This is repeatable and happens every time you do things this way. Create a landless adventurer in china, have him build a holding and do the decision to start a war to take it, take the county, swear fealty to son of heaven, have kids, embrace celestial government. On death, time freezes and the family title stays with the dead character. The game cannot pass the family title to the heir for some reason. It can't even be taken through debug or console commands.
I know this is stupidly specific, but it ruined an awesome campaign so I'm trying to get some visibility, since no one's responded to the bug report I made on the forum
Edit: Administrative in Byzantium has an even worse version of the bug. You don't even get a domicile/estate when you embrace the government