Legal aspects of NRI banking: Inheritance and estate planning

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High Net Worth Individuals (HNIs) who have established their lives away from India often have financial assets and investments in India, which makes estate planning important. Estate planning is a strategic approach to manage wealth, property, and possessions to ensure your assets end up with your heirs or chosen beneficiaries in case of your death or incapacity. However, NRIs often face complexities due to different laws governing their assets in their resident country versus their homeland.

Legal aspects of NRI banking

Read on important aspects of inheritance and estate planning for NRIs, including the legal framework in India, importance of making a will, taxation implications, and role of NRI banking services in facilitating this process.

Understanding the laws of succession in India

Hindus, Sikhs, Buddhists, and Jains fall under the Hindu Succession Act, 1956, while Christians, Parsis, and Jews are governed by Indian Succession Act of 1925. Muslims in India have their respective personal laws. These laws outline who can inherit and how succession occurs if there is no will.

Making a Will: The most important step in estate planning

As an NRI, you have the legal privilege to create a separate will as per India laws to cover assets in India. Consider these factors when creating a will for effective wealth management and assets transfer.

  • Any adult (18 years or above) can create a will if the person is of sound mind.
  • Compliance with the Indian Succession Act, 1925 is mandatory for a will to be valid. Islamic law is an exception to this rule.
  • At least two witnesses must attest to the will to affirm its authenticity.
  • Drafting the will must occur freely, without any undue influence, and this statement should be clear in the document.
  • Precise details of the properties and assets for transfer need inclusion in the will.
  • Disinheriting any heirs requires a specific mention, providing clarity and reasons for such a decision.
  • Designation of an executor who will carry out the terms of the will is essential.
  • While registration of the will is not compulsory, it can facilitate easier legal processes for NRIs.

When the legal heir is an NRI?

When an NRI is a legal heir, they must adhere to the guidelines of the Foreign Exchange Management Act (FEMA), 1999. The main challenge during inheritance planning from India centres on the limits of currency that can be transferred overseas.

For an NRI heir who inherits agricultural land in India or if there is a trust in place that names NRIs as beneficiaries (effective upon the testator’s death), it’s crucial to obtain proper legal advice to ensure compliance with the act’s provisions.

Coming to taxation, in 1985, inheritance tax (known as estate tax) was abolished in India. However, rental income from inherited assets is taxable for the property owner, whether they are an NRI or a resident Indian.

Leverage NRI banking services for seamless inheritance and estate planning

NRI banking services offer multiple tools tailored for high-net-worth individuals managing assets across borders. They offer facilities like safe deposit lockers, wealth management services, seamless mobile banking solutions, and advisory services to help NRIs navigate the legality of inheritance.

As an HNI and NRI, you also enjoy exclusive investment strategies, tax planning, estate planning, and portfolio management. You get experts that help you devise a strategy to align with your preferences and the legal frameworks of the country where you reside. By guiding you through the complexities of inheritance laws, these services simplify asset distribution.

Craft a legacy that lasts without legal complications

Estate planning is not just about distributing wealth, it’s a way to extend your influence and wishes beyond your lifetime. A well-crafted will combined with premium NRI banking solutions provides a structured way to achieve this goal. These methods ensure that your estate plan is clear, legally compliant, and executed precisely as intended.


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