Matter note: a will and estate plan covering CIS

Estates with assets across the Commonwealth of Independent States (the CIS – the grouping of post-Soviet states including Russia, Kazakhstan, Ukraine and others) present a structuring challenge that sits at the intersection of civil-law forced-heirship rules, common-law trust doctrine, and the recognition question that surfaces whenever an instrument executed in one jurisdiction must operate across several others. A Hong Kong-seated international counsel role in a matter of this kind is rarely headline work; it is the quiet architecture that determines whether the plan holds when it is tested.

This note describes an anonymised matter our desk handled. The parties are not identified. No numbers are used beyond the qualitative. The purpose is to illustrate the cross-border problem, the route we chose, and the lesson that transfers to structuring work of the same kind.

The situation: a family with a dispersed asset map

The principal was a founder-generation entrepreneur. The business interests sat primarily in a CIS jurisdiction operating under a civil-law system. Real property was held there directly in personal name. A holding entity had been incorporated in a common-law offshore centre and sat above a trading operation, but the documentation around that structure was incomplete. Liquid assets were distributed across accounts in more than one jurisdiction, including accounts held through intermediaries in a third country.

The family itself was spread across borders. The principal was tax-resident in a CIS state. Adult children held residence in two separate European states. A surviving spouse had recently established presence in Asia. There was no existing will that had been stress-tested against more than one jurisdiction's rules. A prior estate plan had been drafted some years earlier by domestic lawyers in the home CIS state; it addressed assets situated there, and nothing else.

The constraint was time. The principal had received a health diagnosis that made the succession question urgent. The instruction when we were engaged was clear: understand what happens to the whole estate, not just the domestic part, and produce a plan that works across the family's actual map.

The problem: civil-law forced heirship meeting common-law structures

The central legal tension in a CIS-connected estate plan is the interaction between the forced-heirship rules that apply in most civil-law CIS jurisdictions and the protective architecture that common-law trust and holding structures are designed to provide.

Most CIS jurisdictions reserve a fixed proportion of the estate for a defined class of heirs, typically the surviving spouse, minor children, and in some systems dependent parents. That entitlement applies regardless of what the will says. It attaches to assets situated in the relevant jurisdiction and, in some systems, has potential extraterritorial reach against assets held by the deceased at the moment of death.

The offshore holding entity in this matter was incorporated in a common-law jurisdiction. The Trustee Ordinance (Cap. 29) in Hong Kong, which was substantially reformed with effect from 1 December 2013, offers relevant context: the 2013 reform strengthened protections against foreign forced-heirship claims for trusts governed by Hong Kong law, and abolished the rule against perpetuities for Hong Kong trusts. But this structure was not a Hong Kong-law trust; it was an offshore company sitting above an operating business. The question was whether that structure would be respected by the CIS-jurisdiction courts if a forced-heirship claim were brought against the estate after the principal's death.

What foreign counsel and principals frequently underestimate is the distinction between holding title through a corporate structure and holding assets in a way that a civil-law court will characterise as outside the estate. CIS courts in our experience are not uniformly persuaded that an offshore holding company disappears the underlying economic interest for succession purposes. The characterisation depends on the jurisdiction, the facts, the documentation, and the manner in which the company was actually operated.

How does Hong Kong connect to an estate with CIS assets?

Hong Kong enters the picture for three reasons in a matter of this kind. First, it is the natural neutral-forum hub for families moving capital and residence across the Asia-Pacific and CIS corridors. The common-law system, English as an official working language of the courts, and the absence of forced-heirship rules under Hong Kong law make it an attractive governing-law choice for trust and wealth structures designed to span multiple jurisdictions.

Second, the family's practical reality placed Hong Kong in the centre. The surviving spouse had established presence in Asia. Any structure intended to provide for the spouse needed to function under a governing law that the spouse could access and enforce. A structure governed exclusively by the law of a CIS state would have been practically inoperable for her.

Third, the instruction we received was to act as international counsel, coordinating the cross-border picture and working alongside locally licensed firms where local-law execution was required. That coordination role – across the CIS jurisdiction, the offshore centre, and the common-law environment where the structure would ultimately be governed – is precisely the kind of matter our cross-border private wealth practice is built around.

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 route is won or lost.

For a structured assessment of your family's cross-border succession position, write to us at info@lockhartyip.com.

The route chosen: sequence and turning point

The starting point was a jurisdiction-by-jurisdiction asset map. Before any instrument was drafted, we needed a clear picture of where each asset was situated for succession purposes – not where it was registered, not where the principal felt it was held, but where a court in each relevant jurisdiction would treat it as situated at the moment of death. Those two answers are not always the same.

The offshore holding company was reviewed first. The question was whether the company, as operated and documented, was sufficiently separate from the principal's personal estate that a CIS forced-heirship claim could not reach the underlying assets through it. The answer required input from locally licensed counsel in the CIS jurisdiction and from practitioners in the offshore centre. Our role was to frame the legal questions, coordinate that input, and integrate the answers into a single structuring analysis.

The turning point was the documentation review of the holding company. What emerged was that the company had been operated in a manner inconsistent with its formal separate legal personality. Minutes were incomplete. Distributions had been made informally. The shareholder register had not been updated following a restructuring several years earlier. In practical terms, the structure as it stood would not have been likely to withstand a determined forced-heirship challenge before a CIS civil court.

The correction step was not to abandon the holding structure. It was to regularise it. Minutes were prepared retroactively where the law of the offshore centre permitted, shareholder documentation was updated, and distributions were properly recorded going forward. That work preceded the drafting of any testamentary instrument, because a will drafted over a broken structure is a will over broken ground.

The will itself was then prepared as a multi-jurisdictional instrument. The approach, standard for estates of this kind, was to prepare separate instruments for each principal asset jurisdiction rather than a single global will. A global will is sometimes used for simplicity; in a CIS-connected estate it creates risk, because the document is submitted to probate in multiple jurisdictions, and a challenge in one can delay administration across the whole estate. Separate instruments, properly cross-referencing each other and excluding assets covered by the other, avoid that entanglement.

For the CIS-situated assets – the real property and the local business interests – the instrument was drafted to comply with local formal requirements, taking into account the forced-heirship entitlements that could not be excluded. The plan did not attempt to defeat the forced-heirship claim; it structured around it, allocating the assets most likely to attract the claim to the heirs entitled to it by law, and directing other assets through the common-law structure to the surviving spouse and to the children in the jurisdictions where they were resident.

A reserved-powers structure, discussed in our guide on founder-controlled businesses and reserved-powers trusts, was considered for the liquid assets. The principal was not ready to give up control during lifetime. The solution was a will trust – taking effect at death rather than during the principal's lifetime – governed by a common-law governing law and administered outside the CIS, with the surviving spouse as the primary beneficiary and the adult children as remainder beneficiaries. The structure was designed so that assets flowing into it would not be situated in the CIS at the moment of death and would therefore not be directly subject to the CIS forced-heirship regime.

If an earlier structure or succession plan has produced an adverse result or a stalled position, a second read of the cross-border picture can identify the error and the routes still open. On matters of this kind, email info@lockhartyip.com.

The qualitative outcome and the transferable lesson

The matter closed with a full estate plan in place: the holding company regularised, separate wills covering the principal asset jurisdictions, and a will trust structured to receive the liquid assets at death under a governing law accessible to the surviving spouse. The forced-heirship exposure was not eliminated – it cannot be, for assets situated in a CIS jurisdiction subject to that regime – but it was mapped, quantified in legal terms, and allocated in a way the family understood and accepted.

The transferable lesson is this. CIS-connected estate planning fails most often not because the succession law is hostile, but because the asset map is wrong. Principals and their advisers treat the structure as they believe it to exist rather than as a court in the relevant jurisdiction would characterise it. The holding company that has not been properly maintained; the real property that the principal believes sits in a structure but in fact sits in personal name; the account that is registered in one jurisdiction but governed by an agreement pointing to another. Each of those mismatches becomes a litigation point when the estate is administered.

The second lesson is sequencing. The will must be drafted over the structure as it actually is, not as it is intended to be. If regularisation is needed – and in our cross-border practice it frequently is – that work comes first. A will that disposes of assets through a structure that cannot withstand scrutiny is not a succession plan; it is a source of litigation.

The third lesson concerns the forced-heirship question specifically. For CIS-connected estates, the question is not whether forced-heirship applies. It does. The question is which assets it reaches, in which jurisdiction, and how the plan is designed to work with that constraint rather than against it. Structures that attempt to defeat a legitimate forced-heirship entitlement through artificial arrangements are vulnerable. Structures that plan around it, using properly documented holding architecture, governing-law choices and multi-instrument wills, are not.

Our related briefing on asset protection for principals with Singapore exposure addresses a number of comparable structuring questions in a different regional corridor. The analytical approach – map the assets, assess the characterisation risk, sequence the instruments – applies equally here.

What practitioners working in this space typically miss

The CIS is not a single legal system. Each state has its own succession law, its own forced-heirship regime, its own rules on the recognition of foreign wills and foreign trusts. A plan drafted with Kazakhstan in mind operates differently in Russia; a plan that references Ukrainian succession law must now account for an entirely changed legal environment. The practical implication is that generic advice on "CIS estate planning" as a category is of limited use. The analysis must be jurisdiction-specific.

The second gap we regularly see is the trust recognition question. Common-law trusts are not universally recognised in civil-law CIS jurisdictions. A trust that is effective under Hong Kong law, or under the law of an offshore centre, may be characterised by a CIS court as a disguised transfer or a sham, particularly if the settlor retained significant control. The reserved-powers question – how much control a settlor can retain without defeating the trust structure – is therefore not just a Hong Kong or offshore-centre question; it is a question about how the structure will be seen by the courts that will be asked to give effect to it.

That characterisation risk is one of the reasons the regularisation work described in this note was sequenced before any testamentary instrument was drafted. It is also one of the reasons that a cross-border adviser with sight of the whole picture – the CIS legal environment, the offshore holding structure, the common-law governing-law choice, and the enforcement question – is not a luxury in a matter of this kind. It is the structural requirement for a plan that will work.

Related practices

Private Wealth – succession, trust structures, asset protection and family-office planning across jurisdictions
Holding Structures – reviewing and regularising offshore and onshore holding architecture for cross-border groups

Frequently asked questions

Do I need a Hong Kong adviser for a will and estate plan covering assets in the CIS?

A Hong Kong international counsel is relevant where the estate plan needs to operate across a common-law governing law and one or more CIS civil-law jurisdictions – particularly where the family has residence in Asia, holds assets through offshore structures, or requires a neutral forum that offers strong trust and asset-protection rules. Hong Kong's common-law system, the absence of forced-heirship rules, and the statutory protections for trusts under the Trustee Ordinance (Cap. 29) make it a natural governing-law anchor for the common-law portion of a CIS-connected estate plan. We work alongside locally licensed counsel in each relevant jurisdiction for matters requiring local-law execution.

Which jurisdiction's law applies to a will and estate plan covering assets in the CIS?

There is no single answer. Succession to immovable property is generally governed by the law of the jurisdiction where the property is situated, meaning a property in a CIS state will attract that state's succession law, including its forced-heirship rules, regardless of where the will is executed or what governing law it selects. Movable assets follow the law of the deceased's domicile at death in many systems, though this varies. Structures held through companies or trusts add a further layer: the characterisation of the interest, and whether the asset is treated as inside or outside the estate, depends on the law of each court asked to decide the question. A multi-instrument approach – separate wills for each principal asset jurisdiction – is the standard response to this complexity.

What are the main risks in a will and estate plan covering assets in the CIS?

The principal risks are four. First, forced-heirship exposure: most CIS jurisdictions reserve a portion of the estate for defined heirs, and a plan that does not account for this will be corrected by the local court. Second, characterisation risk: a holding structure that has not been properly maintained may be treated as transparent by a CIS court, making the underlying assets directly subject to the estate. Third, recognition risk: a common-law trust or offshore structure may not be recognised in a civil-law CIS jurisdiction. Fourth, sequencing error: drafting a will over a structure that has not been regularised produces litigation rather than succession. Parties should verify the current position in each relevant jurisdiction before acting.

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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: a will and estate plan covering assets in the CIS