India’s incapacity law gap: why estate planning must go beyond wills

The blind spot

The scale is not small. The Longitudinal Ageing Study in India, 2023, found about 8.8 million Indians aged 60 and above living with dementia, a prevalence of 7.4%. The UNFPA India Ageing Report 2023 counted 149 million Indians aged 60 and above in 2022, projected to reach 347 million by 2050. Each may one day need someone to sign a cheque, sell a flat or consent to surgery on their behalf, and Indian law offers only fragments to handle it.

What Indian law actually offers is fragmentary. Let’s take a look at each aspect:

1. The Indian Contract Act, 1872, under Section 11, voids contracts made by a person of unsound mind, but offers no advance planning route.
2. The Mental Healthcare Act, 2017, lets a person nominate a treatment representative, though it covers healthcare only and stays silent on property and finances.
3. The Rights of Persons with Disabilities Act, 2016, under Section 14, lets a court appoint a limited guardian for a benchmark disability, but excludes most dementia and stroke patients.
4. The National Trust Act, 1999, provides guardianship, though only for four listed conditions, autism, cerebral palsy, mental retardation and multiple disabilities.
5. And the Powers of Attorney Act, 1882, lets a person appoint an agent, but stays silent on whether that agency survives incapacity, so rulings on the point vary.

Court route

Because no dedicated statute exists, families turn to courts, which act as guardians under their parens patriae jurisdiction. In 2020, the Delhi High Court let only a spouse or children guard a comatose woman whose Provident Fund savings a bank had withheld, and ordered full asset disclosure. In 2025, the Bombay High Court ordered a medical board to examine a 78-year-old dementia patient before ruling on her children's guardianship plea, a process that took months.

Currently, there are 4 tools available in India as of date, each addressing a different piece of the problem.

1. A General Power of Attorney, with a survival clause, lets a chosen agent manage accounts and property, though banks and registrars still treat such clauses inconsistently.
2. A nominated representative under the Mental Healthcare Act, 2017, gives a named person a say in treatment decisions, but addresses healthcare only and not matters relating to money or property.
3. An Advance Medical Directive, the living will be recognised in Common Cause versus Union of India, 2018, records a person's end of life wishes and was simplified by the Supreme Court in 2023, though it applies only to end of life care.
4. And a private family trust under the Indian Trusts Act, 1882, lets a trustee manage assets for the person's own benefit through incapacity, though it needs upfront legal setup and a carefully drafted deed.

Trust advantage

Of the detailed 4 options above, the private family trust deserves the closest attention as it alone keeps working without interruption even during a person's unfortunate incapacitation. A person transfers assets, a house, fixed deposits, a stock portfolio, to a trustee, who manages them for their own benefit.

Since the assets legally belong to the trust, incapacity freezes nothing, the trustee, still of sound mind, keeps signing cheques and settling bills. A well drafted deed adds an incapacitation clause, triggered once two doctors certify the settlor cannot manage their affairs, letting the trustee pay hospitals and caregivers directly, bypassing court guardianship.

None of these four tools alone matches the single, enforceable system a durable power of attorney offers in the US or the UK. But a private trust, layered with a living will and a Mental Healthcare Act nomination, comes closest. Until Parliament legislates a dedicated incapacity law, that combination remains the safest route for an Indian family.

Shraddha Nileshwar, head – will & estate planning at 1 Finance.