Divorce, 2nd Marriages And Wills: Why High-Value Assets Remain Undocumented

With rate of divorces and second marriages on the rise, families in India are increasingly becoming unconventional. Yet Indian succession laws often fail to reflect these realities. 

Consider Arjun (name changed), a businessman who died suddenly without a Will. He had divorced, remarried, and left behind a daughter from his first marriage, a son from his second, and two stepchildren from his wife's earlier marriage whom he had lovingly raised but never legally adopted.

Under Hindu succession law, if a person dies intestate, property passes to Class I heirs, namely, the widow, biological children, and mother. Stepchildren inherit nothing unless legally adopted or specifically provided for through estate planning. Arjun's daughter from his first marriage would inherit alongside his second wife and son, while the stepchildren would receive nothing despite years of being part of his family.

Besides intestate succession where assets are not distributed as per one's wishes, the ownership can get into a complicated structure. For instance, assets such as homes or businesses are often inherited jointly, creating co-ownership among beneficiaries from different households with little shared history or trust. A thoughtful estate plan can instead allocate specific assets to specific beneficiaries, avoiding complicated ownership leading to unnecessary disputes. 

"With divorce rates rising steadily in urban India, particularly among working professionals, and remarriages and blended families becoming increasingly common it is very concerning that fewer than one-third of India's ultra-high-net-worth families have an updated will, and even fewer have integrated estate plans covering private family trusts, nominations, and business succession as per industry data statistics," says Sneha Makhija, Head of Wealth Planning at Sanctum Wealth.

The Reluctance To Plan Ahead

Many avoid estate planning because it forces uncomfortable conversations about mortality and family dynamics. Individuals in second marriages often fear the estate plan will appear to favour one set of family members over another. Complex wealth spread across businesses, real estate, and investments can also make planning feel overwhelming. Many mistakenly believe nominations are enough, overlooking that nominees are generally custodians rather than the ultimate legal owners.

"Without a clear estate plan, blended families often face legal disputes and emotional strain. Stepchildren may be unintentionally excluded, multiple families can become locked in years of litigation, businesses may lose direction, and relationships can fracture permanently. Wealth intended to create security instead becomes a source of conflict," Makhija said further.

What Effective Planning Looks Like

A robust estate plan goes beyond a will, especially for blended families. It typically includes an updated will, a private family trust where wealth is segregated appropriately amongst identified family members to avoid friction and nominations aligned with the overall plan. Had Arjun taken these basic steps, he could have protected and provided for his family members appropriately and spared unnecessary conflict.

"Estate planning is not really what happens to one's wealth after their demise, it is instead about ensuring that the people you love inherit clarity instead of confusion. As Indian families continue to evolve, the greatest legacy is not just wealth, it is a plan that makes your intentions unmistakably clear," added Makhija.