According to Article 1133 of the Civil Code of the People's Republic of China, a natural person may establish a testamentary trust in accordance with the law. A testamentary trust means that the testator provides in their will that, upon their death, the estate is transferred to a trustee, who manages and distributes it to the beneficiaries in the manner specified in the will. It transforms a "one-time inheritance" into "ongoing distribution according to rules," enabling far more refined succession arrangements.

Testamentary trusts primarily address several categories of problems. First, minor children or those lacking management capability: instead of handing the estate over to the children in a lump sum, the trustee pays out installments tied to milestones such as education, living expenses, and starting a business, preventing young beneficiaries from squandering everything at once. Second, preventing family wealth from flowing out due to a child's divorce: through the trust structure, the estate is designated as belonging solely to the child individually and is not treated as joint marital property. Third, cross-border asset succession: for families involving Hong Kong or heirs with foreign nationality, a testamentary trust can coordinate the laws of multiple jurisdictions. Fourth, succession of family business equity: holding equity through a trust prevents children from fighting over the estate and disrupting company operations. In one of our firm's winning high-end inheritance cases, a combined arrangement of testamentary trust plus notarized will smoothly achieved the transition of family business equity to the second generation.