The traditional will, long considered the cornerstone of estate planning, is facing stiff competition from family trusts. This shift isn’t just a matter of legal formality, it reflects the rising complexity of modern wealth and the sophisticated needs of today’s wealthy families.
Why the traditional will is losing ground
Most people view a will as a straightforward document that governs asset distribution after death. But for ultra-high net worth individuals (UHNIs), that simplicity becomes a limitation. Once a will enters court for probate, it becomes a public document, exposing family finances to scrutiny and potential disputes.
The probate process itself can stretch for months, or even years, particularly if the will is contested. During this period, business decisions can stall, investment opportunities may be lost, and legal costs accumulate. For families running active businesses, such delays can be devastating to both operations and market position. Several high-profile families have endured this process very publicly, becoming fodder for tea-time gossip.
Family trusts, by contrast, operate differently. Established during the settlor’s lifetime, they enable assets to be transferred outside the probate process. Wealth passes to beneficiaries according to pre-set terms, without court involvement or public disclosure. This privacy and efficiency make trusts especially attractive to families who value discretion.
The growing appeal of trust structures
Privacy is just one factor driving the move toward trusts. These structures offer unmatched control over how and when wealth is passed on, something wills cannot replicate.
Unlike wills, which usually transfer assets immediately upon death, trusts can impose conditions that encourage responsible stewardship. Some families tie disbursements to milestones such as completing education, reaching a certain age, showing business acumen, or contributing to philanthropic goals. Others use trusts to safeguard assets against risks such as divorce settlements or creditor claims.
For globally connected families, trusts also provide tax planning advantages that wills cannot. With children and assets spread across multiple jurisdictions, trusts can minimize estate tax exposure internationally, an increasingly common need for modern Indian families.
Making assets last beyond one generation
Many families want their wealth, reputation, and legacy to endure well past the next generation. A will simply hands over assets to heirs, leaving them vulnerable to individual decisions or disputes. Trusts, on the other hand, embed assets in a framework designed to benefit the family across generations, safeguarding legacy and continuity.
Making the right choice for your family
The decision between a will and a trust isn’t one-size-fits-all. Key considerations include:
Asset value: Families with large, complex, or international holdings usually benefit from trusts, which can accommodate specific requirements.
Family dynamics: When members live across countries or have varying levels of financial acumen, trusts provide a structured way to manage complexities and prevent disputes.
Timeline and costs: Wills are cheaper to set up but can trigger costly and drawn-out probate battles. Trusts require upfront investment but often save significant time and expense during execution.
Legacy goals: Families with philanthropic aims, conditional inheritances, or value-based succession often find trusts more effective.
The hybrid approach: Best of both worlds
Many sophisticated families now adopt hybrid strategies. They place core business assets and major financial holdings in trusts while using Wills for personal items and residual assets.
This allows them to enjoy the privacy and control of trusts while maintaining the simplicity of Wills for less complex holdings. It also provides a safety net. If trust structures face unforeseen challenges, wills can still handle remaining assets.
Tax and regulatory considerations
Trust planning involves complex tax and legal implications that vary with each family’s circumstances. Income tax, gift tax, and estate tax all play a role, as do regulatory changes that continue to reshape how trusts function. Expert guidance is essential to structure plans effectively and compliantly.
Looking ahead: the future of succession planning
As Indian wealth grows in size and complexity, succession planning is evolving accordingly. Preserving wealth across generations now demands more than simple transfer, it requires carefully designed structures that anticipate modern challenges.
The growing preference for trusts reflects this maturity. Rather than treating succession planning as a necessary formality, leading families now see it as strategic wealth architecture that enhances their legacy.
Bottom line
Wills remain valuable, but trusts increasingly offer superior, nuanced solutions for succession. The choice ultimately depends on each family’s circumstances. But the trend is clear: India’s wealthiest families are turning to trust structures as their preferred strategy.
Smart succession planning isn’t about choosing the most common option. It’s about building the right framework for your family’s unique needs and long-term prosperity.
Kanchi Gandhi is managing director Kotak Mahindra Trusteeship Ltd.