HONG KONG SAR, CHINA Law and Practice Contributed by: Alfred Ip, Hugill & Ip
personal estate, protecting them from future personal creditors, matrimonial claims of beneficiaries, and the risks of beneficiary insolvency or incapacity. The trus - tee exercises discretion over the timing and quantum of distributions, allowing the family’s wealth to be managed in a flexible and responsive manner. For an introduction to the different types of trusts available, see Trust Focus Week: Different Types of Trusts and Estate Planning FAQ: Trusts. Family investment companies (FICs) and limited partnerships are increasingly popular alternatives or complements to trusts. An FIC allows the founding generation to transfer economic value through non- voting shares or preference shares to the next genera - tion whilst retaining voting control and management authority through ordinary shares. This structure is particularly effective for family businesses, where con - tinuity of management is critical. Similarly, a limited partnership structure offers economic and govern - ance benefits with greater flexibility in profit allocation. For families with a single-family office, the FIHV regime, discussed at 1.2 Exemptions , provides a compelling tax incentive to centralise investment management in Hong Kong, as detailed on the IRD’s FIHV page. 2.7 Transfer of Assets: Digital Assets The succession of digital assets, including crypto - currencies, non-fungible tokens (NFTs), digital wal - lets, and online accounts, presents novel and rapidly evolving challenges in Hong Kong estate planning. The foundational legal question of whether cryptocur - rencies constitute “property” capable of being owned and transferred was definitively answered by the Hong Kong Court of First Instance in Re Gatecoin Limited (In Liquidation) [2023] HKCFI 914, which confirmed that cryptocurrencies are “property” under Hong Kong law and can be held on trust. This landmark ruling pro - vides a legal foundation from which to include digital assets in wills and trust structures. Despite this necessary legal clarity, the practical chal - lenges of digital asset succession remain formidable. Self-custodied cryptocurrency holdings are secured by private keys and seed phrases, which are known only to the holder. If an executor cannot locate these credentials, the assets are practically irrecoverable,
regardless of the legal entitlement. Executors deal - ing with custodial exchange accounts face additional hurdles, including platform-specific account recov - ery procedures, anti-money laundering verification requirements, and the risk of account-freezing during probate. Effective planning requires a comprehensive digital asset inventory, maintained securely and updated regularly, identifying all digital assets, the platforms or wallets where they are held, and the access cre - dentials or recovery instructions. To avoid the will becoming a public document that discloses sensi - tive security information, this inventory should be stored separately from the will itself but in a location disclosed to the executor. For detailed guidance on this topic, see Cryptocurrencies in the Complicated World of Tax, Estate and Trust Law and the Hugill & Ip insights on Cryptocurrency Inheritance and Digi - tal Asset Succession. In 2026, Hong Kong expanded the family office FIHV tax concession to cover digital assets, as discussed in Hong Kong Family Offices: The New Tax Concession Expansion. 3. Trusts, Foundations and Similar Entities 3.1 Types of Trusts, Foundations or Similar Entities Hong Kong possesses a mature and sophisticated trust law framework, making it one of the most trust- friendly jurisdictions in Asia. The discretionary trust is the dominant vehicle for private wealth planning, offer - ing maximum flexibility in the distribution of income and capital among a class of beneficiaries. The trus - tee exercises absolute discretion over distributions, ensuring that the trust can adapt to changing fam - ily circumstances, tax environments, and beneficiary needs over time. The Trustee Ordinance (Cap. 29) expressly permits the creation of reserved power trusts, under which the settlor retains specified powers ‒ such as the power to direct investments, to appoint and remove trustees, or to add and exclude beneficiaries ‒ without invalidat - ing the trust. This is a critical feature for Hong Kong clients who are reluctant to relinquish all control, as it
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