Cross-Border Estate Planning for NRI and Global Families

Cross-border estate planning for Indian families turns on three separate concepts: tax residence, domicile, and the situs of assets. India levies no estate duty, but family members resident in jurisdictions that do — including the UK and US — can bring worldwide estate exposure into a structure designed only for Indian conditions.

The three concepts

Tax residence determines where a person is taxed on income, and is tested differently in each jurisdiction. Indian residence rules turn on physical presence with additional conditions for persons of Indian origin, and there is a deemed residence provision for certain individuals not liable to tax elsewhere.

Domicile is a distinct concept, not the same as residence, and drives estate tax exposure in jurisdictions that levy it. UK inheritance tax exposure has historically turned on domicile, and the rules in this area have been reformed — confirm the current position with UK counsel.

Situs determines which jurisdiction can tax an asset regardless of the owner’s residence or domicile. US situs assets can attract US estate tax exposure for non-resident non-citizens at relatively low thresholds — a point that surprises families holding US securities directly.

Why Indian structures can fail abroad

A structure built for an Indian family with Indian assets can produce unintended consequences once a family member becomes resident or domiciled elsewhere.

An Indian private trust may not be recognised the same way in another jurisdiction, and may be treated as transparent, or as a foreign trust attracting punitive treatment and extensive reporting. US treatment of foreign trusts with US beneficiaries is the most frequently encountered example, and it can convert a sensible Indian structure into a reporting and tax burden.

A beneficiary who becomes resident abroad may trigger reporting obligations in that jurisdiction covering the trust and its assets, sometimes with substantial penalties for non-compliance the family did not know applied.

Assets held in one jurisdiction may require separate probate there, delaying administration.

The recurring situations

Children educated and settled abroad. The most common pattern. A structure created when the family was entirely resident in India acquires foreign-resident beneficiaries, and nobody revisits it.

Family members holding US securities directly, creating US situs exposure that could be managed by holding through a non-US structure.

Property held abroad, requiring local succession planning and separate probate.

Returning residents, where a person moving back to India brings foreign structures into the Indian tax net, and where transitional residence status offers a planning window frequently missed.

Foreign asset reporting. Indian residents must report foreign assets and income in their returns, with significant penalties for non-disclosure under the black money legislation. This applies to beneficial interests in foreign trusts and is a serious exposure for families assuming a discretionary interest need not be reported.

[INSERT: an anonymised Solique example — a cross-border family structure reviewed and adjusted, and what the review identified.]

Practical approach

Map the family: where each member is resident, their likely trajectory, and where each asset is situated.

Take advice in every relevant jurisdiction. A structure signed off only in India, for a family with members abroad, is incomplete — and nothing here should be read as advice on foreign law.

Review whenever a family member relocates, since relocation is the event that most often breaks an existing structure.

Confirm foreign asset reporting compliance for all Indian-resident members, including beneficial interests.

Related reading

• succession structures — Succession Structures for Indian Family Businesses
• family office setup — Setting Up a Family Office in India: Key Considerations
• remittance limits — Liberalised Remittance Scheme: Limit and TCS Rates