ase Study No 1 – Large Business Families with 3 rd Active Generation
A diversified Group with interest in textiles, exports, manufacturing and construction. Business spread across pan India and few international geographies. Listed companies held through a matrix of Pvt. Ltd companies, HUFS & individual name. The clients were looking at a structure to consolidate the assets and avoid any future litigation.
Family Tree:
Business Assets – ABC Group:
- Real Estate – 15 Properties
- 2 Listed companies with market cap of INR 6250 Crores
- Their Share holding is 67% in both
- 18 Private Limited Companies holdings, businesses, properties & investments
- Arts Rs 70 Crores
- Jewellery Rs 20 Crores
- Properties in Dubai, Singapore etc.
Objectives:
- Commonly held assets to be transfer to the Mother Trust, this will avoid future litigation.
- From Mother Trust equal benefits would be passed.
- Personal Assets to be held in the personal trust.
- Management of Company A with Son 1
Management of Company B with Son 2
Management of Company C with Son 3
(in the phase of set up)
Proposed Structure
Advantages of the Structure:
- Eliminating future complications in transfer of assets.
- Insulating assets from disputes – within the family or outside the family.
- Step wise succession without losing control over the assets.
- Will help in case of medical emergencies
- Will and trust is ambulatory in nature and can be modified at any point of time.
- Probate will not be required for the assets transferred in the trust, thereby saving a great amount of legal formalities and legislative fees.
- Income generated by the Trust is taxable in the hands of the Trust thereby giving an additional opportunity for tax planning.
- Financial support to the respective families in case of untimely demise of the any family members
- Provision for Children education and marriage expenses
- Under this structure the business assets will get consolidated in one trust
- Personal properties and wealth will be held in each personal trusts
- In terms of taxation one would get a pass thru
- Business can continue to run independently as they are functioning now
