Estate and
Succession Planning

With rapid economic growth, entrepreneurial success, high market returns and global investments reshaping the country’s economic and social fabric, Indian Ultra-HNIs have seen multi-fold growth in their wealth.

As wealth grows, it brings with it complexity in its management. Ultra-HNIs often have intricate investment portfolios. The family business is often sprawling and ownership structures are becoming complex. Ultra-HNI families often have at least one family member studying or residing abroad. Ownership of diverse global assets that are subject to a variety of tax laws and regulations further complicates the management, preservation and transfer of wealth.

Wealth Goals Base: 150

  • a. Secure transition of wealth to my beneficiaries
  • b. Ensuring financial security for the future
  • c. Sustaining wealth / protection against investement loss, inflation, etc.
  • d. Optimal diversification of wealth across different asset classes
  • e. Creation of corpus to meet specific goals: Retirement/Foreign Education/Home, etc.
  • f. Reduced tax liabilities, including inheritance taxes
  • g. Others

37%

Ultra-HNIs said that ensuring the secure transfer of wealth to their beneficiaries is one of the primary objectives of wealth management

Without proper management of wealth, there is a risk of wealth erosion. Estate and succession planning is crucial for Ultra-HNIs to mitigate this risk. A thoughtful, professionally designed succession plan ensures the protection and seamless transfer of wealth, preserving their legacy.

How Critical is Estate and Succession Planning to You? Base: 150

Succession Planning

2 out of 3 Ultra-HNIs surveyed said that estate and succession planning is critical for them. However, conversations with private bankers reveal that, despite the clear benefits, Ultra-HNIs often delay initiating the conversation around succession.

Procrastination, combined with the cultural discomfort surrounding talks of mortality, often leads to a reluctance to address the inevitable. Undercurrents of family conflict can further add to the hesitation, as disagreements within the family add another layer of complexity to the process. Additionally, emotional attachments to the business and the apprehension over relinquishing control further contribute to the delay. 30% of Ultra-HNIs surveyed had not yet given succession planning a thought. This number was much higher among Inheritors, with more than half not having thought about succession.

TOPIC 1

Tools of Succession Planning

01. Tools of Succession Planning

At the core of this strategic planning lie three vital tools: wills, trusts, and gift deeds

Trusts offer greater control, privacy and flexibility over asset distribution. Besides facilitating seamless wealth transfer across generations, they help in ring-fencing assets against loss arising from business liabilities, marital difficulties, tax claims and potential creditors. Additionally, they can reduce the impact of estate and inheritance taxes on family members living abroad and help in overall tax optimisation.

Tools of Estate and Succession Planning Base: 140

A deed is a legal document that shows someone is giving a gift and proves their intent to transfer ownership of property or assets to someone else without any money being exchanged. This transfer is done voluntarily and while the giver is still alive, unlike transfers made through wills. By strategically using gift deeds, tax liability, too, can be optimised.


Many states in India offer concessions on stamp duty for gift deeds if the asset is gifted to a relative

TOPIC 2

Tax Optimisation

02. Tax Optimisation

Tax Planning

Tax optimisation is a critical endeavour with clear advantages for Ultra-HNIs. It requires not only a thorough understanding of current tax laws but also the ability to predict potential future changes. Additionally, with global investments, the intricacies of international tax regulations present an opportunity for strategic planning to effectively manage tax liability, ensuring financial efficiency across borders.

In India, gifts received during weddings are tax exempted!

However, this demands a proactive, customised approach to safeguarding assets while simultaneously adhering to tax requirements. Through the strategic use of trusts, charitable giving, strategic investments and international tax planning, tax liabilities can be optimised, ensuring the preservation and growth of wealth for future generations.

02. Tax Optimisation

Ultra-HNIs prioritise maximising tax savings through legal deductions, exemptions and credits. They focus on optimising investment decisions by choosing tax-efficient vehicles and strategies for better tax exemption or deferral. Additionally, they manage tax-related risks by adhering to tax laws, thus minimising the chances of audits and disputes.

Out of the Ultra-HNIs surveyed, 50% use tax-advantaged accounts (e.g. ELSS, NPS), while 35% prefer to invest in tax-favourable instruments.

Tax Optimisation Strategies Base: 144

  • a.Investing in Tax Advantaged Accounts
  • b.Leveraging Exemptions and Deductions based on Investments in Specific Instrument
  • c.Using the Indexation Benefit
  • d.Setting Off Capital Losses
  • e.Reinvestment of Capital Gains
  • f.Meeting all Tax Compliances related to International Investments and Funds
  • g.Ensuring DTAA (Double Taxation Avoidance Agreement) Is In Place
  • h.I do not try to reduce/optimise my tax liability
  • i.Others

TOPIC 3

Crafting Success: A Legacy Beyond Wealth for the Next Generation of Ultra-HNIs

03. Crafting Success: A Legacy Beyond Wealth for the Next Generation of Ultra-HNIs

Next Gen Empowerment Base: 149

  • a. Education and Wealth Management
  • b. Involvement in Business Decisions
  • c. Alignment with Family Values and Legacy
  • d. Professional Guidance and Mentorship
  • e. Adaptability and Preparedness
  • f. Communication and Trust
A crucial element of succession planning is preparing the next generation to manage wealth and carry on the family’s legacy

Apart from the allocation of wealth to the next generation, a crucial element of succession planning is preparing them to manage wealth and carry on the family’s legacy. This not only preserves the family’s wealth but also instils the values, skills and vision necessary for the next generation to thrive.

For family businesses, succession planning is critical because it safeguards the business against interruptions when control transitions to the next generation. For today’s family businesses, succession planning and integration strategies have become as critical as their business strategies.

24%

Ultra-HNIs believe that practical learning and demonstration of how the family business is managed and operated is an effective way of preparing the next generation

TOPIC 4

A Collaborative Approach: Working Together for Success

04. A Collaborative Approach: Working Together for Success

An Ultra-HNIs financial legacy is a masterpiece painting, with each stroke representing a different aspect of wealth.

A comprehensive succession strategy cannot be designed in silos. It requires seamless collaboration between an Ultra-HNIs advisors – legal advisers, chartered accountants, bankers and private bankers. This approach ensures that every facet of wealth transfer is meticulously planned, risks are minimised, and benefits are maximised. This collaboration is not only beneficial — it is essential.

The legal advisor adds the outlines, bringing in their expertise in crafting wills and trusts, ensuring that the succession plan complies with all regulatory requirements and addresses potential legal challenges. Their insight is crucial in safeguarding assets from litigation and ensuring a smooth transition.

43%

Ultra-HNIs cited their private banker or chartered accountant as their professional of choice for crafting a succession plan

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