Estate Planning After The 2026 Reforms: What Every Family Should Know

CA Sreejith Kuniyil
Founder, PravasiTax &
True Legacy

Estate planning in India has entered a new phase. With the Income-tax Act, 2025 that came into force on 01 April 2026, and significant changes to succession law, individuals and families should revisit their estate planning strategies to ensure they remain legally robust and tax-efficient.

While the reforms do not fundamentally change the way wealth is transferred on death, they have important implications for Wills, private trusts, gifts and estate administration. More importantly, they reinforce the need to treat estate planning as an ongoing process rather than a one-time exercise.

The New Income-tax Act, 2025: What Has Changed?

The Income-tax Act, 2025 replaces the Income-tax Act, 1961 with a modernised and simplified legislative framework. Although many substantive tax principles continue under the new law, estate planning documents drafted under the previous regime should be reviewed to ensure that they remain current and effective.

One aspect that continues to provide certainty is that India has not reintroduced inheritance tax or estate duty. Assets inherited through a Will or under the applicable succession laws are therefore not taxed merely because they pass on to the legal heirs.

However, this should not be confused with complete tax exemption. Once an inherited asset begins generating income, whether through rent, dividends, interest or a subsequent sale, that income will be taxable in accordance with the provisions of the Income-tax Act, 2025.

Accordingly, tax planning should not end with the transfer of wealth; it should also consider the tax implications for the beneficiaries after they inherit the assets.

The Removal of Mandatory Probate

An equally significant development is the removal of the mandatory probate requirement under Section 213 of the Indian Succession Act, 1925.

Historically, probate was compulsory for certain classes of Wills executed within specified jurisdictions. The removal of this requirement is expected to simplify estate administration and reduce both the time and cost involved in transferring assets to beneficiaries.

That said, probate has not become irrelevant. In estates involving substantial assets, competing claims or the possibility of future disputes, obtaining probate may still provide greater legal certainty. Financial institutions and other asset-holding entities may also continue to request probate in particular cases as part of their internal compliance procedures.

The practical implication is that probate is no longer a mandatory legal requirement, but rather a strategic decision based on the facts of each estate.

Existing Wills Should Be Reviewed

Many people assume that a Will remains effective indefinitely once it has been executed. While a validly executed Will continues to remain legally enforceable, it should be reviewed periodically to ensure that it accurately reflects the person’s current intentions and financial circumstances.

The 2026 legal changes provide an appropriate opportunity to review existing Wills, particularly where they contain references to the Income-tax Act, 1961 or where there have been significant changes in family circumstances or asset ownership.

A review should also consider whether the appointed executors, guardians and beneficiaries remain appropriate, and whether the Will adequately addresses newly acquired assets, digital assets and overseas investments.

Estate planning is most effective when it evolves alongside the family’s financial and personal circumstances.

The Growing Importance of Private Family Trusts

Private family trusts continue to play an increasingly important role in succession planning, particularly for families with substantial or complex asset portfolios.

Unlike a Will, which operates only upon the death of the testator, a trust allows assets to be managed and administered during the settlor’s lifetime and after their demise in accordance with clearly defined objectives.

Trusts are particularly beneficial where there are family businesses, multiple immovable properties, vulnerable beneficiaries, minor children or beneficiaries residing outside India.

From a tax perspective, families should also review existing trust structures under the Income-tax Act, 2025 to ensure that the trust continues to achieve the intended tax and succession outcomes. The distinction between specific and discretionary trusts remains an important consideration while designing an efficient estate planning structure.

Lifetime Gifting Requires Careful Planning

Lifetime gifting has long been an effective succession planning tool, allowing individuals to transfer wealth during their lifetime rather than upon death.

The Income-tax Act, 2025 broadly continues the existing framework relating to gifts. Transfers made to specified relatives continue to enjoy favourable tax treatment, while gifts received from non-relatives beyond the prescribed threshold may attract tax, subject to applicable exemptions.

However, gifting should not be viewed solely as a tax-saving mechanism.

Before transferring immovable property, business interests or high-value investments, families should carefully evaluate the legal, commercial and succession implications. Once ownership is transferred, the owner permanently loses control over the asset. Accordingly, gifting decisions should always form part of a broader estate planning strategy rather than being undertaken in isolation.

Estate Planning Extends Beyond a Will

One of the most common misconceptions is that estate planning begins and ends with the preparation of a Will.

In reality, an effective estate plan involves several interconnected elements, including nominations, joint ownership arrangements, powers of attorney, trusts and beneficiary designations.

It is not uncommon to find situations where nominations in bank accounts, insurance policies or investment portfolios do not align with the provisions of a Will. Such inconsistencies frequently become the source of avoidable family disputes and delays in estate administration.

A comprehensive review should therefore ensure that all estate planning documents operate harmoniously and accurately reflect the individual’s succession objectives.

A Timely Opportunity to Review Your Estate Plan

The 2026 reforms do not require every individual to rewrite their Will or restructure their estate plan. However, they do present an important opportunity to reassess existing arrangements.

Individuals should consider reviewing:

• Existing Wills and codicils.
• Private trust deeds.
• Gift planning strategies.
• Nominations for financial assets.
• Powers of Attorney.
• Succession plans for business interests and family-owned assets.

Regular reviews are particularly important following major life events such as marriage, divorce, the birth of children, acquisition of significant assets or changes in tax legislation.

Conclusion

The introduction of the Income-tax Act, 2025 and the recent amendments to succession law represent an important milestone in India’s evolving legal framework. While the fundamental principles of estate planning remain unchanged, the reforms underscore the importance of periodically reviewing succession structures to ensure they continue to meet both legal and commercial objectives.

Estate planning is not just about distributing assets after your lifetime. It is about protecting your family’s interests, ensuring a smooth transfer of wealth, and avoiding unnecessary legal complications.

With the legal and tax landscape continuing to evolve, a periodic review of your estate plan is one of the most effective ways to safeguard your legacy for future generations.

Pic courtesy: google/ images are subject to copyright