Passing down a family legacy to the next generation has undergone a complete transformation in the traditional notion of inheritance. Today, the emphasis of high-net-worth individuals (HNIs) has shifted the idea of a succession or continuation of both values and wealth for the next generation.
Shift in legacy planning
“It’s no longer an exercise in legacy planning as it was in the past.” Families are now additionally looking for answers regarding ownership, decision-making, and financial planning. “The dialogue has shifted from ‘What happens when I pass away, or when my dad passes away?’ to ‘What happens in the next 50 to 80 years’.
Data bears this out. The Hubbis Survey of the India HNW and UHNW wealth advice industry reveals that; “69% of wealthy Indian clients are building upon or fine-tuning their succession and transfer planning initiatives, whereas 64% have already formalised their will or transfer plans.” This trend bears out the notion that wealthy individuals are beginning to realize the importance of proper planning when it comes to their accumulated assets, lest otherwise significant fortunes unravel or find a loss of purpose down the line.
The demographic structure of the Indian population is also fuelling this change. Strong wealth creation in the last few years has created a large pool of wealthy individuals. Today India has approximately 8.5 lakh HNIs and 13,600 ultra-HNIs, of which 20% HNIs are below the age of 40 years. The younger generation is receptive to expert advice on diversified investment and the latest global best practices of handling assets. Therefore, the long-term and multigenerational planning of assets is an area of growing need among the families that have accumulated their wealth over the previous two decades.
Building a superior risk-adjusted portfolio should be the core focus of legacy planning. Diversification of the portfolio into various asset classes such as equities, fixed income, real assets, and alternative investments enables effective mitigation of risk resulting in capital preservation as well as sustainable and consistent wealth growth.
Governance and values in legacy planning
Another important area is the issue of governance. Families are establishing formal investment committees and outlining specific roles for family members, with a set of rules for making decisions. Investment professionals can act as a third-party advisor in making these decisions and reconciling the family’s emotions with financial realities. The key steps to building a strong governance framework include forming formal investment committees with clearly defined family roles, establishing disciplined decision-making rules, and engaging investment professionals as neutral third-party advisors.
Apart from financial systems, values-based legacy planning is becoming central to modern wealth transfer, with wealthy families integrating philanthropy, impact investing, and financial education while actively exposing heirs to investment decisions, charitable initiatives, and responsible financial stewardship.
In the past, family offices were basically limited to investment management. But currently, they are also embracing legacy planning, asset preservation, and generation education. This also marks a transition from wealth generation to family sustainability.
Long-term continuity
With private wealth in India on the rise, families need a comprehensive strategy integrating disciplined investment, strategic planning for the next generation, and values-based engagement to secure their legacy.
(Prashasta Seth is CEO of Prudent Investment Managers LLP. The views are personal)