Blended families: Love unites but succession divides

It is common for a blended family member to feel that what seems fair emotionally may not look equal financially. As a result, there is a higher degree of inheritance anxiety and lack of estate planning will mean leaving the key decisions to the courts rather than families.

While the legal framework is meant to provide order in society, it can collide with emotions when human relationships are layered with members from blended families, separated spouses, and stepchildren.

In a second marriage, what you do not plan for is what your heirs will fight for.

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Love writes the vows but succession planning writes the legacy

Not long ago, a young entrepreneur with a blended family lost his life in a tragic accident. What followed is a very public battle over succession, with a mosaic of competing claims.

While the individual reportedly put in a place a succession plan, its validity is being challenged. Let us understand the implications and rights of parties involved under two scenarios.

Scenario 1: Where there is no will

In the absence of a will, succession is not guided by intention or desire but by law. Under the Hindu Succession Act (HSA), the statutory provisions take over and can lead to outcomes very different from what the deceased may have wanted.

Under the HSA, in the case of a Hindu male, his widow, children (from any marriage), and mother are all Class I heirs. They inherit simultaneously and equally. While the ex-wife has no share, all legitimate children have equal rights in succession.

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Scenario 2: Where there is a will

The law of inheritance bends to the power of a will. Personal intent properly expressed overrides statutory rules. So it is possible to leave behind assets and make allocations as per the desire of the individual to any member, including non-family members and charity, just by making a simple and precise will and executing it properly as per law.

While the law ensures equality, a will certifies the intention.

Guardianship for minors

Guardianship sometimes creates flashpoints. If a child from a prior marriage inherits, the natural guardian is the ex-wife (biological mother of such child). She may have no inheritance rights herself but controls the child’s share until the child attains majority. This sometimes creates tension with other heirs. A preferred guardian of choice, often called a testamentary guardian, can be appointed under a will.

The power and limitations of a will

A will is the simplest yet most underrated instrument for succession. It allows a person to allocate assets and property to desired beneficiaries, exclude certain heirs, and ease the transmission process.

Unless wills are precise and executed properly, they are prone to contest on technical grounds. A will without clarity creates disputes, not legacies.

A private family trust: a foolproof alternative?

Trusts can overcome the limitations of a will. They offer continuity, asset protection, and enable conditional or staggered distribution as per desired milestones or events. Properly structured, they help mitigate disputes during your lifetime and ring-fence assets against claims.

Gifts made during lifetime

Some people prefer to make asset transfers during their lifetime to intended beneficiaries. Such transfers by way of gift are irrevocable, unless the gift was made conditional.

The case for succession planning

Stories of relationships going sour that could have been avoided are common. There are instances of parents reclaiming gifted property because children neglected them, or blended families torn apart by unequal expectations, and ex-spouses or siblings fighting bitter inheritance battles, all because of one missing link: a clear succession plan.

For effective succession, leaving matters to statute is an invitation to hardship and conflict. As families and wealth get more global and complex, a poor succession plan is a gamble that threatens the security of loved ones and empowers unintended claimants.

Disclaimer: The views expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with a financial advisor before taking any decisions.