Matter note: forced-heirship and cross-border

A family's wealth rarely sits in one country. The assets are here, the holding entity is offshore, the patriarch holds a second passport, and the intended beneficiaries live across three time zones. When a forced-heirship regime enters that picture – claiming a mandatory share for children or a surviving spouse regardless of what the will says – the question of which law governs the succession becomes the most consequential question in the room. In our cross-border private-wealth practice, we see this tension play out with increasing frequency as families with Mainland Chinese origins build multi-jurisdictional asset maps anchored through Hong Kong.

Hong Kong law imposes no forced-heirship regime. Under the Trustee Ordinance (Cap. 29), as substantially reformed with effect from 1 December 2013, a Hong Kong-law trust established by a settlor is protected against foreign forced-heirship claims by a statutory firewall – and the rule against perpetuities has been abolished, allowing long-horizon planning. Those two features make Hong Kong a structurally sound hub for cross-border succession where a foreign forced-heirship system would otherwise apply to the family's assets.

This matter note describes, in anonymised form, the cross-border succession challenge a family brought to us and the route we took to resolve it. The names, nationalities and asset values have been removed. The sequence, the legal question and the transferable lesson remain intact.

The situation: a family with an exposed map

The principals were a founder-generation couple with assets spread across a civil-law jurisdiction in continental Europe, an operating business held through a BVI entity, and a portfolio of financial assets managed through a Hong Kong account. The founder held citizenship of the civil-law jurisdiction; his spouse held Hong Kong permanent residence. Their two adult children were resident in a third country.

The civil-law jurisdiction applied a forced-heirship regime under its domestic succession law. That regime reserved a fixed mandatory portion of the estate for the children, regardless of the testamentary wishes of the deceased. The regime applied not only to assets physically located in that jurisdiction but – under the conflict-of-laws rules of the civil-law system – to the worldwide estate of a citizen domiciled there at death.

The founder had not updated his estate plan in several years. A will existed, but it had been drafted under the civil-law regime and made no provision for the offshore assets. The BVI holding entity had no shareholder agreement addressing succession. The Hong Kong financial assets were held outright, with no trust structure. The family had assumed the offshore character of the BVI entity would insulate those assets from the civil-law forced-heirship claim. That assumption was not well-founded.

What does it mean when a forced-heirship regime claims jurisdiction over a worldwide estate? In practice, it means the estate's administrators in the civil-law jurisdiction may seek to claw back, or at minimum account for, assets that the deceased disposed of – including assets held through offshore vehicles – if those disposals are treated as gifts reducing the hereditary mass. The BVI entity, on these facts, created an appearance of separation. Whether it would withstand that challenge depended on the governing law of the trust or shareholding arrangement, and on whether the civil-law courts would recognise that structure as effective.

The cross-border legal interface

The core tension on this file was between the civil-law succession system – which claimed mandatory application to the founder's worldwide estate by reason of his citizenship and domicile – and Hong Kong's trust and succession law, which would have applied had the assets been held through a properly constituted Hong Kong-law trust.

Hong Kong's position is clear on paper. The Trustee Ordinance (Cap. 29) provides that a Hong Kong-law trust is not invalidated by reason only that the settlor reserved certain powers, and the 2013 reform expressly strengthened the firewall against foreign forced-heirship claims. If assets are settled into a Hong Kong-law trust, the trust deed is governed by Hong Kong law, and the trust is validly constituted, then the trust property does not form part of the settlor's estate for succession purposes – at least under Hong Kong law. The forced-heirship claimant would need to persuade the court of the civil-law jurisdiction to disregard that structure.

The offshore layer complicated the picture. The BVI entity was not a trust; it was a private company. Shares in a BVI company are moveable property, and their succession situs – the legal location of the asset for succession-law purposes – was a contested point. Different systems reach different conclusions depending on whether they treat company shares as situated at the place of incorporation, the place where the register is kept, or the place where the shareholder is domiciled. The civil-law jurisdiction's approach on this point would determine whether the BVI shares fell inside the mandatory portion calculation.

We also had to consider the Hong Kong financial assets. These were held outright in the founder's own name. Under any succession system that applied to his estate, they would clearly form part of the hereditary mass. The only structural question was whether, and how quickly, they could be moved into a structure that would afford protection going forward.

For a family office considering how to build a more resilient holding structure through Hong Kong, see our overview of single family office structures through Hong Kong.

The sequence and the turning point

The matter came to us in late 2026. The founder had received preliminary advice from civil-law counsel in the European jurisdiction that the mandatory portion claim, if contested, would likely be pursued through the courts of that jurisdiction after his death – not in Hong Kong. That advice was technically accurate. It was also insufficient, because it left open the question of whether a foreign judgment from the civil-law jurisdiction could eventually be enforced against assets in Hong Kong or the BVI.

Our read of the enforcement risk was this: a civil-law court judgment against the estate administrators – or against the BVI entity as a vehicle holding estate assets – would face a difficult path in Hong Kong if structured correctly. Hong Kong courts apply common-law conflict-of-laws rules to succession matters. The recognition of a foreign succession judgment in Hong Kong is not automatic; it depends on the judgment type, the connecting factors, and the procedural history. A well-constructed trust, validly settled under Hong Kong law before the contingency arose, would not ordinarily be unwound by a foreign court order that Hong Kong courts were asked to enforce post-death.

The turning point in our advice was identifying the window. A forced-heirship clawback analysis in most civil-law systems looks back over a defined period before death and asks whether disposals made during that period reduced the hereditary mass. That look-back period varies by jurisdiction. Acting early – before the founder's health position changed materially – was essential. A settlement made while the founder had full capacity and without any immediate prospect of death would sit in a materially different position from a deathbed settlement, which is typically treated as a disguised bequest in civil-law systems.

We recommended a two-stage approach. First, the BVI holding structure would be reviewed to assess whether the shares could be moved into a Hong Kong-law trust without triggering adverse tax or regulatory consequences in the relevant jurisdictions. Second, the Hong Kong financial assets would be settled into a separate Hong Kong-law discretionary trust, with the founder and his spouse as potential discretionary beneficiaries during their lifetimes and the adult children as remaindermen.

The private wealth practice at Lockhart & Yip coordinated this review alongside allied counsel admitted in the civil-law jurisdiction and locally licensed Hong Kong firms.

Strategy and execution

The Hong Kong-law trust was the structural core of the solution. It was constituted as a discretionary trust under Hong Kong law, with an independent professional trustee. The Trustee Ordinance (Cap. 29) provided the governing framework, including the statutory firewall provision introduced by the 2013 reform that protects a Hong Kong-law trust against invalidation solely on the ground that the disposition would be contrary to the law of another jurisdiction – including a forced-heirship law.

Critically, the trust was structured so that the settlor did not retain so extensive a control over the trust that a court would treat the trust property as remaining in his estate. The reservation-of-powers analysis was conducted with care. Hong Kong's reformed statute permits a settlor to reserve certain powers without vitiating the trust, but the line matters: if the settlor effectively remains the beneficial owner, the firewall protection is weakened regardless of the statutory text.

The BVI shareholding required a separate analysis. The BVI entity could not simply be transferred into the trust without considering whether that transfer would itself constitute a disposition within the civil-law look-back period. We worked through that timing question with allied counsel in the civil-law jurisdiction, and the conclusion was that the transfer sat comfortably outside the look-back window, given the founder's age and health at the time.

A letter of wishes was prepared to guide the trustee's discretion without creating a binding obligation – which would have risked the trust being recharacterised as a bare trust or an estate-planning device subject to challenge. The letter addressed the family's succession intentions, the treatment of the operating business if a liquidity event occurred, and the priority of distributions during the settlor couple's lifetimes.

The civil-law will was updated in parallel, in coordination with the family's European advisers, to make clear that the will disposed only of assets situate in the civil-law jurisdiction that were not otherwise covered by the trust structure. A conflict between the will and the trust deed would have created a litigation risk in itself; the coordination between the two documents was essential.

For clients with trust structures and UK assets in the succession map, our guide on private trusts and family assets in the United Kingdom addresses the cross-jurisdictional trust and estate issues that arise in that corridor.

The sequence above describes the standard position. Your matter turns on the specific governing laws of the jurisdictions in the family's map, the current health and capacity of the settlor, the assets held directly versus through entities, and the timing of any prior disposals – which is precisely where the route is won or lost.

To discuss how the Trustee Ordinance and the Hong Kong trust firewall apply to your cross-border succession position, contact info@lockhartyip.com.

Qualitative outcome and transferable lessons

The trust was constituted within a few months of initial instruction. The BVI shareholding was settled into the trust structure within the same planning cycle. The civil-law will was updated and aligned with the trust documents before the end of the planning year.

The family's position moved from an exposed, outright-holding structure – vulnerable to a mandatory portion claim across the worldwide estate – to a structured position in which the trust assets, held under Hong Kong law, benefit from the statutory firewall. The civil-law forced-heirship regime did not disappear; the founder remained a citizen of that jurisdiction, and assets still situate there at death would remain subject to the mandatory portion rules. But the offshore and Hong Kong-held assets were now held in a form that the civil-law system would find substantially more difficult to reach.

Three lessons apply broadly to families in comparable positions.

First, the offshore company structure alone does not solve the forced-heirship problem. A BVI or Cayman entity insulates assets from operational creditors and provides structural flexibility, but it does not override the succession-law rules of the deceased's domicile. The question is whether the structure is recognised as effective by the civil-law jurisdiction, and that question turns on how the structure was created and when.

Second, timing is the decisive variable. Civil-law forced-heirship systems typically apply look-back periods to inter vivos disposals. A structure built while the founder is healthy and long before any contingency is categorically more defensible than one built in response to a health crisis. If an earlier, incomplete attempt at planning has already occurred, the structure may still be salvageable – but the analysis is more complex and the window may be shorter.

Third, the Hong Kong trust firewall is meaningful only if the trust is properly constituted and the settlor does not retain so much control that the structure is transparent for succession purposes. The statutory text of the Trustee Ordinance (Cap. 29) provides protection, but the protection is not absolute and the implementation matters as much as the legal text.

If an earlier filing, structure or succession attempt produced an ambiguous or incomplete result, a second review can identify what remains open and what steps the family can still take.

To assess the forced-heirship exposure across your family's asset map and identify the structuring route through Hong Kong, email info@lockhartyip.com.

Related practices

Private Wealth – succession, trusts, and cross-border family asset protection
Holding Structures – BVI, Cayman and Hong Kong holding entities for cross-border groups

Frequently asked questions

How long does forced-heirship and cross-border succession risk usually take?

The structuring phase – trust constitution, entity review and will alignment – typically runs over several months, depending on the number of jurisdictions engaged and the complexity of the asset map. There is no single statutory timeline; the governing instruments in each jurisdiction set their own requirements. What matters most is acting within any look-back window that the relevant civil-law forced-heirship regime applies to inter vivos disposals. The sooner the review begins, the more options remain open.

Do I need a Hong Kong adviser for forced-heirship and cross-border succession risk?

Where Hong Kong is the intended hub for the trust or holding structure, a Hong Kong-focused international adviser is essential to ensure the structure is constituted correctly under the Trustee Ordinance (Cap. 29) and the statutory firewall provisions apply as intended. Civil-law counsel in the forced-heirship jurisdiction remains necessary alongside. The two advisory functions address different legal systems, and coordination between them determines whether the structure holds together across the full asset map.

What does the route look like for forced-heirship and cross-border succession risk?

The route typically runs through four stages: mapping the family's asset, residence and citizenship position across all relevant jurisdictions; identifying the forced-heirship exposure and the look-back risk; designing the Hong Kong-law trust structure and the associated holding-entity changes; and aligning the existing will or testamentary documents with the new structure. Allied counsel in the civil-law jurisdiction and locally licensed Hong Kong firms contribute to each stage. The sequence and timing are tailored to the family's specific map.

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

Matter note: forced-heirship and cross-border succession risk