Why estate planning in India is never a one-size-fits-all

Highlights

• Estate planning in India operates across multiple legal frameworks, often interacting in ways that are not immediately visible.
• Property classification alone can materially alter succession outcomes, even within the same legal system.
• Structural decisions around ownership, control and risk are rarely linear, particularly across business and multi-state assets.
• The process is largely sequential, with clarity on the legal position preceding effective structuring.

India is often described as a country that functions like a subcontinent. In estate planning, this description reflects a legal reality.

Personal laws governing succession vary by religion. Marital statutes influence property rights. Geographic location can determine which civil code applies. Even the classification of property, whether self-acquired, ancestral or joint family, can materially change outcomes.

Over two decades of advising families, we have observed that these factors rarely operate in isolation. Their interaction often produces outcomes that even sophisticated families do not anticipate. A recent engagement with an inter-faith business-owning couple illustrates how layered these considerations can become.

The questions that caught them off guard

When the couple approached us to structure their estate, they expected discussions around assets, valuations and tax efficiency. Instead, we began with questions about their marriage. In which state had they married? Under which law had the ceremony been solemnized? How many children did they have? Which religion were the children recorded under, and how was this documented with the registrar and at school? Was there any joint family or ancestral property on the husband’s side?

These were not just incidental questions. They determined the legal framework that would govern succession.

One country, many succession frameworks

India is among the most diverse jurisdictions in matters of personal law. While Hinduism is often perceived as a single faith, practices affecting inheritance historically varied across regions. The effort to introduce uniformity culminated in the Hindu Succession Act, 1956, which, subject to amendments from time to time, continues to govern Hindu succession.

Despite this effort, the act itself recognizes three distinct types of inheritance:

• Self-acquired property
• Joint family property
• Ancestral property

While a Hindu is generally free to leave self-acquired property through a Will, joint family and ancestral property are governed by separate rules shaped by the applicable school of Hindu law and regional considerations.

Marriage law can also influence property rights. Where a marriage is solemnised under the Special Marriage Act, 1954 rather than the Hindu Marriage Act, 1955, as in this couple’s case, it may result in the loss of certain rights in joint family property from the date of marriage, depending on the applicable school of Hindu law. These implications are rarely examined at the time of marriage and often surface only during estate planning.

It is equally important to distinguish between intestate and testamentary succession. Intestate succession applies where a person dies without a Will. Testamentary succession applies where a valid Will exists. The Hindu Succession Act, 1956, primarily addresses intestate succession, particularly in relation to joint family and ancestral property. Testamentary succession across most communities is governed by the Indian Succession Act, 1925, subject to specific exceptions. This Act also covers succession among any Indian to whom customary or religion specific laws do not apply. Muslim succession continues to operate under its own religious law framework, with variations across sects and regions, while Christian succession is governed by its own laws.

When geography adds another layer

In this family’s case, the wife was Christian and originally from Goa, and the marriage had taken place there. This raised an additional layer of consideration, as Portuguese civil law continues to apply in certain respects in Goa. Accordingly, it was necessary to examine whether those provisions would be relevant in their case.

What appeared initially to be a straightforward inter-faith estate required analysis across multiple legal systems shaped by religion, marriage statute and geography.

Assets and structural choices

Once the legal context was understood, we turned to the assets. Broadly, they fell into four categories:

• Shareholding in the family business, held primarily through a company
• Real estate (residential and commercial), primarily held in their own names, most of it jointly
• Financial assets, including mutual funds, hedge funds, stocks and bonds, largely held in their name jointly
• Agricultural farmland classified as urban farmland

We began with the business shareholding. The first issue was strategic. Did they intend the next generation to act as owner-managers or owner-investors? The chosen model would influence control, delegation of authority and succession mechanics. As the husband had functioned as the sole owner-manager, clarity on delegation of powers was essential before any structure could be designed. The couple also expressed a preference that next-generation spouses should not be part of the ownership circle. This made the consideration of family trusts necessary.

It was also found that the residential real estate was spread across five states in India. As per the Indian Constitution, land falls within the legislative domain of individual states. This required a review of stamp duty and registration laws in each state, as well as the probate fee structure of the relevant High Courts, before an appropriate plan could be formulated.

Financial assets were comparatively straightforward. However, the husband had provided personal guarantees to banks for loan facilities extended to his company, a common practice in India where lenders seek additional security through promoter guarantees. This created potential exposure of personal assets to business liabilities. We therefore suggested consideration of an asset protection strategy. One possible instrument was an asset protection trust, among other available structures, with the objective of ring-fencing personal assets to the extent feasible.

Lastly, the agricultural land presented a different set of considerations. While stamp duty was unlikely to be a significant concern, each state has distinct rules governing the disposal of agricultural land. These rules also vary depending on whether the land is classified as urban or non-urban, and such classifications themselves differ across states. Thus, a detailed review of the specific location and zoning was therefore necessary before formulating a plan.

Sequencing before structuring

By this stage, the couple were understandably overwhelmed. Rather than attempting to address every structural layer simultaneously, we recommended beginning with a foundational step: Putting clear Wills in place.

In our experience, the process of drafting Wills compels families to organize their personal, legal and financial information in a structured manner. The clarity achieved during this exercise provides the groundwork for more advanced structuring. Once the base is in place, trusts and other vehicles can be introduced in a considered and phased manner.

The larger lesson

Estate planning in India requires navigating multiple, overlapping legal frameworks. Religion, marriage law, geography and property classification can each influence succession outcomes. Governance choices within a family business add another dimension.

For families such as this one, the complexity does not arise from the volume of assets alone. It arises from the interaction of legal identities and structural choices.
In India, estate planning cannot be approached as a template exercise. It demands careful mapping of legal position before structural design. When undertaken early and methodically, it creates clarity for the present and continuity for the next generation.