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Tata Capital > Blog > Wealth Services > Importance of timely succession planning among HNIs

Wealth Services

Importance of timely succession planning among HNIs

Importance of timely succession planning among HNIs

The percentage of high net worth individuals (HNIs) is supposed to increase by 60%-70% in the coming five years as per reports. While writing a Will can help you give your wealth to your beneficiaries but HNIs need a bit more, for appropriately planning their succession. This has been one of the major reasons for the boost of succession planning services in the country. A timely succession planning can not only help you allocate your wealth to your beneficiaries as planned but can help in different other ways as well.

Why do you need to start early with your succession planning?

Life is pretty much uncertain, it was, and it will be. Moreover, with the ongoing situation, anything can happen at any point in time. Therefore, HNIs are now not waiting to reach their sixties to start with their succession planning. Instead, they are starting in the age of 40s’ to plan their succession thoroughly. This helps in proper planning as you have more time at hand and you are not in a rush.

One of the most important benefits that as an HNI you may get by planning your succession earlier in life is that you can evaluate the people for a longer duration, and understand whether they are right for retaining your wealth or not. You can plan how your business will work, people who will be holding the top positions at the organization, and other aspects.

Then a timely succession planning can also help you transfer your wealth to those whom you want to. Suppose you have 2 children, while one is minor and the other is already in your business. So, you may want to leave more wealth of yours for the minor child for his or her education, marriage, and other purposes. So, if you start planning it early, you can sort any differences of opinion with your elder child if any, and avoid them running to court after your demise.

Additional Read – A Detailed Guide on Transition Planning

Recent trends in Succession Planning for HNIs

With the changing times, and increase in the HNIs, succession planning is also evolving. Here are some of the new trends in this industry –

  • In a family of HNIs, while the primary decision-maker is usually the father/male person, but women in the family, the wife of the HNI, has also a say in succession planning. They have their own opinions and desires to transfer their wealth to the next generation. So, nowadays, succession planning is more of an inclusive decision of the family members and not just the male head of the family.
  • There is another shift from return maximization to risk optimization. Earlier, most of the HNIs wanted to invest to see their wealth grow significantly, while now, it is more about preserving capital and then generating returns. They are diversifying their portfolios to minimize the risks and increase the returns using alternative investments, structured products, and others.
  • HNIs often park their wealth in offshore accounts as most of the children study abroad and settle there. Hence, it is beneficial to park their investments, assets in foreign accounts. Another thing that has changed in the past few years is that now most of the HNIs are looking for safe destinations for parking their wealth complying with the tax and other regulatory rules of the countries. This is decreasing the chances of any fraud or money laundering issues.

Additional Read - Unlisted Equity Shares – All you need to know about it


So, there is not only an increase in the number of high net worth individuals but also a major change in their thought process and wealth management attitude. This has led to timely succession planning as well which in turn leads to the proper allocation of wealth to the beneficiaries. For more information, you can consult our experts at Tata Capital Wealth, who can further assist you in this regard.

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