With speedy wealth creation, international publicity and maturing enterprise outlooks, founders are not simply constructing corporations—they’re considering legacy. Trusts and property constructions are gaining traction as instruments for sensible succession planning, asset safety, and futureproofing towards tax and authorized uncertainties.
New-age entrepreneurs who need extra management, readability and continuity in how their wealth lives on are adopting what was once a playbook for old-money households.
Founders are actually considering past simply development. They’re asking: How do I protect this? How do I go it on easily? It’s about defending what they’ve constructed from household disputes, future uncertainty and enterprise dangers.
The dialog round trusts resurfaced lately following Indian cricketer and investor in life-style model CheQmate Yuzvendra Chahal’s separation from his spouse. Anshuman Singh, a Supreme Court docket advocate, mentioned Chahal’s pre-established household belief helped protect key property from authorized publicity. As a part of the settlement, Chahal reportedly agreed to pay ₹4.75 crore in alimony.
The surge in startup valuations, preliminary public choices and high-profile exits has created a wave of newly accrued wealth, Singh defined. Zerodha’s Nithin Kamath has publicly burdened the significance of long-term wealth planning, even when the small print of his belief preparations aren’t public.
“It isn’t simply the Yuzvendra Chahal case,” mentioned Prachi Shrivastava, founding father of Vakil Vetted. “We’ve got seen a D2C founder making a belief after a high-profile household feud performed out over LinkedIn and a SaaS founder ringfencing shares after a breakup with a co-founder-turned-partner.”
Peace of thoughts
She mentioned startups are not facet hustles, they’re generational property. Fairness, mental property, model offers and inventory choices don’t sit neatly in a locker — and founders are realising that private life turbulence can leak into their cap tables if left unstructured, she remarked.
A serious driver is the need amongst startup and IPO-bound founders to sidestep potential household disputes—whether or not it is inner tensions, separations or something that may complicate the switch of wealth, defined Neha Pathak, head of belief & property planning at Motilal Oswal Non-public Wealth. “The purpose is to make sure a clean handover and get rid of any friction earlier than it arises.”
“One other large issue is danger,” she added. Startups, by nature, are high-stakes ventures and founders are more and more ensuring that if one thing goes fallacious within the enterprise, their private property stay protected. Belief and property planning offers them that essential separation—and peace of thoughts.
The true query is: How does belief and property planning truly work behind the scenes to guard wealth? How does it protect founders from dangers, and what mechanisms make it efficient? Extra importantly, how is all of it structured to make sure each management and continuity?
In contrast to wills, which turn into public, trusts supply a discreet option to distribute wealth.
In India, the important thing distinction between a will and a belief is after they take impact and the way a lot management they provide. A will comes into play solely after demise and goes by means of probate – a authorized process by means of which property are handed on – in some states, which is a public and generally prolonged authorized course of.
A belief, nevertheless, will be arrange throughout one’s lifetime, presents higher management over asset distribution, helps keep away from probate, and retains issues non-public. Trusts are particularly helpful for complicated estates or when discretion and long-term planning are priorities.
One other large cause to guard your property, says Vishal Yeole, senior director – enterprise advisory at Waterfield Advisors, is to remain one step forward of any potential modifications in property tax legal guidelines.
India launched Property Obligation in 1953 to tax inherited wealth, nevertheless it was scrapped in 1985 as a result of low income and enforcement challenges. Since then, there’s been no property or inheritance tax within the nation, although the concept of reintroducing it resurfaces every now and then in coverage circles.
Benefit of safety
Explaining how belief constructions assist founders stability management and possession, Yeole mentioned the founder’s stake will be moved right into a belief, with the founder changing into a trustee. So, whereas they not “personal” the shares on paper, they nonetheless have a say.
In the meantime, one other key benefit, Yeole identified, is that belief property are typically protected, except it’s confirmed that the switch was fraudulent or executed purely to dodge authorized claims.
Usually, the largest considerations come from inside the household. Founders are not looking for their hard-earned wealth caught up in inner disputes, particularly throughout occasions like separation or divorce.
Startup founders usually overlook belief planning—till private drama hits the cap desk. Rippling co-founder Prasanna Sankar went public on X throughout a custody battle, elevating alarms about management and stability. At Mu Sigma, Dhiraj Rajaram purchased out ex-wife Ambiga’s stake post-divorce, avoiding chaos however skipping a belief construction.
ShopClues’ Sandeep Aggarwal accused his cofounder spouse Radhika of ousting him, igniting a public conflict over credit score and management. And at Zoho, founder Sridhar Vembu was accused by his spouse of quietly shifting firm property to household, triggering questions round possession and transparency.
Whether or not as a result of divorce, disputes over management, or succession challenges, the absence of structured belief planning can depart even probably the most profitable startups susceptible.
“Many founders desire organising a non-public belief construction,” Pathak defined. “Why? As a result of it’s intimate, managed and permits them to ringfence property from each exterior threats and inner problems. The belief deed can embrace particular provisions on who takes over the enterprise, who has entry to property if one thing occurs to the founder and the way possession will get handed on.”
One widespread strategy is naming youngsters as beneficiaries, whereas deliberately leaving out youngsters’s spouses. This helps keep away from claims throughout potential divorces or disputes and retains wealth safe inside the bloodline.
Disruptive wealth
One may even define determination rights, voting rights and distribution situations—all tailor-made to the founder’s imaginative and prescient.
Pathak shared the instance of a garment manufacturing startup gearing up for an IPO. To handle the incoming wealth, the founders arrange a number of trusts—some providing rapid payouts to relations, others designed for staggered distributions, and some structured particularly to repay principal lenders.
The thought was easy: guarantee accountable use of funds and keep away from overwhelming relations with sudden windfalls.
“You don’t need new wealth to disrupt lives or breed complacency,” Pathak mentioned.
One founder had two clear objectives: securing lifelong care for his or her particular wants baby and supporting charities they had been intently concerned with. They wished these plans to proceed seamlessly, even when they weren’t round. However there was one other key concern: privateness.
“I don’t need the world realizing what I personal or who’s getting what,” the founder mentioned. So, a good portion of their property was moved into trusts—guaranteeing care, contribution, and full confidentiality.
Tushar Kumar, a Supreme Court docket advocate, mentioned the drafting of the belief deed have to be exact, strong and tailor-made, clearly demarcating trustee powers, beneficiary entitlements and contingencies.
“Jurisdictional legal guidelines regarding stamp responsibility and registration have to be accounted for, particularly in respect of immovable property, to keep away from inadvertent tax liabilities,” Kumar mentioned.
Maybe most significantly, care have to be taken to make sure the belief doesn’t battle with the governing private legislation of the household, significantly in issues involving intestate succession or claims beneath the Hindu Succession Act or Muslim Private Regulation, he defined.
Sonali Pradhan, head of wealth planning at Julius Baer India, identified a important however usually ignored angle—founders can face claims not simply from buyers or regulators, but in addition from staff and even shoppers. If there’s any deficiency in compliance from the founder, the primary transfer by regulators or courts is usually to freeze their financial institution and demat accounts. For a listed firm, that isn’t only a private hit—it could actually ship severe shockwaves to the shareholders and different stakeholders.
Sudden demise
She additionally touched on how the rise in sudden premature deaths has made many startup founders rethink the timing of the legacy planning train. She shared the instance of a younger, single e-commerce founder who has seen speedy wealth creation.
His concern? Ensuring there’s a clear, considerate plan to handle and deploy that wealth even after he’s gone.
Epigamia’s co-founder Rohan Mirchandani died unexpectedly in December from a coronary heart assault. In August 2023, 51-year-old Ambareesh Murty, co-founder of on-line furnishings platform Pepperfry, succumbed to a coronary heart assault.
In December 2021, Pankhuri Shrivastava, the 32-year-old founding father of rental startup Grabhouse and woman-focused platform Pankhuri, misplaced her life to a cardiac arrest.
These incidents have prompted many younger entrepreneurs to assume severely about legacy planning and defending their wealth.
