap.

The correct sequence is the reverse. Begin with the asset register and the governing-law analysis (Step 1). Identify forced-succession exposure (Step 2). Put the Hong Kong or offshore trust structure in place (Step 3). Then align the UAE instruments to the structure as it exists (Step 4). Finally, update all instruments when there is a material change in assets, residence or family composition.

A second common error is treating the letter of wishes as a legally binding document, or – conversely – neglecting it entirely. A letter of wishes that is excessively prescriptive and specific may, in some jurisdictions, be argued to constitute a sham trust (a trust whose terms do not reflect the true arrangement, leaving the assets within the settlor's estate). A letter of wishes that is absent entirely leaves trustees without practical guidance. The instrument requires care in its drafting and periodic updating.

If an earlier filing, structure or enforcement attempt produced an adverse or stalled result, a second review of the sequencing can identify where the gap arose and what steps remain open. Write to us at info@lockhartyip.com to discuss your position.

How does the cross-border element affect enforcement and recognition of the plan?

Succession planning is only as effective as the plan's enforceability in each jurisdiction where assets sit. For the Hong Kong–UAE interface, the enforcement question operates on two levels.

First, Hong Kong court orders and trust structures are not automatically recognised in the UAE, and vice versa. A Hong Kong-law trust governing Hong Kong-sited assets will generally be respected by the Hong Kong courts under the Trustee Ordinance. Whether a UAE court – or a Sharia court with jurisdiction over a Muslim family member's estate – will recognise and respect that trust structure is a separate question, determined by UAE law and the specific facts. The anti-forced-heirship firewall in the Trustee Ordinance protects the trust from being set aside by the Hong Kong courts on grounds of a foreign forced-heirship claim. It does not bind UAE courts.

Second, for assets in the DIFC, the common-law framework and the DIFC courts provide a distinct enforcement environment. The DIFC courts have their own enforcement treaties and arrangements with courts in a number of jurisdictions, including reciprocal arrangements that allow DIFC judgments to be recognised in other common-law systems. For families with Hong Kong holding structures and DIFC-sited assets, this creates a potential recognition path that does not depend on the UAE onshore civil court system.

We regularly advise on the recognition and enforcement dimension of cross-border succession plans. The interaction between the DIFC framework and Hong Kong's common-law system is one of the more practically useful aspects of this interface – and one that is often underused in planning. For related considerations involving a CIS-origin family with similar structural questions, see our succession planning across Hong Kong and CIS briefing. For a worked example of asset-protection structuring involving cross-border exposure, see our asset protection matter note on Cyprus exposure.

Decision checklist before the file is opened

The following questions frame the decision for a family approaching succession planning across Hong Kong and the UAE. None of the answers is standardised; each depends on the family's asset map, residence profile and family composition.

• Is a complete, legally characterised asset register in place, with situs and titleholder confirmed for each line item?
• Has the family's domicile position been assessed under both Hong Kong law and UAE law? Domicile is a term of art; UAE residence alone does not establish UAE domicile for all legal purposes.
• For non-Muslim expatriate principals: has a DIFC registered will been executed and registered covering UAE-sited estate assets?
• For Muslim family members: has the Sharia succession position been mapped against the specific asset profile, and has specialist UAE law advice been obtained on the scope for wasiyya and structural planning?
• Has a Hong Kong or offshore trust been considered for assets that are to pass across generations or are exposed to forced-heirship claims? Is the trust deed executed, not merely in draft?
• Have the UAE testamentary instruments been reviewed and updated to reflect the trust structure as it actually exists – not as it was planned to exist?
• Is there a protector appointment in place for any Hong Kong trust, with a clear succession mechanism for the protector role itself?
• Is the letter of wishes in place, appropriately framed, and consistent with the trust deed?
• Has the plan been reviewed for any material change in assets, family composition or residence in the past three years?
• Is there a clear executor appointment in the UAE instrument, and has that executor been briefed on the structure?

A plan that can answer all of these questions positively is a plan that has been built to operate. A plan that cannot is a plan that has been partially built – and partial plans create the gaps that produce contested estates.

For a structured assessment of your succession position across Hong Kong and the UAE, write to us at info@lockhartyip.com.

Related practices

Related practices

• Private Wealth – succession, asset protection and family office structuring across borders
• Holding Structures – BVI, Cayman and Hong Kong holding entity design and review

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