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Cross-Border Succession and Wealth Management: Legal Complexities for NRIs
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....ross-Border Succession and Wealth Management: Legal Complexities for NRIs<br>By: - Vidhi Chetnani<br>Investments - Wealth<br>Dated:- 18-7-2025<br>Introduction With a trend in redefining the lives of Indian nationals living in foreign countries, Non-Resident Indians (NRIs) are being left with increasing incidences of having managements that involve assets in more than one jurisdiction. Although this transnational life presents wide opportunities in creating wealth, it poses legal risks of succession and estate planning in turn. Different inheritance laws, wildly different tax regimes, cumbersome and complicated probate procedures, and highly restricted foreign exchange controls make a maze-like legal situation. This article explains the leg....
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....al intricacies that need to be addressed by NRIs who have to work with cross-border succession and wealth management based on Indian laws and international comparative practice. Jurisdictional Conflicts in Succession Laws The conflict of laws presents one of the greatest dilemmas in cross-border succession as it has to be unravelled. Various jurisdictions that are located worldwide incorporate various principles that guide the determination of the governing law in the succession. Although civil law jurisdictions, such as France, have adopted the law of habitual residence of the deceased to all of his assets, common law jurisdictions, such as India, adopt the lex situs rule to immovables and the domicile law to movables. The Indian success....
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....ion law closely touches on personal laws. The Hindu Succession Act, 1956, governs the Hindus, Buddhists, Jains, and Sikhs. Christians and Parsees fall under the Indian Succession Act 1925, and the Muslims are governed by the Muslim Personal Law (Shariat) Application Act. This complicates the succession planning process among the NRI, and the situation is more complicated in situations when assets are located in different countries that have conflicting laws. Recognition and Probate of Wills The recognition and enforcement of wills are a very critical procedural requirement in succession planning. All wills made by Hindus, Sikhs, Jains, and Buddhists are required to be probated under Section 213 of the Indian Succession Act, 1925, where th....
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....e property is located in presidency towns (Mumbai, Chennai, or Kolkata). The above applies to Christians and Parsis who must have undergone probate irrespective of the place they reside. An NRI writing his last will in a foreign country might hit a snag in case his will is not written as per Indian law. Execution, attestation, and notarization, American courts, on the other hand, usually accept (without proof) execution and attestation. On the other hand, such countries as the United Kingdom require a grant of probate by the country itself by use of its legal systems, and this legal system cannot receive an Indian will unless it fits its procedural order. NRIs should thus take caution and, in some cases, make a will regarding Indian and for....
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....eign assets. Tax Implications and Double Taxation Concerns Succession planning cannot be complete without looking at the tax repercussions of death and the passing of wealth. Despite the fact that India does not impose tax on inheritance or estate at the current time, a number of tax exposures may occur with NRIs. To begin with, the income of inheritances, such as rent earned or interest earned, is taxable in India on the residence status of the person getting the income under Section 6 of the Income Tax Act, 1961. Second, there is a tax known as the capital gains tax on the self-acquisition of property on sale by an NRI, even though the property is not occupied. The acquisition expenditure is computed in accordance with the original own....
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....er, indexation advantages. Thirdly, according to Section 56(2)(x), receipt without sufficient consideration of any property is taxable as income unless it is exempted, namely by inheritance. Additional problems are caused by foreign taxes. As an example, the United States has a maximum 40 percent estate tax on worldwide assets of its residents and citizens. Taxes on Indian assets that U.S.-based NRIs inherit may be waived only with a good action plan. The bad news here is that our Double Taxation Avoidance Agreements or DTAAs, as set out in Section 90 of the Income Tax Act, do not usually acknowledge the inheritance or estate tax, thus exposing NRI to a risk of dual taxation. Foreign Exchange Regulations and FEMA Compliance This is added....
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.... by one other level of complexity in the foreign exchange rules of India. The dealings with foreign exchange and the assets possessed in foreign countries are governed by the Foreign Exchange Management Act, 1999 (FEMA). NRIs who bequeath immovable property in India are mostly permitted to hold on to it. But, otherwise, in case they want to repatriate proceeds of the sales, then the conditions are of a strict nature. Remittances limited to USD 1 million per financial year are allowed on inherited assets on submission of requisite documents such as Succession certificates or discharging of wills, as per Master Directions issued by the RBI. When it comes to movable assets like shares or bank deposits, the transfers must live up with FEMA and....
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.... the Foreign Exchange (Non-Debt Instruments) Rules, 2019. Section 13 of FEMA provides the grievous penalties in case of non-compliance, viz. confiscation and fine of up to three times the amount concerned. Estate Planning Tools: Trusts and Dual Wills As a strategy to reduce the risk and procedural delays of cross-border succession, NRIs are resorting more and more to structured estate planning solutions such as private trusts and dual wills. The Indian Trusts Act 1882 controls trusts in India and can further be created so as to avoid probate and effectively manage and transfer assets. Privacy, tax efficiency, and control are provided especially by using discretionary trusts. But, their formation and functioning should be in line with the....
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.... FEMA and Benami Transactions (Prohibition) Act, particularly, in cases where the beneficiaries or the assets are foreign. Probate approval in the respective jurisdiction can be made faster with dual wills, which contain a will in respect to Indian property, and a will in regard to foreign property. Care should be exercised so as to make the wills revoke one another, and these wills should be harmonised to prevent any ambiguity in the law. Inheritance Disputes and Practical Challenges Cross-border probate is a conflict zone, especially when the heirs are not in the same geography. One of the frequent legal issues raised is the undue influence, issues of authenticity of foreign-executed wills, and conflicting probates in different jurisdi....
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....ctions. Indian courts can use the lex situs rule of immovable property as provided in Sections 5 and 6 of the Indian Succession Act and consult international conventions, as it is mentioned in Section 41 of the Indian Evidence Act, or a foreign order. There has also been the problem of document recognition. Foreign wills without attestation or notarization may not be accepted by Indian courts, whereas probate orders made in India may be rejected by foreign courts unless authenticated by an apostille under the Hague Convention. Such practical challenges may extend the time of the estate administration and subsequently increase legal expenses. Strategic Recommendations for NRIs A proactive, legally sound approach is what NRIs ought to take....
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.... in their quest to navigate the complicated ground in cross-border succession. Firstly, perform jurisdiction-specific wills under the advice of a legal professional to make it legally compliant under local and Indian legal systems. Second, one should always revise and rewrite estate plans so that they become relevant to the changing family situation or laws. Third, there should be set up trusts where it is warranted for high-value or vulnerable assets. Documentation should be sound so that all wills have to be attested, registered, and, in case of need, apostilled. Tax implications would be looked at in terms of the DTAs and local laws that govern the estate. Lastly, whatever transaction is done must abide by FEMA, and any transaction requ....
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....iring the transfer across borders or repatriation of any assets should strictly adhere to the advice given by the experts. Conclusion There is no longer a purely local issue of succession or wealth management relating to NRIs; rather, these are international compliance activities in which the practitioner must have a highly sensitive knowledge of several different legal regimes. As courts in different jurisdictions have taken different stands with regard to testamentary instruments, and as tax jurisdictions are watching the movement of the assets across several jurisdictions, NRIs need to be careful. Although strong, Indian law is usually inadequate to deal with the intricacies of foreign estate planning, and therefore, professional advic....
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....e is essential. The legal fraternity needs to drive legislative changes such as the digitised signing of wills, clarification of inheritance tax, and harmonisation of foreign probates. In the meantime, careful planning is the finest defence NRI has in case of legal ambiguity and loss of money.<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....