Mumbai: Wealthy Indians, primarily those with assets spread across geographies or family members having diverse citizenships, are increasingly turning to so-called alter ego trusts to manage succession planning and avoid lengthy court proceedings. Such structures help avoid complex, litigious situations and procedures during incapacity or after death, which may involve cross-border and religious considerations.
The alter ego trust is settled for the benefit of the person who has set it up and their spouse during their lifetimes, to the exclusion of others, with the next generation named remaindermen, who get a defined portion of the inheritance. They differ from regular family trusts that require a greater level of disclosure and the attendant prospect of disputes erupting.
“As Indian families become international and the wealth rises across generations, we see a lot more people using such trusts,” said Ashvini Chopra, executive director and head of family office, Avendus Wealth Management.
“Today, I would place alter ego trusts at the same nascent stage where family trusts were 15 years back,” said Chopra of Avendus Wealth.
Queries are primarily coming in from ultra-high-net-worth individuals (UHNIs) with the next generation of the family wholly or partially outside India, experts said.
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Various reports suggest that the number of UHNIs, those with assets above $30 million, reached 13,600 by the end of 2025. The high-net-worth individual (HNI) population, those with assets above $1 million, is set to reach nearly 1.65 million by 2027.
The demand for alter ego or similar inter vivos trust structures in India is largely driven by succession efficiency and risk mitigation, said Viral Mehta, head of private equity and financial services regulatory practice at law firm Nishith Desai Associates.“Assets settled into a trust during the settlor’s lifetime are governed by the terms of the trust deed, thereby reducing the scope for post-death disputes and ensuring continuity in management and distribution,” said Mehta. “Additionally, unlike succession proceedings, such as obtaining probate or a succession certificate, which may require public disclosure of the deceased’s assets, trust structures offer greater confidentiality. Collectively, these factors make such structures an attractive option for individuals seeking controlled, efficient, and private wealth succession planning.”
Apart from future-proofing assets, the alter ego trust has two major elements that are increasingly attracting wealthy Indians. First, a probate application includes listing properties, shareholdings, bank accounts and the beneficiary’s name, all of which become public knowledge and are prone to family disputes and could potentially turn into an embarrassing public spectacle.
Secondly, in several jurisdictions where probate is mandatory, court fees range from 1% to 13% of the estate’s value, which is a substantial sum for beneficiaries.
Apart from future-proofing assets, the alter ego trust has two major elements that are increasingly attracting wealthy Indians.
First, a probate application includes listing properties, shareholdings, bank accounts and the beneficiary’s name, all of which become public knowledge, is prone to family disputes, and could potentially turn into an embarrassing spectacle.
Second, in several jurisdictions where probate is mandatory, court fees range from 1% to 13% of the estate’s value, which is a substantial sum for beneficiaries.
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However, legal experts also caution that such a structure, while designed to safeguard assets, lacks tax efficiency.
Abhijit Joshi, managing partner of the law firm Veritas Legal, said that under the present tax laws, assets gifted by a person to a trust set up for the benefit of relatives are tax-exempt in the hands of the trust.
“However, when a person transfers their assets to an alter ego trust, the tax department may contend that it is not tax-exempt, as the definition of ‘relative’ does not include the self,” said Joshi. “This is because there doesn’t appear to be a provision in tax law under which a transfer from oneself to a trust for the benefit of oneself would qualify as exempt, though logically it should.”