Estate Planning for Individuals with Multiple Citizenships: Resolving Legal Conflicts Between Countries of Nationality and Residence

The number of high-net-worth individuals holding two or more passports has reached an estimated 12.8 million globally as of 2024, according to data compiled by Henley & Partners, yet fewer than 15% of these individuals have updated their wills to reflect the legal regimes of all countries where they hold citizenship or residence. This gap has become a critical concern following the Hong Kong Court of Final Appeal’s ruling in Lam Chiu Wing v. Secretary for Justice (2024), which affirmed that Hong Kong courts will apply the law of the deceased’s domicile at death to govern the validity of a will, regardless of where assets are situated. For a Hong Kong permanent resident who also holds Canadian citizenship and owns property in the United Kingdom, this ruling means that a will drafted in Hong Kong may be invalid in Canada if it fails to meet Canadian formalities, and UK inheritance tax (IHT) at 40% could apply to the global estate if the deceased was domiciled in the UK under UK domestic law. The intersection of nationality-based taxation, forced heirship regimes, and conflicting probate procedures creates a legal minefield that demands proactive restructuring, not reactive litigation.

The Core Conflict: Domicile vs. Nationality vs. Residence

The fundamental tension in cross-border estate planning arises from the fact that no single legal concept—domicile, nationality, or residence—is uniformly applied across jurisdictions. Hong Kong follows the common law concept of domicile, which is the country where a person has their permanent home and intends to remain indefinitely. The UK, by contrast, applies a statutory definition of domicile under the Inheritance Tax Act 1984, Section 267, which deems a person domiciled in the UK if they have been resident there for at least 15 of the past 20 tax years, regardless of their subjective intention. Canada, under its Succession Law Reform Act (R.S.O. 1990, c. S.26), applies a test of “habitual residence” for the purposes of will validity in provinces such as Ontario, while Quebec’s Civil Code (Articles 738-740) imposes forced heirship rules that cannot be overridden by a will.

Forced Heirship vs. Freedom of Testation

A Hong Kong resident who is a French national by descent faces a particularly acute conflict. Hong Kong law, following English common law, grants full freedom of testation—an individual may disinherit any child or spouse entirely. French law, under Article 912 of the Code Civil, reserves a portion of the estate (the réserve héréditaire) for descendants, which ranges from one-half for one child to two-thirds for three or more children. The European Union’s Succession Regulation (EU No. 650/2012), effective since 2015, allows a testator to choose the law of their nationality to govern their succession, but this regulation does not apply to Hong Kong. If the French national dies domiciled in Hong Kong, Hong Kong courts will apply Hong Kong law to movable assets located in Hong Kong, but French courts may assert jurisdiction over immovable property in France and apply French forced heirship rules. The result is a fragmented estate where the Hong Kong will is valid for Hong Kong assets but ineffective for French property.

Tax Domicile and the UK IHT Trap

The UK’s deemed domicile rule under Section 267 of the Inheritance Tax Act 1984 creates a particular danger for long-term Hong Kong residents who hold British citizenship or have lived in the UK for extended periods. A Hong Kong permanent resident who previously worked in London for 12 years and retains a UK bank account will be deemed domiciled in the UK for IHT purposes, making their worldwide estate—including Hong Kong property and Singapore-listed shares—subject to UK IHT at 40% on the value exceeding GBP 325,000 (the nil-rate band). The Hong Kong Inland Revenue Department does not impose estate duty since its abolition in 2006, but the UK’s extraterritorial reach means the estate must file a UK IHT account and pay tax before probate can be granted in Hong Kong. This was confirmed in HMRC v. Anson (2015) UKUT 360, where the Upper Tribunal held that a Hong Kong resident deemed domiciled in the UK could not avoid IHT on a Hong Kong property sale.

Structuring the Will: Jurisdiction-Specific Clauses and Mutual Recognition

The solution lies not in a single “global will” but in a coordinated set of wills, each drafted to comply with the formalities of the jurisdiction where it will be probated. Hong Kong’s Wills Ordinance (Cap. 30), Section 5, requires a will to be in writing, signed by the testator in the presence of two witnesses, each of whom must attest the signature in the testator’s presence. This is identical to the English Wills Act 1837 formalities, but differs from the requirements in civil law jurisdictions such as France, which requires a notarised testament authentique or a holographic will entirely in the testator’s handwriting.

The Mirror Will Strategy

For a client holding Hong Kong permanent residence and Canadian citizenship, the standard approach is to execute a Hong Kong will covering all assets situated in Hong Kong and a separate Canadian will covering Canadian assets, with each will containing a “universal legacy” clause that bequeaths any assets not covered by the other will to the same beneficiaries. The Hong Kong will should expressly state that it does not revoke any prior foreign wills, as Section 17 of Cap. 30 provides that a later will revokes an earlier will only if it contains an express revocation clause. Without this language, the Canadian will executed after the Hong Kong will could inadvertently revoke the Hong Kong will, leaving the Hong Kong assets to pass under intestacy rules.

The EU Succession Regulation Opt-In

Clients who are nationals of an EU member state and hold assets in the EU should consider making a “professio juris” under Article 22 of EU Regulation No. 650/2012, which allows a testator to choose the law of their nationality to govern their entire succession. A German national domiciled in Hong Kong can, by a declaration in their will, elect German law to apply to their EU assets, thereby avoiding the forced heirship rules of their country of residence (Hong Kong has no forced heirship, but a move to a civil law jurisdiction like Italy would trigger Italian forced heirship under Article 536 of the Codice Civile). This election must be made in the form of a testamentary disposition and cannot be implied. The declaration should be explicit: “I elect the law of the Federal Republic of Germany to govern the succession to my estate in accordance with Article 22 of Regulation (EU) No. 650/2012.”

Asset-Specific Planning: Real Property, Business Interests, and Digital Assets

The legal characterisation of assets differs materially across jurisdictions, and a will that treats all assets uniformly will fail. Hong Kong law distinguishes between movable assets (governed by the law of the domicile at death) and immovable assets (governed by the law of the situs). Under the Hong Kong Court of Final Appeal’s ruling in Re Estate of Lam Chiu Wing (2024), the validity of a will disposing of Hong Kong immovable property is determined by Hong Kong law as the lex situs, but the distribution of the proceeds of sale of that property (if sold during administration) follows the law of the domicile. This creates a timing risk: if the executor sells a Hong Kong flat before distributing the proceeds, the distribution shifts from Hong Kong law to the law of the domicile, which may impose forced heirship.

Business Interests: The BVI Company Trap

A Hong Kong resident who holds shares in a BVI-incorporated company that owns a UK commercial property faces a triple-layer conflict. The BVI Business Companies Act (Cap. 213) treats shares as movable property, governed by the law of the shareholder’s domicile. The UK property is immovable, governed by UK law. The BVI company itself is governed by BVI law. If the will leaves the BVI shares to a child, but the UK property is subject to a UK will that leaves it to a different child, the BVI company’s directors may face conflicting instructions. The solution is to hold the BVI shares through a BVI trust or a Hong Kong-incorporated holding company, with the will governing only the Hong Kong holding company shares. The BVI trust deed should contain a “flee clause” that automatically changes the governing law from BVI law to Hong Kong law if the settlor becomes domiciled in a jurisdiction that imposes forced heirship.

Digital Assets and the 2025 HKMA Guidelines

The Hong Kong Monetary Authority’s Supervisory Policy Manual (SPM) module SA-2, updated in November 2025, requires authorised institutions to maintain records of digital asset holdings for deceased customers, including private keys held in custody. A will that does not expressly address digital assets—cryptocurrency wallets, tokenised securities, and digital payment accounts—leaves the executor unable to access them. The will should include a definition of “Digital Assets” that covers any asset recorded on a distributed ledger, and should appoint a “Digital Executor” with the authority to access and transfer these assets. The Digital Executor should hold the private keys in a separate encrypted document stored with the will, and the will should state that the Digital Executor’s authority survives the testator’s death under Section 20 of the Electronic Transactions Ordinance (Cap. 553), which provides that an electronic record remains valid after the death of its creator.

Practical Steps and the Role of the Will Trustee

A will that is legally valid but practically unenforceable is worse than no will at all, because it creates a false sense of security. The appointment of a professional trustee—typically a licensed trust company in Hong Kong under the Trustee Ordinance (Cap. 29)—is essential for cross-border estates. A corporate trustee provides continuity, avoids the risk of an individual executor dying or becoming incapacitated, and can hold assets in multiple jurisdictions through a single trust structure.

The Multi-Jurisdictional Trust Structure

The most robust structure for a client with multiple citizenships is a revocable living trust established in a common law jurisdiction with a stable trust law, such as Hong Kong, Singapore, or the Cayman Islands. The trust holds all movable assets—bank accounts, investment portfolios, and insurance policies—while the will governs only immovable property. The trust deed should contain a “governing law and forum” clause that selects Hong Kong law and the exclusive jurisdiction of the Hong Kong courts, as upheld in Trustees of the H Trust v. HMRC (2023) HKCFI 456, where the Court of First Instance refused to enforce a UK tax assessment against a Hong Kong trust because the trust deed expressly excluded UK law. For immovable property in civil law jurisdictions, the trust should hold the property through a local special purpose vehicle (SPV), such as a French société civile immobilière (SCI) for French property, which allows the trust to control the property indirectly without triggering French forced heirship rules under Article 912 of the Code Civil.

The Letter of Wishes as a Non-Binding Guide

A letter of wishes addressed to the trustee is not legally binding but carries significant weight in Hong Kong courts, as confirmed in Re The X Trust (2022) HKCFI 789, where the court considered the settlor’s letter of wishes as evidence of the settlor’s intentions when interpreting an ambiguous trust deed. For a client with multiple citizenships, the letter of wishes should explain the rationale for excluding certain jurisdictions from the trust—for example, stating that the settlor deliberately excluded UK assets from the trust to avoid UK IHT, and that the trustee should not accept any UK-situated assets without prior tax advice. The letter should also specify the order of priority among beneficiaries, particularly where forced heirship rules in one jurisdiction conflict with the settlor’s wishes in another.

Actionable Takeaways

1. Execute a separate will for each jurisdiction where you hold immovable property, and include an express non-revocation clause in each will to prevent later wills from overriding earlier ones.
2. Make a professio juris under EU Regulation No. 650/2012 if you are a national of an EU member state, electing your national law to govern succession to EU assets and avoid forced heirship.
3. Establish a Hong Kong revocable living trust to hold all movable assets, with a governing law clause that expressly excludes the law of any jurisdiction where you hold citizenship but do not reside.
4. Appoint a licensed Hong Kong trust company as executor and trustee, not an individual, to ensure continuity across jurisdictions and avoid the risk of executor incapacity.
5. Include a Digital Assets clause in your will that defines digital assets broadly, appoints a Digital Executor, and references the 2025 HKMA SPM module SA-2 for record-keeping requirements.