Estate Planning

Estate planning in India today operates in a materially different tax environment than a generation ago, following the repeal of India's three historical wealth-transfer taxes. The Wealth-tax Act, 1957 was repealed by the Finance Act, 2015, with effect from Assessment Year 2016-17 — net wealth is no longer taxed in India. The Estate Duty Act, 1953 was repealed by the Estate Duty (Abolition) Act, 1985, so no estate duty applies to deaths occurring on or after 16 March 1985. The Gift-tax Act, 1958 was repealed by the Finance (No. 2) Act, 1998, so gifts made on or after 1 October 1998 are not taxed under that Act — gifts are instead taxed, where applicable, as income in the recipient's hands under Section 56(2)(x) of the Income-tax Act, 1961 (with specific exemptions for gifts from relatives and on occasions such as marriage).

Succession of property, in the absence of a will, is governed for Hindus, Buddhists, Jains and Sikhs by the Hindu Succession Act, 1956. The 2005 amendment to Section 6 made daughters coparceners in a Hindu Undivided Family on the same footing as sons, with equal rights in ancestral property; the Supreme Court's 2020 ruling in Vineeta Sharma v. Rakesh Sharma confirmed this right applies retroactively, regardless of whether the father-coparcener was alive on the amendment's commencement date. Section 8 governs intestate succession among Class I heirs (spouse, children, and specified others) where no will exists.

Where an inherited asset is later sold, its cost of acquisition for capital gains purposes is the previous owner's cost under Section 49(1) of the Income-tax Act, 1961, and the holding period tacks on the previous owner's holding period under Section 2(42A) Explanation 1(i)(b) — often converting what looks like a recent acquisition into a long-term asset.

Our engagement covers succession-structure design (will, nomination, HUF partition), tax-efficient transfer planning under the current no-wealth-tax/no-estate-duty/no-gift-tax framework, and capital-gains planning for eventually-disposed inherited assets.

Estate planning is the organisation of a person's assets so that they pass to the intended beneficiaries with the least friction and the least tax — through wills under the Indian Succession Act 1925, trusts, nominations, and the family arrangements that avoid intestacy. For a Hindu, the Hindu Succession Act 1956 governs the devolution on death; for others, the personal law and the Succession Act apply. On the tax side, gifts during life are taxed under Section 56(2)(x) of the Income Tax Act 1961 beyond the exempt limits, while a well-drawn will directs the estate without the gift tax trigger.

The cost of no plan is intestacy — the estate devolving by the rules of the personal law instead of the owner's wishes. The statutory heirs share the property in the prescribed proportions; the spouse, children and parents get their shares whether or not the owner wanted it that way; and the estate is administered through the succession process — legal heirship certificates, succession certificates and, where needed, probate — each a delay and a cost the family absorbs.

The failure modes of DIY estate planning are the ones lawyers see daily: a will unsigned or un-witnessed properly, a nomination that conflicts with the will, an asset not covered by either, and the family disputes that follow. A single defective document can put the whole estate into the court's hands.

This service is for individuals and families planning their succession — wills, trusts, nominations and the family settlement arrangements. We map the assets and the family, draft the will under the Indian Succession Act 1925 with the asset schedule and executor appointments, structure trusts where the estate is complex, coordinate nominations and registrations, and keep the plan reviewed as the family and assets change.