How Do Rich Protect Their Wealth And Property?
Some of the richest families in the country run a family business. We are also aware that the differences often creep up when families manage big businesses. The difference in ideologies, investment strategies, marriages, etc., can affect the way assets get treated. So how do wealthy households manage their assets and property? In the West, concepts such as prenuptial agreements are common and valid. Such is not the case in India. Here's a look:
Resorting to trusts
An estranged husband or wife cannot claim benefits from the assets registered with a trust. In this way, the assets remain within the bloodline and cannot be divided among others. The trustor gives the trustee the right to hold the ownership of property and assets for the benefit of a beneficiary. Such trusts protect the assets legally, cuts down paperwork and effort as also inheritance and estate taxes while guaranteeing that the trustor's wishes when it comes to distribution of wealth is prioritised.
Trusts could be revocable, irrevocable, funded or non-funded.
Will to your rescue
The more the wealth, the more the pressure to resort to a Will. Especially when it comes to divorces, industrialists often make sure that the consequences of a divorce do not upset their financial interests. Therefore, a Will may name the grandchild but not the daughter-in-law. This is in no way means that the daughter-in-law is discriminated. Instead, there have been cases where a non-transferable life interest in real estate assets is made for the daughter-in-law just in case of trouble.
In the same way, sons-in-law may also be protected.
What goes wrong in a HUF?
If wealthy families resort to succession as is done in the case of a Hindu Undivided Family (HUF) , there are chances of a fallout. There have been cases reported where the daughter demands her share in the property. This erodes business interests, too. Therefore, wealthy families seek guidance from legal advisors who chalk out plans to ensure that the family wealth is not violated or usurped in case of early fallout of marriages. Care is taken that children born in such wedlocks have ample protection.
What happens to prenups?
Still rare in India, prenuptial agreements are not valid in the court of law in India. However, also note that violating the agreement that has been stamped and notarised also constitutes fraud and this could be a ground for divorce.
Prenups usually agree upon alimony and maintenance to be provided to either spouse in case the marriage fails. Custody of children, distribution of responsibilities, liability if they happen to have children out of wedlock and other financial aspects are usually put down in a prenuptial agreement.