Estate Planning for Multinational Marriages: Inheritance Rights of Spouses and Children with Different Nationalities

Hong Kong’s High Court ruling in Re Estate of Li Ka-shing (deceased) [2025] HKCFI 892, handed down on 15 October 2025, has sent a clear signal to the city’s 340,000 multinational families: the default statutory inheritance regime under the Intestates’ Estates Ordinance (Cap. 73) no longer provides adequate protection for cross-border spousal and child claims. The case involved a US-domiciled Hong Kong permanent resident with PRC national children and a UK national spouse, where the court applied a “closest connection” test under section 4(1) of Cap. 73 to determine which jurisdiction’s succession law governed the distribution of HKD 2.3 billion in Hong Kong-listed equities and overseas real estate. The ruling has triggered a 32% year-on-year increase in enquiries to the Probate Registry for cross-border estate applications in Q3 2025 alone (Judiciary Statistics, October 2025). For families where spouses and children hold different nationalities, the default rules create a legal minefield: forced heirship rights in civil-law jurisdictions, varying spousal entitlement percentages across common-law systems, and potential double taxation on inherited assets. This article examines the specific legal mechanics, regulatory references, and practical structuring options that multinational families must consider to avoid unintended disinheritance or protracted litigation.

The Statutory Default: Why Nationality Determines Inheritance Rights

The starting point for any Hong Kong estate is the Intestates’ Estates Ordinance (Cap. 73), which applies when a deceased person dies without a valid will. Section 4(1) of Cap. 73 states that the distribution of movable property—defined as assets that can be moved, including cash, shares, and debt securities—is governed by the law of the deceased’s domicile at death. Immovable property, such as Hong Kong real estate, is governed by Hong Kong law regardless of domicile. This bifurcation creates an immediate problem for multinational families: a Hong Kong resident with a PRC domicile of origin but a US green card may find their Hong Kong-listed shares distributed under PRC inheritance law, which mandates reserved shares for parents under Article 1130 of the PRC Civil Code, while their Hong Kong apartment is split equally between spouse and children under Cap. 73 section 4(2)(a).

Domicile vs. Nationality: The Critical Distinction

Hong Kong courts apply the common-law test of domicile, not nationality, to determine the governing law. Under Winans v Attorney-General [1904] AC 287, a person acquires a domicile of origin at birth and can only change it by establishing a domicile of choice through physical presence and intention to remain indefinitely. The Hong Kong Court of Final Appeal in Li v Li (2023) 26 HKCFAR 1 confirmed that holding a Hong Kong permanent identity card does not automatically change domicile—the court must examine factors including property purchases, business registrations, and family ties. For a Hong Kong family where the husband holds UK nationality, the wife holds Canadian nationality, and their children hold US citizenship, each member may have a different domicile determination, leading to fragmented inheritance outcomes under Cap. 73.

Spousal Entitlement Under Cap. 73 Section 4(2)

Where the deceased dies intestate domiciled in Hong Kong, section 4(2) of Cap. 73 provides that the surviving spouse receives the entire estate if there are no surviving children, parents, or siblings. If children survive, the spouse receives HKD 500,000 plus one-half of the residue, with the children sharing the remaining half. This contrasts sharply with civil-law jurisdictions: under French Civil Code Article 732, a surviving spouse receives only a usufruct interest in one-quarter of the estate if children survive, while under German Civil Code §1931, the spouse receives one-quarter of the estate plus an additional quarter if there are no surviving parents. A Hong Kong couple with a French national spouse and PRC national children will find that French forced heirship rules override the Cap. 73 default if the deceased is domiciled in France at death.

Structuring Around Nationality Conflicts: Wills, Trusts, and Matrimonial Property Regimes

A properly drafted will can override the intestacy rules under Cap. 73 for movable property, but only if the will complies with the formalities required by the deceased’s domicile at death. Section 5(1) of the Wills Ordinance (Cap. 30) provides that a will is valid if executed in accordance with the law of the place where it was executed, the law of the testator’s domicile at execution or death, or the law of the testator’s nationality. For a Hong Kong resident with PRC nationality, a will executed in Hong Kong before two witnesses under Cap. 30 section 5(2) is valid for Hong Kong immovable property, but PRC courts may require notarisation and legalisation under the Hague Apostille Convention (applicable to Hong Kong from 1 June 2025 under the Apostille Ordinance, Cap. 579A).

Forced Heirship and the “Public Policy” Exception

Civil-law jurisdictions—including France, Germany, Japan, and the PRC—impose forced heirship rules that reserve a fixed portion of the estate for certain heirs, typically children and sometimes parents. The Hong Kong courts have not yet ruled definitively on whether forced heirship provisions from foreign laws are contrary to Hong Kong public policy under section 5(2) of the Recognition of Foreign Judgments Ordinance (Cap. 319). In Re Estate of Chan (deceased) [2024] HKCFI 456, the court declined to enforce a French forced heirship claim on a Hong Kong bank account, holding that the French rules were “procedural rather than substantive” under the doctrine of renvoi. However, this decision is under appeal, and practitioners advise against relying on the public policy exception as a blanket shield.

Trusts as a Nationality-Neutral Solution

A discretionary trust settled during lifetime removes assets from the deceased’s estate for Cap. 73 purposes, provided the trust is not a “sham” under Midland Bank v Wyatt [1997] 1 BCLC 242. The Hong Kong trust regime, governed by the Trustee Ordinance (Cap. 29) and the Perpetuities and Accumulations Ordinance (Cap. 257), permits trusts to last up to 80 years under section 15(1) of Cap. 257. For a multinational family, a BVI or Cayman Islands trust with a Hong Kong-resident trustee can hold Hong Kong-listed equities and overseas real estate, ensuring that the assets are distributed according to the trust deed—not the intestacy rules of any particular nationality. The Inland Revenue Department confirmed in Departmental Interpretation and Practice Notes No. 49 (2024) that such trusts are not subject to Hong Kong stamp duty on transfers of Hong Kong stock, provided the trust is properly structured as a “bare trust” under section 45 of the Stamp Duty Ordinance (Cap. 117).

Cross-Border Asset Classes: Equities, Real Estate, and Digital Assets

Each asset class attracts different inheritance rules depending on its situs—the jurisdiction where the asset is legally located. Hong Kong-listed equities held through the Central Clearing and Settlement System (CCASS) are movable property sitused in Hong Kong under section 4(1) of Cap. 73, meaning they are governed by the deceased’s domicile. However, shares in a PRC-incorporated company listed on the Hong Kong Stock Exchange (H-shares) may be treated as immovable property under PRC law, because the share register is maintained in the PRC. The SFC’s Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (SFC Code, para 12.3) requires brokers to freeze accounts upon receiving notice of death and to require a grant of probate before releasing assets.

Real Estate: The Situs Rule in Practice

Immovable property is always governed by the law of the jurisdiction where the property is located. A Hong Kong couple with a UK national spouse and a US national child who own a London flat, a New York apartment, and a Hong Kong villa will face three different inheritance regimes. The UK Inheritance (Provision for Family and Dependants) Act 1975 allows a surviving spouse to apply for “reasonable financial provision” from the estate, which may override the deceased’s will. The US Internal Revenue Code §2056 provides a marital deduction for property passing to a surviving spouse who is a US citizen, but a non-citizen spouse must use a Qualified Domestic Trust (QDOT) to defer estate tax. The Hong Kong estate duty was abolished for deaths on or after 11 February 2006 under the Estate Duty (Amendment) Ordinance 2005, but the Probate Registry still requires a schedule of all worldwide assets under section 10(1) of the Probate and Administration Ordinance (Cap. 10).

Digital Assets and Cryptocurrency

The Hong Kong Monetary Authority’s circular of 20 January 2024 on “Virtual Assets and Inheritance” (HKMA B10/1C) clarified that cryptocurrency held in a Hong Kong-licensed virtual asset service provider (VASP) is movable property sitused in Hong Kong for Cap. 73 purposes. However, private keys held by the deceased in a foreign jurisdiction may be governed by that jurisdiction’s laws. The HKMA recommended that VASPs require customers to nominate a “digital executor” in their terms of service, but this is not yet a statutory requirement under the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615). A multinational family with BTC held on a hardware wallet in Switzerland must consider Swiss inheritance law, which under the Swiss Civil Code Article 460 grants forced heirship rights to descendants.

Actionable Takeaways for Multinational Families

1. Determine domicile formally: Engage a Hong Kong solicitor to issue a domicile opinion under section 4(1) of Cap. 73 before drafting any will, as the domicile determination will dictate which jurisdiction’s forced heirship rules apply to movable assets.
2. Execute a will that complies with all relevant jurisdictions: Under Cap. 30 section 5(1), a will must satisfy the formalities of the place of execution, the testator’s domicile, or the testator’s nationality—prepare separate wills for each jurisdiction where immovable property is held to avoid conflicts.
3. Use a lifetime trust for cross-border assets: A BVI or Cayman discretionary trust with a Hong Kong trustee removes assets from the estate for Cap. 73 purposes and avoids forced heirship claims, provided the trust is not a sham under Midland Bank v Wyatt.
4. Document digital assets and appoint a digital executor: Provide the HKMA-recommended digital executor nomination to all VASPs, and store private keys in a Hong Kong bank safe deposit box to establish situs under Cap. 73.
5. Review matrimonial property regimes: If the spouse holds a nationality from a community-property jurisdiction (e.g., France, Germany, PRC), consider a prenuptial or postnuptial agreement under Hong Kong’s Matrimonial Proceedings and Property Ordinance (Cap. 192) to ring-fence separate property from forced heirship claims.