Page 95 - Quick Insights Book 2022

26 Succession & Estate Planning

WHAT IS SUCCESSION PLANNING?

Succession and / or Inheritance are the process of the heir
inheriting his ancestors’ Property which is commonly termed as
Succession Planning or Estate Planning. Succession governs
how the inheritance would take place. In absence of a will, the
distribution of the estate is governed as per Laws of the nation.
If one is Hindu, it is as per Hindu Succession Act, 1956. For
Christians, Jews and Parsis, it is as per Indian Succession
Act 1925. If a person is Muslim, his property will be divided in
accordance to Muslim Personal Law.
Apart from above, Business Houses also need to plan their
heirs which is commonly terms as Business Succession Plan.
For private, owner-managed, or family-owned businesses, a
succession plan can drive the growth of the business, reduce
taxes, and set the stage for retirement.

SUCCESSION PLANNING IMPORTANT?

 There is an old saying that explains the inherent benefits
of succession planning best. If you fail to plan, you plan
to fail.

 How family will deal on sudden death of key family
member(s).

 Succession planning ensure that a business and family
always have the right leaders and personal affairs in
place
 Succession planning also helps in identifying where you
see the future of your business and family, identifying
the gaps and taking steps to fill the gap.

Succession Planning can broadly be divided into:
1. Business Succession Planning Succession &
2. Family Succession Planning

ROLE OF CA IN BUSINESS SUCCESSION PLAN Estate Planning

A Chartered Accountant can play an important role in assisting
his client in Business Succession Plan in the following ways:

 Creation of a formal transfer agreement for likely
successors.

 Evaluation of corporate finance and entity structure
options, including debt and financing paths in accordance
with succession plan of the business.

 Assist in understanding key business value drivers for
Business Succession Plan.

82 Quick Insights on Professional Opportunities for Chartered Accountants