Ask an Indian client and a US client, in identical words, "what happens to your portfolio's tax basis when you die," and the honest answers are close to opposites, which is exactly why this topic cannot be planned from a single template copied across the two markets.
How does estate planning work in the US?
In the United States, three mechanisms interact. First, the federal estate and gift tax applies above a large basic exclusion amount, $15,000,000 per individual for 2026, following the One Big Beautiful Bill Act's permanent extension and as stated in the IRS's own 2026 inflation-adjustment release. The rate on the excess is a flat 40%. A married couple can access up to double the individual exclusion through the portability election, which means filing to claim a deceased spouse's unused exclusion, the "DSUE". The annual gift tax exclusion for 2026 is $19,000 per recipient (per the same IRS release), letting a client transfer meaningful sums during life with no gift-tax filing at all, gift by gift, recipient by recipient, year by year. Second is step-up in basis at death under IRC §1014, which does more real work for most clients than the estate tax itself, since most estates sit well under the exclusion. An heir's cost basis in an inherited asset resets to its fair market value on the date of death. Decades of embedded capital gain can therefore vanish for tax purposes the instant the asset passes. Third, the two interact, and the interaction is worth stating as one rule of thumb: appreciated assets are generally better held until death, to capture the step-up, than gifted during life, where the recipient instead inherits the donor's original and lower carryover basis. Worked Example 6 computes the difference precisely. The mirror image is less obvious and matters just as much. Assets sitting on an unrealized loss should generally be sold before death rather than held, because basis steps down at death too, permanently erasing a loss a sale during life could have harvested.
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How does estate planning work in India?
In India, the picture is structurally different at the root: there is currently no estate duty or inheritance tax at all, the erstwhile Estate Duty Act, 1953 was repealed with effect from 1985, and no successor estate tax has been reintroduced since (a periodically revived policy debate, not a current law, treat any claim that India has reinstated an estate tax as something to check against the current Finance Act before repeating). The transfer of an asset by inheritance or under a will is itself excluded from being treated as a taxable "transfer," so no capital-gains tax and no gift tax arise purely from inheriting. But, and this is the genuinely important structural contrast with the US, worth holding as a single sentence. India gives the heir the deceased's original cost basis and original holding period, not a step-up (Section 49(1) of the Income Tax Act treats the cost of acquisition, in the heir's hands, as the cost to the previous owner, and the holding period includes the previous owner's holding period); the embedded capital gain does not vanish at death the way it can in the US, it simply passes through to whoever eventually sells. A gift made during life to a relative (as the Income Tax Act defines the term) is similarly excluded from being treated as taxable income in the recipient's hands under Section 56(2)'s exceptions, a genuinely useful planning lever for moving assets to a family member in a lower tax bracket before a sale, though the precise definition of "relative" and the current monetary thresholds around this exemption are exactly the kind of statutory detail to confirm against the current Act before relying on it for a specific client. One more structural piece worth naming: the Hindu Undivided Family (HUF), a creature of Hindu personal law recognized as a distinct taxable "person" under the Income Tax Act, is a wealth-transfer and tax-planning vehicle with no US analogue at all, and its presence or absence in a client's family structure is exactly the kind of "unique circumstance" this module's constraint framework exists to surface.
Trusts: four choices in the deed
Lalita Desai (synthetic), 72, wants to set aside ₹5 crore for a grandson who has twice run up debts he could not repay. She wants it to support him for life, paid out only as he needs it. She also wants it beyond his creditors' reach and out of her own estate now. A trust can do all of that, provided four choices in its deed are made the right way.
Revocable or irrevocable. A revocable trust can be changed or cancelled by the person who set it up, the settlor, so its assets are still treated as hers. In the United States a revocable living trust avoids probate, but its assets stay in the settlor's taxable estate. An irrevocable trust cannot be changed, so its assets leave her estate, and funding it is a gift. In India the Indian Trusts Act, 1882 lets a settlor revoke a trust made during her life only under a power of revocation she reserved in the deed, or with the consent of every beneficiary, provided all of them are competent to contract.
Fixed-interest or discretionary. In a fixed-interest trust each beneficiary is entitled to set payments, such as all the income every year. In a discretionary trust the trustee decides when to pay each beneficiary and how much. For a grandson who spends whatever he is given, the discretion is the protection, because he has no entitlement he can spend in advance.
A spendthrift clause. It stops a beneficiary selling or pledging his interest, and stops his creditors reaching the assets before the trustee pays them out. Most US states enforce one. Its force depends on local law, so check it before relying on it in an Indian deed. A discretionary trust protects on its own terms, since a beneficiary with no fixed entitlement has nothing fixed to sell or pledge.
An independent trustee. Discretion protects the grandson only if someone other than him exercises it. A professional or independent trustee can serve for his whole life and say no when no is the right answer. It also takes the work off a settlor who does not want it.
For Lalita that means an irrevocable discretionary trust with a spendthrift clause and an independent trustee. Each choice closes one risk, and dropping any of them reopens it.
Family governance: a charter and a council
A family that sells its company stops running a business and starts owning money, and its arguments change with it. Who may work for the family, and on what pay? Is an equal share the same as a fair one?
A family charter, usually called a family constitution in India, is a written agreement on the family's values and its rules on family employment, pay, distributions and decisions. Its value is timing. A rule agreed while nobody's share is on the table settles a fairness dispute before it hardens, for instance by paying the child who works in the business a salary for the work instead of a larger inheritance.
A family council applies the charter. It is a small group of representatives from each branch that meets on a fixed schedule. It takes the family's decisions on shared investments and philanthropy and hears disagreements before they reach a lawyer. Larger families add a family assembly, a wider meeting of all members that elects the council.
The council is also where the next generation is prepared. Financial education for a spouse who never managed money, and for grandchildren who will one day vote on the family's wealth, works best as one of its standing duties.