Succession Planning – The Singhania story
The recent fallout between father and son – Vijaypat and Gautam Singhania is a classic case of lack of well-structured estate and succession planning. (See the full story below)
The Singhania family is not new to family feuds and litigation. In 1987 the Singhania family had a family settlement, where three groups Mumbai, Kanpur and Kolkatta got their share of wealth. But that didn’t go as planned – legal battles are still going on for a bunglow property in Juhu, Mumbai.
Dr. Vijaypath Singhania and his late Brother Ajaypat Singhania’s family also had to go through their own share of family litigation. Dr. Vijaypath Singahia’s estranged son Madhupati Singhania who relinquished his rights post the family settlement has brought a new angle to the family litigation. This time his children are up against the grand father and have filed a suit against him.
In year 2002 Dr. Singhania gifted his share of holding ( 37.17%) in the Raymond group to his youngest son Gautam. And now it looks like there is a rift between them! I’m sure Dr. Singhania didn’t foresee this, but in all honesty, a man of his acumen and brilliance has no excuse to not have thought through potential contingencies.
Succession Planning – 1, Emotional Decisions – 0
Time and again, I’m proved right. History repeats itself, Indian Kings lost their kingdoms more because of internal feuds and that trends continues to date. Why do people repeat the same mistakes? Why do people choose emotions over logic?
At Terentia, we always believe that the patriarch and his spouse, who are carving the estate plan, are the Class 1 beneficiaries and will always be seated at the top of the estate plan which will revolve around their well being and needs first. There is no compromise or second thoughts on them being first recipients of distribution of benefits, at any given point in their life time. The defined distribution will trickle down as per the succession plan post them. This is the right approach to effective succession plans and more people must adopt the same.
People need to set up “Trusts” when they cannot trust. Along with the Trust it is also important to have other legal documents and agreements in place. I hope that people learn from such examples and execute a proper estate plan, this will only help them and their loved ones from drawn out heart aches and litigation.