As India’s ultra-high-net-worth individuals (UHNIs) grow in number, so do the complexities of succession planning. The Knight Frank Wealth Report 2024 highlights a 50% increase in India’s UHNI population from 13,263 in 2023 to 19,908 by 2028. This growth, driven by first-generation wealth creators, underscores a major challenge: how to ensure their wealth, value and recognition. It endures for generations.
For India’s wealthiest families, succession planning involves more than the distribution of assets. It is about embedding family values, addressing governance in family businesses, and preparing successors for stewardship.
Good Governance: Stopping Conflict Before It Starts
Complex family dynamics can derail succession planning if not proactively addressed. Studies have shown that globally, 70% of family businesses fail to successfully transition to the second generation, often due to a lack of governance structure. In India, family heads often delay succession planning, assuming that their family structure is too simple to require or avoid potentially contentious conversations. Our recommendation is that succession plans should be created early when family relationship dynamics are harmonious and simple, rather than during times of complexity or crisis.
Multi-family offices (MFOs) play an important role in establishing governance structures such as family charters, advisory boards, and clear role definitions. These tools ensure transparency, reduce conflict, and enable smooth transitions.
Heritage and Family Values: Bridging the Gap
Incorporating family values into succession plans is a well-established practice in the West. However, this has not been explored among Indian UHNIs. While most of India’s wealthy believe in passing down family values through word of mouth or personal interaction, they prefer not to document it as part of their succession planning.
Family offices, however, are beginning to push families toward a more holistic approach. For example, advisors recommend including stipulations in wills and trusts that tie the legacy to adherence to family values or charitable activities. This ensures that the property reflects not only the individual but also the ethos of the family.
In recent times, customers have gradually started to understand the importance of reducing not only wealth but also the principles that shape it. Structured discussions around this can create a balance between financial goals and legacy aspirations.
The role of charity in succession
Philanthropy is emerging as an important component of succession planning among Indian UHNIs. The India Philanthropy Report 2024 published by Bain & Company highlights that Indian ultra-high-net-worth individuals have significantly increased their philanthropic contributions in recent years. For example, donations from UHNIs increased by more than 60% in FY 2023.
Incorporating philanthropy into succession plans ensures that assets contribute to social good while preserving the family’s legacy. While we have not seen Indian UHNIs match their Western counterparts in terms of integrating philanthropy into their succession planning, some families have begun to combine legacies with philanthropic commitments, creating a culture that lasts for generations. Family offices allow families to support causes that align with their values by establishing charitable trusts or foundations.
Successor Preparation: Mentoring and Financial Literacy
A well-documented challenge in succession planning is the lack of preparation among successors. According to several studies and surveys, more than 50% of those who expect to receive a share of the “great wealth transfer” over the next two decades say they are not ready to manage their money. Indian UHNIs are no exception, many families are struggling with heirs who have no interest in financial management or management of family assets.
To address this, MFOs can provide mentoring and structured programs for successors focused on investment, risk management, and stewardship. These programs empower heirs to make informed decisions and align with the family’s long-term vision.
It’s not just about teaching technical skills. It’s about instilling a sense of responsibility and helping the next generation understand the impact of their decisions. However, the advice succeeds only when successors accept its need and reach MFOs themselves.
Professionalizing a family business
There is a growing trend among UHNIs in India to bring in professional management for their family businesses, ensuring business continuity across generations. Traditionally, leadership roles were reserved for family members, but this is gradually changing with the next generation wanting to explore domains beyond the family business.
For example, families can look to successful models such as Mahindra & Mahindra, where majority ownership remains within the family, but day-to-day operations are managed by professionals. This separation of ownership and operations reduces internal conflict, preserves business value, and allows family members to focus on long-term strategy.
Business management while maintaining family oversight is critical to both business sustainability and personal relationships within the family.
Simplifying property transfer
India’s regulatory environment presents both opportunities and challenges for asset transfers. Advisors such as MFOs can recommend appropriate structures to minimize high costs and risk. Proactive planning is key. Structured transfers, guided by experienced advisors, can reduce tax liabilities and create a secure foundation for future generations.
A future-ready approach
As India’s UHNI population grows, so does the importance of adopting future-ready succession strategies. Families must balance traditional practices with modern tools, integrating governance structures, professional management, philanthropy, and mentoring into their plans.
Multifamily offices are uniquely positioned to guide this journey, offering personalized solutions that reflect each family’s unique dynamics and aspirations. By addressing both financial and non-financial goals, India’s wealth creators can ensure their legacies last far beyond their heritage.
(Rajamohan Krishnan is the principal founder and managing director of Entrust.)