(Commonwealth_India) In India, conversations around legacy planning are quietly changing in tone and urgency. What was once treated as something to be dealt with near the end of a founder’s life is now moving much earlier, becoming a decision that can shape how a business grows, raises money, and makes its most important choices. As companies scale, invite private equity investors, or look toward public listings, gaps in succession planning and unclear ownership are no longer considered family matters. They are increasingly viewed as business risks that can slow momentum, fuel disputes, and create tax problems at exactly the wrong time.
As Shobhit Mathur of Ionic Wealth often points out, legacy planning is frequently misunderstood as simply passing wealth within a family. In reality, when someone builds a business, a brand, or an institution, the deeper concern is how that creation survives beyond the founder. The real challenge is ensuring it continues to thrive in a way that respects both the needs of the business and the relationships within the family.
This disparity becomes particularly noticeable in promoter-led companies. While ownership may be clearly defined on paper, authority is often not. Lawyers say this gap can remain hidden when businesses are small but becomes risky as they grow. Informal arrangements, where one family member is seen as in control, can quickly unravel when banks, controllers, or minority investors demand accountability. The once manageable situation begins to crumble under pressure. Board decisions become stalled, questions arise about banking advice, and disagreements escalate into legal conflicts. At that point, succession planning is no longer about legacy alone; it becomes vital to restoring assurance and keeping the business running efficiently.
In specialised firms structured as LLPs or partnerships, the problem looks dissimilar, but it is just as grave. People, not hard assets, closely tie legacy in this context. Senior partners often shape client relations, goodwill, and revenue. If exit terms or succession articles are unclear, the firm’s value can shrink almost instantly. Consultants observe that conflicts often arise not after a partner’s death, but during retirement or partial exits. Firms that lack clear estimation methods or changeover plans run the risk of losing clients and talent, which legacy planning aims to protect.
The rise of private equity has made these issues harder to ignore. Term-sheet discussions now include succession planning, according to bankers. Investors want clear answers: who will run the company if the promoter steps back, how decisions will be taken, and whether the next generation has both the authority and the capability to lead. As Tanmay Patnaik of Trilegal explains, this is where formal tools such as shareholders’ agreements and family constitutions matter. These documents spell out governance, voting rights, board composition, and exit mechanisms, allowing professional managers to operate within a clear, legally sound framework that still reflects the family’s values.
Tax and structure add an additional layer of difficulty. Many Indian families hold possessions across individuals, HUFs, functioning companies, and informal measures built up over decades. During sequencing, this patchwork can generate misperception, disputes, and unnecessary tax leakage. Mehul Bheda of Dhruva Advisors records that India’s tax system, including high effective rates on dividends and buybacks and the absence of merging mechanisms, makes value transfer more challenging. Simplifying structures can help, but timing is crucial. Most restructuring involves income tax, stamp duty, or both, and waiting too long usually means paying more as valuations rise.
Ultimately, advisers emphasise that legacy planning is never truly “done.” Life events such as marriage, divorce, the birth of a child, or the loss of a family member can all change what an effective plan should look like. That is why regular reviews matter. Revisiting wills, trusts, and nominee details every few years, or whenever life takes a major turn, helps ensure that plans remain legally sound, tax-efficient, and aligned with how families and businesses actually operate today.
