India's household wealth has expanded significantly, driven by disciplined savings across bank deposits, insurance, equities, and mutual funds. Yet, a large portion of this wealth risks going unclaimed – not due to poor investment decisions, but because of weak estate planning and a persistent hesitation to formalize wills.
The scale of the problem is striking: approximately ₹78,000 crore lies unclaimed in bank deposits, ₹14,000 crore in insurance, ₹9,000 crore in dividends, and about ₹3,000 crore in mutual funds. Studies also indicate that nearly 70% of family wealth is lost by the second generation and up to 90% by the third, partly due to inadequate planning.
Cultural Discomfort and Emotional Complexity
A primary reason behind this trend is a deep-rooted discomfort in discussing money and mortality within Indian families. Saurabh Bansal, a Certified Trust and Estate Planner, notes that financial details are often confined to one or two members, while open conversations about assets or future distribution are rare.
“A will moves the conversation from ‘what we have’ to ‘who gets what,’ and that shift brings in questions of fairness, expectations, and intent. These are deeply personal questions, and not always easy to answer,” Bansal explains, highlighting the emotional weight involved.
While drafting a will is legally straightforward, the decisions behind it are inherently emotional, requiring a balance between equality and fairness. This often leads families to prioritize short-term comfort over the long-term clarity that could prevent future disputes.
Historical Context and Joint Family Systems
The hesitation also has historical roots. Pranjali Madnani, Director of Estate Planning at Agnam Trustees, points out that in earlier times, a single head of the family would decide asset distribution. Today, however, family heads are cautious about creating any stir by initiating discussions on asset division. Historically, Hindus did not have the concept of a will, which was introduced much later with British rule. Culturally, India still leans towards a mindset of collective family welfare, which can deprioritize individual estate planning.
Why Estate Planning Matters for Investors
In today's financial environment, where assets are diversified across various instruments and geographies, the absence of a will can create serious complications. Missing documentation, unclear ownership, and over-reliance on nominations can significantly delay or even derail asset transfers, causing distress and potential financial loss for heirs.
Experts emphasize that estate planning is not exclusively for the wealthy; it is essential for anyone with financial assets. A structured will, combined with updated nominations and clear documentation, ensures that wealth is transferred smoothly and precisely as intended. As India's wealth continues to grow, formalizing its transfer through a well-prepared will is becoming as critical as its creation.