The Challenges Of Estate Planning For Non-Resident Indians With Property In India

Estate planning is a crucial part of your overall financial soundness and continuity.  For non-resident Indians (NRIs) with property in India, estate planning can be particularly challenging due to the unique legal and tax considerations involved. In this blog, we'll explore the challenges of estate planning for NRIs with property in India and offer some tips on how to navigate this complex process.

Here are some challenges that NRI faces in their estate planning

Different Laws 

Since the laws are different, making good estate planning can be challenging. In India, property ownership is governed by the Transfer of Property Act, 1882, and the Registration Act, 1908. These laws are complex and can be difficult for NRIs to navigate without professional legal advice.

Tax Consideration

The second challenge for NRIs with property in India is understanding the tax implications of property ownership and transfer. In India, property transfer is subject to several taxes, including stamp duty, registration fees, and capital gains tax. It is also challenging for NRIs when it comes to the tax implications of property transfer in their country of residence.

One of the primary tax considerations for NRIs with property in India is whether to sell the property or transfer it as part of their estate plan. The tax implications of selling versus transferring the property can be quite different.

Selling Of Inherited Property

Selling an inherited property can be tricky for an NRI since the tax and the income earned from it can be tricky to compute. In addition, the legal implications of joint ownership and sole ownership can be quite different, so it is important to understand the implications of each option.

Succession Laws Applicable

The succession laws differ based on the religion of a person. The Hindu Succession Act applies to a person who is a Hindu, Sikh, or Jain. The Sharia laws apply to a person who is Muslim and the Indian Succession Acts apply to Christians. Additionally, the succession laws applicable will change if the person converts to a different religion.

How To Plan Your Estate Plan Smartly?

One of the best ways that you can protect your assets for the future is by making a Will. If you are an NRI or OCI, you can make one Will for your assets in India and another for your assets outside India. Since the Succession laws applicable are different, you can ask a professional to help with the Will.  

You can also set up a trust. A Trust is of two types i.e., Private and Public. Private Trust can be used to maintain private wealth in the case of succession while the public trusts are made for the transfer of property for more charitable purposes. 

Estate planning for NRIs with property in India can be a complex and challenging process. Legal considerations, tax implications, and estate planning options must all be carefully considered to ensure that your assets and properties are distributed according to your wishes and in a tax-efficient manner.