Succession and estate planning are one of the most neglected aspects of wealth and legacy planning among high and ultra-high net worth individuals (HNIs and UHNIs) and families as it is presumed that wealth will naturally pass from one generation to the next.
However, there is ample evidence to show that unplanned wealth transitions often lead to family feuds, mismanagement of businesses, and ultimately, dilution of assets.
Among the most commonly used tools for passing on wealth are gift deeds, wills, and private family trusts.
A gift deed allows asset transfer during one’s lifetime, immediately granting control to the recipient. Gifts to defined relatives are tax-exempt under the Income Tax Act, 1961.
A will outlines how assets and liabilities should be handled after one’s passing. It can include or exclude individuals and must be drafted with clarity to prevent disputes, ensuring that the wishes of the testator (the person whose will it is) are honoured. A carefully drafted will help prevent disputes among beneficiaries and those excluded, preserving both one's legacy and familial harmony.
A private family trust enables structured wealth distribution during one’s lifetime, with conditions based on the beneficiary's age or milestones. It involves a settler (creator), trustees (managers), and beneficiaries.
Beyond catering to and securing the future of loved ones, if one desires to give back to society through charitable donations, the same can be included in a will. One can also specify the type or even the name of the charitable organisation to which they want the private trust to donate.
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The foundation of a thorough framework of governance for both the business and wealth of a UHNI family can be ensured through a family charter. This details the mode and manner in which the baton is to be passed in the business, and can even specify things such as family customs and annual vacations. Such a document helps the heirs, descendants, and loved ones inherit with ease and understand their roles and responsibilities.
Even when one has defined their succession and estate plan, a periodical review is indispensable. While it appears to be simple and straightforward, the reality is far more complex. The involvement of multiple assets, jurisdictions, and generations requires expertise in preparing such a plan.
Which is where a professional advisory like a family office enters the picture, as it provides structured governance. Functioning as an impartial steward, a family office ensures that complexities are navigated with precision while safeguarding generational prosperity.
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Succession and estate planning is not just about transferring wealth — it is also about ensuring continuity, preserving values, and safeguarding family harmony. A well-structured plan, incorporating wills, trusts, and governance frameworks like family charters, helps mitigate conflict, secures financial stability, and fosters a lasting legacy.
However, given the complexities involved, professional guidance is essential to adapt to changing circumstances and evolving family dynamics. By proactively planning today, families can ensure that both their wealth and their values endure for generations to come.
The author is Co-founder and Director, Entrust Family Office.
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 certified experts before taking any investment decisions.
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