Succession Planning
for HNI Families

Why succession planning matters

When someone in India passes away without clear arrangements, their assets are divided under the personal law that applies to them, such as the Hindu Succession Act or the Indian Succession Act. That division may be very different from what they would have wanted. Accounts can be frozen, property transfers can stall and family members can end up in court for years.

For HNI families the stakes are higher. Wealth is usually spread across listed shares, mutual funds, PMS and AIF holdings, property, a family business, insurance and often assets abroad. Each has its own rules for transfer.

Start with a will

A registered, well-drafted will is the foundation of any succession plan. It lets you decide who receives what, name an executor you trust and appoint guardians for minor children.

• Be specific. List assets clearly, including demat accounts, folios, policies and property.
• Register it. Registration is not mandatory in India, but it makes a will much harder to challenge.
• Review it. Revisit your will after any major event: marriage, birth, divorce, a large asset sale or a move abroad.
• Consider probate. In some cities, including Mumbai, probate of a will can be required in certain cases. Good drafting can make the process smoother.

Nomination is not inheritance

This is the most common misunderstanding we see. Many families assume that the nominee on a bank account, demat account or mutual fund folio becomes its owner. In most cases they do not.

A nominee is generally a custodian who receives the asset on behalf of the legal heirs. In Shakti Yezdani v. Jayanand Jayant Salgaonkar (2023), the Supreme Court confirmed that nomination for shares does not override the law of succession. If the nominee and the heirs named in your will are different people, the heirs can claim the asset from the nominee.

Nominations still matter. They make the immediate transfer far quicker and avoid assets being frozen. The goal is to keep nominations and your will consistent with each other. Recent amendments to banking law also allow multiple nominees on bank accounts, which gives more flexibility.

Private family trusts

For larger estates, many families use a private family trust. You (the settlor) transfer assets to the trust, trustees manage them and beneficiaries receive income or capital on the terms you set.

A trust can:

• Keep wealth together instead of splitting it into small pieces
• Protect assets for beneficiaries who are minors, have special needs or need guidance with money
• Reduce the chance of disputes, since the trust continues after the settlor's death and avoids probate
• Separate family wealth from business risk

Trusts are not a do-it-yourself project. Tax treatment depends on whether the trust is specific or discretionary, how assets are transferred into it and who the beneficiaries are. The trust deed needs careful legal drafting.

Succession for business families

For families who own a business, succession has two halves: ownership (who holds the shares) and management (who runs the company). Mixing the two up causes many family disputes.

A family constitution, sometimes called a family charter, sets out how decisions are made, who can join the business, how dividends are shared and how disagreements are resolved. It is not always legally binding, but agreeing on it while everyone is in good health and on good terms is enormously valuable.

If there are NRI family members, assets abroad or a mix of residencies, the plan also has to account for FEMA rules and tax in more than one country. This is where GIFT City structures can sometimes help.

A starting checklist

1. List every asset, account, policy and liability in one place, and tell one trusted person where to find it
2. Check that every nomination is updated and matches your intentions
3. Write or update a registered will
4. Review life insurance cover against what your family would actually need (an insurance audit helps here)
5. Consider whether a private family trust makes sense for your estate
6. For business families, start the conversation about a family constitution
7. Review the whole plan every two to three years or after any major life event

Succession planning sits inside our wealth planning work. We coordinate with your lawyer and chartered accountant so your investments, insurance and estate plan all point in the same direction.

Frequently asked questions

This guide is for general information only and is not investment, tax or legal advice. Investments are subject to market risk. Please read all scheme documents carefully and consult your own tax and legal advisers.