The Myth of Secrecy Surrounding Wills Needs to be Debunked

Death does not seem to give peace to the soul in cases where surviving family members fight over the financial wealth left behind by the deceased. Recent reports of protracted court battle over the authenticity and validity of the wills of the members of prominent business families like the Oberois and Kalyanis leave one puzzled over their causes and consequences. It is also ironical that such disputes surface after the death of the individual concerned. Why do such incidents occur, especially in high-profile wealthy families, and what can be done to avoid such situations? 

Look Elsewhere for the Cause 

Disputes of any nature are manifestations of several fundamental problems, all emanating from poor family governance. Most often, disputes related to a will can be traced back to poor quality family relationships built over many years (the Kalyani brothers are 69 and 75)! 

The current surge in will-related disputes brings into focus the dimension of ownership continuity. A standard share holders’ agreement (SHA) is often used in the business ownership context; it ought to have clauses on ownership transfer as well as ownership transmission (to whom shares can be passed over after the death of the holder). Such an instrument does not exist in the case of wealth outside the business.  

It is common sense that our ability to think coherently and act sensibly decrease as we age. Still, wealthy individuals tend to hold on to their wealth till their last breath either out of a feeling of insecurity or possessiveness. Often, they do not seek or receive wise advice on what to do with their wealth. 

When family relationships gradually drift from cordial to suspicion of others and finally become sour, there is every possibility of members thinking and acting with a lot of secrecy. There is lack of trust in others and often older people would not know whom to trust fully, especially with reference to the wealth they possess. Awareness about the challenges and options for managing wealth at old age is also very limited. 

The way forward 

It is high time that the myth about maintaining secrecy of a will is dispelled. Awareness about the benefits of registering a will and its availability to potential beneficiaries while the author is still alive needs to be cultivated. There are a number of ways to demystify a will. 

As a strategic tool, scenario building is very effectively applied in the business context. In fact, it has immense possibilities in making a will less controversial and risky. A lot depends on the extent of deliberations and scenario building the individual does to ensure fairness and transparency among all and over time. Unfortunately, both in the case of a will for personal wealth inheritance and SHA for business wealth inheritance, adequate scenario building is not often done. It is not the momentary feelings of the author of a will that matter when the overall purpose of writing a will is to clearly allocate wealth to inheritors without any possible rift and dispute.  

Fundamental to family harmony and continuity is the practice of fairness to all transparently. Why do disputes arise? It is the want of clear policies, rules and processes that leads to disputes. Families that have good governance have not only clarity on many such matters, but also make sure that subsequent generations are groomed to consider ownership as a responsibility.  

Business families tend to focus on their business wealth when it comes to matters of governance. Even families with a family business board and family council tend not to debate on transfer and transmission of wealth outside the business. In both the Kalyani and Oberoi cases, disputes went beyond business assets. Quality of family relationships is key. 

Good leaders are always stewards, taking care of the interests of other stakeholders fairly and transparently. They are stewards for whom leadership is a responsibility and not an opportunity to meet selfish interests. 

Most parties in disputes take hard and irrevocable positions of argument, leaving little room for logic. It is often the ego that drives them. As in the case of the Kalyani and Oberoi families, the aggrieved party would feel that they had been denied fairness by the other. Mediation has evolved as a systematic approach to find solutions when the parties involved are not able to find a solution amicably. While mediation by respected neutral people has always existed, of late it has evolved into a separate profession for lawyers. Mediation experts bring logic and practical wisdom so that protracted court battles can be avoided. Typically, in situations where there is scope for divergent interpretations, courts may take very long to arrive at a solution, which, in most cases leads to a winner and a loser. Mediation attempts to make it a win-win situation.  

Family businesses will do well by establishing clear governance practices including a family constitution. The root causes here and the solutions suggested are all built into a sound practice of governance with its checks and balances and adaptability across generations. The secrecy around a will needs to be broken. 

The author is professor and senior advisor, Thomas Schmidheiny Centre for Family Enterprise, Indian School of Business. Views expressed are personal.