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Of wills and trusts: Why women need to have their own succession plan


Most women do not undertake any form of succession planning, and even fewer understand the importance of this. This is due to lack of awareness, and because they usually tend to look to their husbands or other family members to deal with their assets. This needs to change, especially at a time when women are becoming wealth creators in their own right and are increasingly running large businesses. Many women today are also running and inheriting valuable portions of their family business.

Indian succession laws are governed by the religion of the person—a Hindu by faith would be governed by the Hindu Succession Act, 1956. These also govern the law related to intestate succession, and usually involve a strict set of rules as to who shall be entitled to a person’s entire property upon their death, and in what proportion the assets are to be divided. Only a proper will can override intestate succession, and hence it’s important to make one correctly.

For Hindu women, the rules of intestate succession are extremely unfavourable—the heirs of her husband are given preference over her own parents and other family members. This can be avoided or altered by putting in place a will that states how her assets or estate would need to be dealt with upon her death.

For most of India’s history, Hindu women were granted partial rights to their property, with limited or no transfer or managerial rights over it. Their access to ‘ancestral property’ or hereditary title to certain types of property was non-existent until recently. In 1956, women finally acquired absolute rights to property in their possession, but such rights were not extended to ancestral property. Their brothers and fathers, however, did enjoy this right.

Approximately 50 years later, in 2005, India granted women rights to their ancestral property, finally allowing them to become absolute owners of their self-acquired property and have equal rights to their ancestral property. In August 2020, the Supreme Court ruled that Hindu daughters had equal rights in the family’s ancestral property. In January 2022, the Supreme Court conferred daughters with equal right to their father’s property even prior to certain key dates.

While developments in ancestral laws continue to dominate headlines, the ‘real’ succession plan happens outside these confines. The two main tools at their disposal are wills and trusts.

Wills: At the bare minimum, every woman needs to execute a simple will, to ensure that her assets are passed on to her loved ones (most likely her children and other immediate family) in the manner she desires. This is the most easily understood option available.

A will requires very few formalities. One can execute a will just by signing it and having it attested by two witnesses. There is no requirement for having the will mandatorily registered in India. A will can be amended or revoked easily at any time.

Unless the will is being executed in Chennai, Mumbai or Kolkata or deals with immovable assets located in these cities, it would not be compulsory to obtain a probate (a court based process).

Trusts: Large business families would require a more complex mechanism of succession planning than just executing Wills. This is to help ensure their wealth is preserved over the future generations and that their assets are sufficiently ring-fenced against creditor claims as well as any unforeseen contingencies.

In reality, most personal wealth, including ownership in valuable family businesses, is either held in the personal names of the patriarch/promoters or in private trusts or holding companies/limited liability partnerships. In practice, most families use private family trusts to safeguard the interests of their married daughters. The older business families may continue to hold some ancestral wealth in Hindu undivided families , or HUFs, but the scale and materiality of such holdings is usually limited.

Contrary to popular belief, trusts are also easy to set up and are extremely useful in creating an organized holding structure, as separate trusts can be established for different kinds of assets.

Women must realize the importance of estate planning and the need to start the discussion regarding the same at an early stage. Relying on intestate laws or on her relatives will not produce the best outcome.

Rishabh Shroff is partner & co-head, private clients, Cyril Amarchand Mangaldas

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