My parents, along with my wife, have an equal stake in my privately-held company. My family also includes my estranged brother who runs a competing manufacturing business. They do not want to create a will. In case they die without a will, what could be the legal implications? How can I ensure that my stake in the company is safe?
This is a common problem among Hindu families holding family-run businesses. If your brother gets ownership in your company, this can create multiple legal issues for you and your family. In the event of your parents passing away without a will, their estate will be inherited by both you and your brother. As a result, the 50% shareholding by your parents will be inherited by both you and your brother, giving him a significant minority shareholding in your company. This can result in accountability issues, as well as several legal problems.
To avoid these complications, it is important that your parents either gift their shares to you during their lifetime or write a will in your favor. It is also important for you to create a will, to ensure that your estate is not equally divided between your wife, children, and your mother, who is one of the class I legal heirs under the Hindu Succession Act.
It is essential to understand that under intestate succession, all the legal heirs get equal rights and share in the estate of the deceased. However, a will creates differential rights and the estate is inherited according to the wishes of the deceased, which are expressed in the will. Depending on your family circumstances, it may be crucial to write a will to avoid any legal issues.
Anju Gandhi, a partner at SNG & Partners, Advocates & Solicitors, recommends that you take steps to ensure your stake in the company is protected in case of your parents’ demise. Otherwise, your brother may intervene and create further legal complications for you and your family.