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For most newly married couples, opting for a family floater health insurance plan feels like the obvious choice. One policy, one premium, both covered, so what could go wrong? However, this seemingly simple decision has a more complex financial logic underlying it, which depends on your age, health profile, and many other factors.

Balanced Advantage Funds (BAFs) are often expected to cut risk before markets fall and add it back at the right time. But a closer look at how these funds adjusted net equity exposure across recent market phases suggests they operate differently.

For years, China’s growth story felt almost mechanical in its reliability. People earned more, spent more, and bought homes whose prices seemed to rise with quiet consistency. That rising wealth fed consumption. Consumption fed corporate earnings. And corporate earnings fed markets. It was a loop that looked stable, until it wasn’t.

AI in Investing: Will It Replace Advisors? | Thefynprint Podcast

In this episode, we dive deep into the rise of AI in personal finance and investment strategies.

From reading your CAS to spotting underperforming funds, AI is transforming the industry.

But when markets are falling and your portfolio drops from ₹50L to ₹35L, can AI truly replace the need for human advice? We explore this and more in this insightful discussion.

📈 What you’ll learn: Can AI replace human financial advisors? What happens when markets plummet?

Why human advice still matters when making investment decisions The future of AI and robo-advisors in personal finance

The investor is gone. But their portfolio of stocks and mutual funds is still there, all sitting in a demat account that no one can touch. There is no nominee. There is no will. So now, a grieving family is tasked with getting a transmission request form, a death certificate, officially valid ID proof, a notarised indemnity bond, a notarised affidavit from every legal heir, and much more.

There is only paperwork, and more paperwork, and a system that was never designed with this, and many more grieving families in mind. For families trying to claim their deceased's securities, this has been the reality for far too long. 

SEBI has finally decided to do something about it, by releasing two consultation papers, one targeting the inheritance process itself, and one targeting the nomination system that should have made all of this unnecessary. Here is a breakdown of the proposals on the table.

Can't nomination help investors avoid the entire problem in the first place?

Not really. However, a big chunk of securities-related inheritance issues start with the fact that there was no nominee in the first place. And as per SEBI's own data, that is not changing anytime soon.

Per a January 2025 SEBI circular, investors could add up to 10 nominees for their demat account and mutual fund folios. But data suggests that those who nominated two people never crossed 1% in any month, falling from 0.8% in January to 0.3% in December.

Those who nominated three people were negligible throughout, from 0.2% in January, to zero from August onwards. In total, the share of accounts with any nomination at all fell from 29.3% in January to 17.9% in December. In fact, across 2025, the share of new demat account holders opting out of nomination only inched up every month, from 70.7% in January to 82.1% as of December 26, 2025. 

So, SEBI has now proposed that the maximum number of nominees for demat accounts and MF folios be restricted at 4, and the maximum number of joint holders in demat accounts/MF folios will continue to remain 3. In fact, the paper also proposes to make nomination optional for jointly held demat accounts/folios

The bigger issue, however, is not how many nominees investors can add. It is what those nominees are actually entitled to. 

There is a long-standing confusion on the difference between a nominee and a legal heir, and how they're not the same. It's not just individuals, but the law as well. Experts note that Section 72 of the Companies Act, 2013 offers nominees nearly all major powers on the deceased individual's securities.

As representatives from LegaLogic consulting, a pan-India full service law firm highlight, "Section 72 of the Companies Act, 2013 provides that a nominee shall be entitled to "all the rights" in respect of the securities upon the death of the holder. On a literal reading, this provision appears to grant nominees near-absolute ownership rights".

However, the Supreme Court has, time and again, highlighted that the nominees are only a custodian or trustee of the deceased investor's securities. The actual question of who owns the securities is decided by succession law, either by the will, or in its absence, by personal law. In any case, nomination does not override succession and does not confer beneficial ownership.

"This apparent conflict was conclusively resolved by the Supreme Court in Shakti Yezdani v. Jayanand Jayant Salgaonkar. The Court held that the rights granted to a nominee under Section 72 are limited to the administrative and operational domain. A nominee is entitled to deal with the company or its records, including receiving and holding securities, but such entitlement does not translate into beneficial ownership. The nominee holds the securities in a representative capacity and remains accountable to the legal heirs. Thus, Section 72 facilitates efficient transmission of securities but does not override succession law or testamentary intent", they add.

SEBI has also separately eased the process of nominees transmitting securities to the rightful legal heirs, so that nominees may not be required to pay income tax on such transmission.

But, what legal remedy does the legal heir have in situations where a person names different individuals in their will and in their demat nomination, and the RTA transfers securities to the nominee? "Legal heirs can approach a civil court seeking a declaration of their ownership rights based on the will. They may also seek recovery of the securities or their monetary value from the nominee. The nominee, in such cases, is treated as holding the securities in a constructive trust for the benefit of the rightful heirs”, LegaLogic representatives say. 

“If the nominee has already disposed of the securities, the remedy may extend to recovery of proceeds or damages. However, this remedy is reactive rather than preventive. The RTA, having acted in accordance with regulatory requirements, is discharged of liability once the transfer is made. The burden of enforcement thus lies entirely on the legal heirs", they add. 

What other changes related to nomination are being proposed?

SEBI's January 2025 circular had introduced a facility allowing incapacitated investors, those who were unable to manage their accounts but still had the capacity to enter legal agreements, to empower a nominee to operate their account or folio on their behalf. It is now proposing to walk that back. Now, instead, such investors would be directed to use the existing mechanism of a Power of Attorney.

Also, the January 2025 circular required 7 details of each nominee, like name, percentage share, relationship with investor, address, mobile, email etc. Clearly, seeing how cumbersome it can be, SEBI is now proposing that only name and nature of relationship will be mandatory. 

All remaining details like address, mobile number, email address and percentage share etc, will be optional. In cases where percentage share is not specified, assets in the account/folio will be divided among nominees equally. 

Another change that is being proposed by SEBI is that nomination would be the default choice when opening a new account. An investor who does not wish to nominate would have to actively choose to opt out, after which a pop-up message on the benefits of nomination would be displayed. The investor would need to consent to that message before proceeding without a nominee. Previously, investors who did not wish to nominate had to record a video declaration for opting out. 

How is SEBI proposing to overhaul securities transmission for cases of no will/nomination?

SEBI is proposing three tiers for transmission claims where there is no nomination or will present. Here's all that you need to know about them.

Tier 1: Straight Through Processing (STP)

This will deal with the smallest holding amounts i.e. up to Rs. 10,000 for physical securities and Rs. 30,000 for demat. Claimants will only need to submit an undertaking on plain paper along with a duly signed transmission request form, a Client Master List of the demat account not older than two months attested by the DP, a verifiable death certificate, and officially valid ID proof. No indemnity bond, no NOC, no court documents will be needed.

Tier 2: Simplified Documentation

This deals with holdings above the STP limit but below Rs. 10 lakhs for physical securities and Rs. 30 lakhs for demat. Here, claimants will need all documents from Tier 1, plus a notarised indemnity bond No Objection Certificate from all legal heirs or a copy of a family settlement deed executed by all legal heirs and duly attested by a notary public or gazetted officer. 

However, in case the legal heirs are already named in a Succession Certificate, Letter of Administration or Legal Heirship Certificate, a notarised affidavit from those claimants alone is sufficient.

Tier 3: Above Threshold, No Disputes

This is the highest tier, dealing with holdings above Rs. 10 lakhs for physical securities and Rs. 30 lakhs for demat, where there are no disputes. No need for a probated will here, all that the claimants need is: 

A transmission request form

Attested Client Master List

Verifiable death certificate

Officially valid ID proof

Notarised affidavit from all legal heirs on non-judicial stamp paper establishing legal ownership. 

Along with this, one of the following documents will also be required:

A copy of the Succession Certificate/Letter of Administration

Court Decree Copy of the Will under the Indian Succession Act, 1925, along with a notarised indemnity bond

Legal Heirship Certificate or its equivalent, along with a notarised indemnity bond

Along with this, a No Objection Certificate from all non-claimants, duly attested by a notary public or gazetted officer will also be needed. 

As for what a verifiable death certificate means, it means either the original death certificate; or copy attested by a nominee subject to verification with original, or copy attested by notary public or gazetted officer, or death certificate with QR code. 

Also, the legal heirship certificate will only be valid if it is issued by a revenue authority not beneath the rank of tehsildar. 

What happens if the investor dies outside of India? 

When an investor dies outside India, the death certificate comes from a foreign authority. Currently, entities accept a certified copy of that document if it has been verified through one of three modes:

By a Court Magistrate, Judge or Notary Public in the country where it was issued

By the Indian Embassy or Consulate General in that country

Through an apostille (a certificate that authenticates the origin of a public document, can only be issued for documents issued in one country party to the Hague Apostille Convention). 

SEBI is proposing to add two more options to this list: certification by authorised officials of overseas branches of Scheduled Commercial Banks registered in India, and certification by authorised officials of any foreign bank.

What will the processing timelines be?

Once a family submits all required documents, the entity has 21 calendar days to process the transmission claim. If the claim is delayed or rejected, the entity must inform the claimant in writing, with reasons. If the delay is the entity's fault, SEBI may take regulatory action. 

When documents are first submitted, the entity must acknowledge their receipt and flag anything that is missing, incomplete or incorrect at that point itself, not later. Once all documents are in order, a second confirmation must be issued to the claimant that the claim is now being processed.

Entities may also offer an online submission facility with a claim tracking option. Any deviation from SEBI's prescribed procedure must be communicated to the claimant in writing, within a specified time.

The deadline for public comments on the transmission paper is April 2, 2026. The nomination paper closes April 7, 2026, so nothing is final yet. SEBI has diagnosed the problem correctly. Whether the cure holds depends on what gets finalised, how consistently it is implemented, and whether the entities processing these claims follow the rules. For bereaved families, the difference between a good regulation and a good outcome has always lived in that gap.

At a time when small-cap stocks are volatile and valuations remain a subject of debate, a new entrant in the mutual fund space is betting big on disciplined stock-picking and promoter quality. Madhu Lunawat, founder of The Wealth Company Mutual Fund, believes the real opportunity in small caps lies beneath the index, where careful selection, not market timing, drives returns. 

In an interaction with Thefynprint, she talks about his journey from investment banking to asset management, his investment philosophy, and why India continues to offer a compelling long-term growth story.

Q. Before launching the AMC, what was your background and core expertise?

I’m a chartered accountant by training and have worked with multiple companies. In 2014, along with Mahavir, I founded the Pantomath Group. We initially entered investment banking, which at the time was relatively easier to scale. That same year, SME markets were gaining traction in India, which became a turning point for us. Over the next four to five years, we executed around 100 transactions, something unprecedented in the country, especially across industrial clusters. That early track record helped build our credibility.

Later, we diversified into asset management and acquired Asit C Mehta, a 42-year-old legacy broking business, thereby adding broking to our platform. In the last three years, we have also invested heavily in technology, AI and machine learning to strengthen our overall ecosystem.

Q. How did working with small businesses shape your investing approach?

Our experience comes from meeting over 8,000 companies across India in the last 12 years. When you interact with that many promoters, you begin to see clear patterns, you can broadly categorize entrepreneurs into those who will succeed, those who will remain average, and those who have the potential to build something truly enduring. That kind of first-hand exposure has been central to whatever we have built so far.

It has helped us not just in identifying strong promoters but also in understanding processes and business evolution. We have also seen how smaller companies are increasingly adopting technology, which challenges the common perception that only large companies innovate. What stands out even more is the intensity and work ethic, these businesses operate almost round the clock, and even the next generation is deeply involved from a very young age. That energy is very inspiring and has significantly influenced our investing lens.

Q. Tell us about your AIF strategy and key filters for investing.

Our AIF strategy focuses on traditional or old-economy businesses that have strong fundamentals. We rely on a few key pillars while selecting investments. First, we place significant importance on promoter shareholding. In nearly 90% of our portfolio companies, promoters have retained high ownership, and in many cases, we are the first institutional investors. These are not early-stage startups but businesses that have scaled over decades to reach revenues of ₹500–1,000 crore or more without heavy dilution.

Second, succession planning is critical. We prefer companies where the next generation is already working alongside the promoter and actively managing the business. Third, profitability is non-negotiable for us. Most of our investments are in profitable businesses or those with a clear and visible path to profitability. Investing in loss-making companies at this stage often leads to repeated capital requirements, which can be risky.

Finally, we are mindful of ESG considerations. We avoid businesses that are not aligned with our values, such as those linked to animal harm or alcohol. Overall, we have built a portfolio of high-quality, family-run businesses, which has translated into strong returns.

Q. Why should investors continue to bet on India?

If you look at global markets over the past two-and-a-half decades, India has consistently ranked among the top-performing major economies. Often, comparisons with markets like the US are not entirely fair because a significant portion of US returns has been driven by a handful of large technology companies whose combined revenues exceed India’s GDP.

India, on the other hand, offers a broader structural growth story. We have a young population, rapid digital adoption, and expanding financial inclusion. Our digital infrastructure is now being studied and replicated globally. While there are challenges, such as low female workforce participation and limited availability of risk capital, these are also areas of opportunity. Overall, India remains one of the most compelling long-term investment destinations.

Q. With IT facing disruption from AI, what will drive India’s next growth phase?

I believe the next phase of growth will be driven by multiple engines rather than a single sector. One of the biggest drivers will be discretionary consumption. As India’s per capita income moves from around $3000-$4,000, we are likely to see a significant consumption boom, similar to what countries like China and Malaysia experienced at that stage. While the impact may not be uniform across all segments due to income disparities, the trend is already visible.

Green energy is another major area where India has made strong progress and is emerging as a global leader. In addition, there are several niche manufacturing and industrial segments where Indian companies are becoming globally competitive. 

Often, these success stories are not widely known, but they demonstrate the depth and capability of Indian entrepreneurship. Overall, Indian businesses are adapting quickly to technological changes and are well-positioned for the future.

Q. Are small-cap valuations still expensive?

Valuations in the small-cap space are not cheap, but at the same time, they may not become significantly cheaper in the near future. The fundamental issue is that a large amount of capital is chasing a relatively limited pool of quality stocks. This imbalance is likely to persist.

Even when indices appear to be underperforming or correcting, there are always individual stocks within the small-cap universe that deliver strong returns. This is where active management plays a crucial role. Unlike large caps, where opportunities for differentiation are limited, small caps offer a much wider universe for skilled managers to generate alpha through careful stock selection.

Q. Should investors allocate separately to large, mid, and small caps or rely on flexi-cap funds?

Investors need to look closely at what their flexi-cap funds are actually doing. In many cases, these funds tend to be heavily skewed towards large caps. If an investor’s overall portfolio is already tilted towards large-cap exposure, then adding a dedicated small-cap allocation can help improve diversification and return potential.

However, small-cap investing requires a certain mindset. It is not suitable for short-term horizons and ideally requires a minimum investment period of five years or more. Investors also need to be comfortable with higher volatility and risk in exchange for potentially higher returns.

Q. What megatrends are you betting on?

We are focusing on a few key megatrends that we believe will shape the next decade. Artificial intelligence is an obvious one, given its transformative potential across industries. Green energy is another area where we see long-term opportunities, supported by policy and global demand.

Discretionary consumption will also play a significant role as incomes rise and consumer behaviour evolves. Additionally, we are bullish on electric vehicles and the broader ecosystem around them, including ancillary industries. Interestingly, many of these opportunities are currently more accessible in the small-cap segment, which allows us to participate in their early growth phases.

Q. How important is your team in executing this strategy?

The team is extremely important, especially in a retail-focused asset management business where experience across market cycles is invaluable. While I bring agility and a fresh perspective, the strength of our platform lies in the depth of experience within the team.

Our CIO has over 33 years of experience, and most of our fund managers and analysts come with 25–30 years in the industry, having managed portfolios across different market environments. This combination of experience and agility helps us build a balanced and resilient investment approach.

Q. You have focused heavily on distribution. Why?

Distribution plays a crucial role in India’s mutual fund ecosystem, but the quality of guidance needs improvement. A large proportion of distributors have entered the space from other professions, such as insurance or postal savings, and may not always follow a structured, goal-based approach.

We are investing significant effort in improving the quality of distribution through training programmes, including behavioural and educational initiatives. In developed markets, advisors focus more on goal planning and risk profiling rather than selling based on past performance. That shift is essential in India as well.

While technology and direct investing will continue to grow, the role of human assistance remains critical, especially in managing investor behaviour during periods of market volatility. Empathy and guidance cannot be replaced by technology.

Q. Final thoughts for investors?

Over a five-year period, most well-managed funds tend to deliver reasonable outcomes, so investors should not focus excessively on short-term performance. What truly matters is staying invested and allowing compounding to work over time.

One of the biggest challenges we see is that nearly 75% of SIPs do not continue beyond five years, whereas real wealth creation typically begins after six or seven years. This highlights the importance of discipline and long-term commitment.

Our broader focus is not just on delivering returns but also on improving investor experience and increasing participation across the country. The goal is to reach more households and ensure that more people benefit from long-term investing.

Without a will, your assets might go to people you never intended. | Vivek Sadhale X Neil Borate

India is on the verge of its largest wealth transition but most families remain unprepared.

✅ Nominee ≠ Heir: Without a will, personal laws decide who inherits. ✅ Wills: Grant control, flexibility, and legal clarity.

✅ Trusts: Enable conditional transfers, bypass probate, and protect wealth during your lifetime.

✅ Executors: Ensure taxes are settled and instructions are followed. ✅ Business succession: Prevents power struggles and ensures continuity.

✅ HUF property: Has special rules — only your personal share is transferable via will. Estate planning isn’t a luxury it’s a necessity.

Whether you’re managing ₹50 lakh or ₹500 crore, a well-drafted will can prevent conflict, reduce costs, and secure your family’s future. For more clarity, reach out to TheFynprint using this link: https://thefynprint.com/assist Also, related article for more clarity: https://thefynprint.com/3-GBIMO5g Ultimately, estate planning isn’t just about distributing wealth it’s about protecting your loved ones, preserving your legacy, and passing down your values. The best time to start is now.

Chapters:

00:00:00 The Great Wealth Transfer (Intro)

00:01:41 Why Make a Will?

00:04:16 Nomination ≠ Inheritance

00:06:14 Intestate Succession: When There’s No Will

00:08:47 Succession Certificate vs Probate: The Court Route

00:12:20 Costs: Will vs No Will

00:14:07 Mandatory Probate in Mumbai/Chennai/Kolkata

00:14:12 Build a Ring-Fenced Will: Witnesses, Executor, Doctor’s Note, Registration

00:18:44 Should You Record Video? (and Jewelry Inventory)

00:20:09 What to Write in a Will: Inventory & Structure

00:23:06 Equal Shares vs Asset-Specific Bequests (Avoid Joint Ownership)

00:27:02 Document Accounts, Not Balances + Revisit Cycle

00:29:19 Bequests to Minors: Guardians/Administrators

00:30:26 NRIs & Cross-Border Assets; Power of Attorney

00:34:05 Living Will / Advance Medical Directive

00:39:01 Gifting Strategy (Residents & NRIs) + LRS/FEMA

00:41:46 Private Trusts—Use Only When Warranted

00:44:46 HUF: Pros, Cons, and Reality

00:47:51 Conditional Wills—What Stands?

00:49:47 Will Do’s & Don’ts (Action Checklist)

We were told withdrawals through UPI, faster settlements, and no more endless paperwork. Months later — nothing has changed.

An RTI revealed ₹340 crores spent on the EPF website… and it still barely works. Two portals, constant errors, and zero reforms. Is this how we treat India’s retirement savings system?

It’s time for real reform, not just announcements.

Kotak Mahindra Mutual Fund has launched the Kotak Quality Overseas Equity Omni FOF, a new fund offer (NFO) aimed at providing Indian investors access to high-quality global companies through a fund-of-funds structure. The NFO is open from 6th March to 20th March 2026 and will invest in overseas equity mutual funds and ETFs that follow a quality-focused investment strategy.

In a recent interview, Kotak Mutual Fund CEO Nilesh Shah said the AMC currently has an ₹800 crore limit left for the new feeder fund. He stressed the importance of geographical and commercial diversification for long-term investors, noting that offshore investments, particularly in deep-tech sectors, can offer unique opportunities.

Could you tell us more about this fund?

There’s value in geographical diversification, such as offshore investments. For an ordinary investor, it may be difficult to diversify across everything, especially if the investment size is limited.

We often have dreams of traveling abroad for vacations, sending children abroad for education, or even seeking medical treatment overseas. Having a separate investment pool to manage these aspirations makes sense. 

Geographical diversification is also critical, especially considering our regional neighbors, with whom we don't always have the best relationships. A low-probability, high-impact event could affect us, and having geographical diversification in place could help mitigate such risks.

From a commercial diversification standpoint, there are companies like Amazon, Google, and Nvidia, which are not present in India. So, when combining aspirations, geographical diversification, and commercial diversification, it makes sense to invest in offshore asset classes.

The underlying fund is tech-focused, but there are concerns about the valuations of tech companies. How do you address those concerns?

Despite concerns over tech valuations, the focus is on investing in companies that are not available in India, especially in deep tech. While we are strong in services, we lack strong representation in product-based technology. So, this investment offers both geographical diversification and exposure to unique companies.

We are not the right people to take a call on valuations. Despite doing due diligence, we have faced situations where our decisions did not work as expected. For example, our global innovation fund did not perform well in the first 2-3 years after launch.

On the other hand, other funds, like the Pioneer Fund, which invests both in India and globally, have performed well. The decision to invest in this particular fund is based on the pedigree of the fund manager and the process they follow. The fund is from GMO (Grantham, Mayo, Van Otterloo & Co. LLC), a respected fund house with a value-oriented investment process, and it has a strong long-term track record.

This fund isn’t suitable for every investor. If you’re looking to travel abroad next year, this isn’t the fund for you. But if you have long-term goals, such as sending someone abroad in five years, this could be a good option.

Why not just invest in the MSCI World Index as a passive fund?

While a passive fund like the MSCI World Index might seem like a simple solution, it comes with limitations. ETFs have their limits because they are packed, whereas active funds have no such limitations. Managing a passive fund is not easy, especially if you're unable to invest in a fund of funds structure. You would have to manage everything yourself, which presents challenges like execution, taxation, and registration issues.

In our experience, managing a passive fund across multiple markets is complicated, especially when it comes to FPI (Foreign Portfolio Investor) registration and other regulatory hurdles.

Additionally, we believe that in today’s complex investment world, it's better to go with a fund manager who can add value. Over the long term, those who have created value with their investment process have been more successful.

Why the focus on quality in the underlying fund?

There are many different stock strategies globally, such as momentum stocks and quality stocks. While momentum and quality stocks are not perfect opposites, their magnitude differs. When you’re starting your investment journey, it’s generally safer to go towards quality rather than momentum. Quality investments tend to be more stable and better for long-term investors.

The expense ratio of the underlying fund is 1%. What is the expense ratio for this fund?

1.59% (Includes the underlying fund)

What is the current limit at AMC level for feeder funds?

The limit for the fund changes daily based on subscriptions and redemptions in other funds. At the moment, the limit is around ₹800 crore, which is quite substantial.

Any plans regarding the GIFT City?

Yes, we have set up our office in the GIFT City, and a team is now functional. We recently held the branch inauguration ceremony. We're looking to launch a fund from that entity to manage LRS (Liberalized Remittance Scheme) money that can be invested abroad. We're also considering carrying feeder funds into our fund from this entity.

You have spent 30 years building your wealth, but have you spent 30 minutes deciding who will protect it and how it will be passed on? If your answer is no, you're not alone. Most people haven't. A nomination here, a joint account there, maybe a will. But what if nominations are not timely updated, or the wills get contested? Suddenly, the wealth you built fragments.

Three legal structures do more than just list your assets' names. They hold your wealth intact across generations: a will, a trust, and an HUF. Which one fits your family? Read on.

What is a will? When does it work best?

A will is a legal document in which you state how you want your assets distributed after your death. It has no legal effect while you are alive — it only kicks in after you are gone. While not compulsory, a recent SC judgement has highlighted that getting your will registered gives it a presumption of genuineness, putting the onus to prove that the will is fraudulent on the individual contesting it.

A will works best when your estate is relatively straightforward. Typically, in the case of salaried individuals, there are no HUFs, businesses, or complex assets to bequeath, and you preferably have adult beneficiaries who can immediately manage what they inherit. It also works best if you are someone who wants to retain full control of your assets until you die.

However, if your beneficiaries include minors, if your family relationships are complicated, if you own a business, or if tax efficiency on income from assets matters to you, a will alone is not enough. That is where a trust, an HUF, or a Section 8 company can come in.

What is an HUF? When does it work best?

A Hindu Undivided Family is a distinct tax entity that can be utilised by Hindu, Buddhist, Jain, and Sikh families to reduce the tax liabilities of individual family members. It works best in cases where the family lives together and jointly holds ancestral property or income, and members have significant individual income of their own.

Says Kunal Savani, Partner, Cyril Amarchand Mangaldas: "Typically, HUFs are best for the joint Hindu families with ancestral properties or gifted assets when family members have high personal income, and the HUF income qualifies for certain deductions or lower tax liability."

The HUF can own property, run a business, invest in mutual funds, and even receive gifts. As for income tax benefits, the annual income of the HUF is tax-exempt until Rs 2.5 lakh (old tax regime) and Rs 3 lakh (new tax regime).

The deductions available to an HUF mirror those available to individuals under the old regime, such as Section 80C, which allows up to Rs 1.5 lakh for HUFs' investments in life insurance, PPF, NSC, ELSS, tuition fees, and home loan principal repayment; and Section 80D, which covers health insurance premiums for HUF members (Rs 25,000 for members below 60 and Rs 50,000 for those above 60), with an additional Rs 5,000 within these limits for preventive health check-ups.

Similar to individual taxpayer deductions under the old regime, if a senior citizen HUF member has no health insurance, medical expenditure up to Rs 50,000 is also deductible. Section 80TTA also allows a deduction of up to Rs 10,000 on HUFs' savings account interest, and Section 24(b) permits the full actual interest paid on a home loan for HUFs' let-out property with no upper cap.

However, under the new default regime, none of the Chapter VI-A deductions apply. HUF can only claim a deduction under Section 24(b) for a let-out property.

The head of the HUF is called the 'Karta' and is typically the senior-most member of the family. The other members are called coparceners, and they have a birthright share in HUF property.

Savani highlights that while forming HUFs promotes a legitimate split in the tax liability, there still exist challenges like the clubbing of taxes, compliance, non-alignment of coparceners for establishing such an HUF, the role of the Karta, and partition risks. Notably, once a partition takes place, the HUF dissolves. The Supreme Court also recently ruled that after joint family properties are partitioned, the shares received by each party become their self-acquired property, and the owner does not need anyone's approval to sell, transfer, or bequeath it. 

What happens to the HUF if Karta dies?

Explains Keshav Singhania, Head, Private Client, Singhania & Co., "Upon the demise of the Karta of a Hindu Undivided Family (HUF), the role is ordinarily assumed by the senior-most coparcener in the family. Under Hindu law, only a coparcener is eligible to act as the Karta of an HUF."

However, the new Karta needs to inform the relevant authorities, like the Income Tax Department, banks, etc., about his being the new Karta of the HUF. Alternatively, on the death of a Karta, an HUF can be dissolved by preparing/executing a 'partition deed' amongst all the coparceners of an HUF.

Though, as Singhania suggests, under Hindu law, both partial partitions and complete/full partitions are allowed. "The income tax laws only recognise a complete or full partition to consider an HUF as dissolved, the reason being that in case of a partial partition, the HUF continues to be in existence as a person, rendering it a tax assessee," he adds.

The division of assets does not necessarily have to be in equal proportions. If all members of the family mutually agree, the assets may be distributed in unequal shares as part of the arrangement. Once a full partition of the HUF has been completed, it is important to formally record this with the tax authorities. An application should therefore be submitted to the Assessing Officer, requesting that an order be passed acknowledging that a full partition of the HUF has taken place. This ensures that the partition is recognised for income tax purposes.

What is a trust? When does it work best?

A trust is a legal arrangement where you transfer ownership of assets to a trustee, a person or institution, to hold and manage those assets for the benefit of your chosen beneficiaries, on terms you set out in a trust deed. Unlike a will, a trust can take effect during your lifetime, does not go through probate, and is significantly harder to contest.

Savani notes that trusts are good for having flexible control of the assets, succession planning, and/or for ring-fencing the family wealth from any potential family disputes and personal risks. You can also opt for a Section 8 company, but it is best suited for charitable purposes with specific goals and not for personal wealth or family tax planning.

A will and a trust are not competing. They are complementary.

In case your estate is relatively modest, a will is often the most practical and cost-efficient way to set out how those assets should be distributed. But the two instruments need not be alternatives. They can work together.

As per Singhania, "A will and a trust can also operate alongside one another. For instance, if certain assets are not transferred to a trust during a person's lifetime, they may still be subject to probate upon death. In such circumstances, a will ensures that these remaining assets are distributed in accordance with the person's wishes."

"Using both instruments can therefore provide a more comprehensive framework for estate planning. While a will acts as a safety net for assets that do not form part of the trust, the trust structure can help facilitate smoother asset management and transfer, potentially reducing administrative complexities and allowing for a greater degree of privacy in the handling of the estate," he adds.

In fact, Singhania suggests that a testamentary trust, a trust formed through testamentary instruments such as a will, is a middle ground that amalgamates the solutions extended by both a will and a trust. A testamentary trust takes effect only upon the death of the testator, and the deceased's estate is bequeathed to such a trust via a will. In this case, the testator provides directions in their will for a designated executor, outlining how their assets are overseen by trustee(s) and distributed to beneficiaries.

"For structuring your wealth for post-death protection, wills mainly help in hassle-free distribution of the self-acquired assets, but trusts/HUFs also provide for smooth transfer of ancestral properties. One can consider setting up a private trust (determinate & irrevocable) for having the assets settled for the lifelong care of beneficiaries, including a disabled child, post the death of the parents," says Savani.

Which structure is right for you? A quick guide

No single structure fits every family. If you are a salaried individual with a straightforward estate and adult beneficiaries, start with a will. If your family has ancestral property, high individual incomes, and members willing to function as a unit, an HUF can reduce your tax burden significantly. If you want control over how and when beneficiaries receive assets, need to protect wealth from disputes, or are planning for a dependant with special needs, a trust or a combination of a will and a trust is the stronger choice. And if your goal is channelling wealth toward a social cause with structure and accountability, a Section 8 company is the right vehicle.

For NRIs, a trust is a better structure. An NRI cannot be a Karta of an HUF, though they can remain a coparcener and retain their rights in the HUF. If the existing Karta of an HUF becomes an NRI, it does not dissolve the HUF. But the tax impact on HUFs is decided based on whether the control or management of their affairs is being undertaken from India or abroad. So, if the karta, who is at the helm of managing the HUF's affairs, becomes an NRI, it could significantly impact the HUF's tax status. 

On wills, NRIs holding assets in India are advised to have a separate Indian will for Indian assets and a separate will in their country of residence for assets held abroad, since a single will trying to cover both jurisdictions can create legal complications during execution. Hence, trusts are increasingly the structure of choice for NRI families with significant India-based assets as well, particularly because they allow a resident trustee to manage assets on behalf of beneficiaries living abroad and can be structured to handle both Indian and foreign assets with clarity. However, one must keep in mind FEMA regulations govern how NRIs can hold, transfer, and repatriate assets in India

Have a child with special abilities? A trust works better

Experts recommend establishing a private trust to protect assets for a child who, due to disability, may be unable to manage finances independently. Through such a structure, assets contributed by the parents are held and managed by a trustee, while the child is named as the beneficiary. The trustee's responsibility is to safeguard the assets and ensure that any income generated is used for the child's benefit.

In this case, parents may also choose to act as the trustee during their lifetime and appoint other family members, trusted individuals, or professionals as co-trustees or successor trustees. This ensures that the trust can continue to function if you are no longer able to act in that role.

Singhania states that to ensure smooth functioning, "The trust deed should clearly set out how the trustees must manage the assets." For example, limiting investments to relatively safe options and directing that the income be used for your daughter's medical and personal needs. Also, assets may be transferred to the trust during the parent's lifetime or through a will, depending on what is most appropriate in your circumstances."

In short, a will tells people what you want after you're gone. A trust makes sure they get it. An HUF keeps the family's income together. A Section 8 company gives your wealth a purpose beyond the family. None of these structures is complicated to understand, but what is complicated is doing nothing and leaving your family to figure it out after you are gone. The best time to choose the right structure was ten years ago. The second-best time is now.

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