NRI Estate Planning: Will vs Trust – Which Is Right?

Confused between a will and a trust? Learn how NRIs can choose the right estate planning solution to protect global assets, reduce legal complexities.

Succession planning is often thought of as something to be dealt with “later.” But for Non-Resident Indians (NRIs), postponing it can create serious complications as NRIs typically have assets across multiple countries, each governed by different legal systems and tax rules.

This makes planning not just a matter of convenience, but a necessity to ensure that wealth is preserved and passed on according to one’s wishes.

Consider the case of Mr.

Rajiv, a 52-year-old, Dubai-based NRI businessman, had spent years developing his business and wealth both within and outside India.

To his acquaintances, he was a man who was well planned in life, from expanding businesses to arranging for investments.

But when he passed away unexpectedly, his family had found out that he had overlooked one crucial detail: he had left no Will or had not made any succession plans, let alone a document trail for his family to ascertain his assets.

His wife found it difficult to gain access to his assets.

His young children faced uncertainty, and relatives stepped in to contest rights over family property.

What should have been a period of mourning became years of paperwork, courtrooms and legal battle for his family.

This is not an uncommon story.

The absence of structured succession planning can turn wealth into a source of conflict instead of security.

The courts, too, have repeatedly emphasized this reality.

In Om Prakash v.

Radhacharan (2009) 15 SCC 66, a widow named Narayani Devi had died without a Will, leaving behind her self-acquired property.

When her mother claimed succession, it was contested by her late husband’s family who had previously thrown Narayani out of her matrimonial home.

The Supreme Court held that since the property was self-acquired, it devolved under Section 15(1) of the Hindu Succession Act, 1956, to the heirs of her husband and thus leaving her parents with nothing.

The Supreme Court in this case held that “sentiments and emotional appeals cannot override the clear provisions of succession law.” Where the law provides a definite framework of succession, courts are bound to follow it strictly, regardless of family dynamics or sympathies.

This case is a stark reminder: without a Will, inheritance will proceed strictly as per statutory succession, which may not align with one’s actual wishes or the family’s expectations.

So, the real question is to ask yourself is that, if you are no longer here, would your family have access to your essential financial documents, and will they be able to manage finances and grieve properly without worry? If the answer is yes, it shows you have already taken a significant step in safeguarding your legacy.

If not, the absence of such preparation can leave your loved ones facing uncertainty, avoidable legal disputes, and prolonged legal and compliance challenges.

Why Estate Planning Is Different for NRIs.

Unlike residents who deal with a single legal system, NRIs face unique challenges in passing on assets: Cross-border assets – Properties, bank accounts, and investments in both India and the country of residence.

Multiple legal regimes – Inheritance rules vary between India and foreign jurisdictions, often with conflicting requirements.

Tax exposure – Estate and inheritance taxes in the country of residence may apply, in addition to Indian tax implications.