For a year or so, India’s super rich are quietly planning to save a chunk of their big money because they fear the taxman might come calling with a new tax law if it’s passed in the next Budget. The government is considering the levy of an inheritance tax on high net worth individuals.Inheritance tax had existed in India till 1986, but since the beginning of this year, there has been the talk of the government bringing the levy back. Sources say now the government has sought feedback, including recommendations, on the proposed re-introduction of inheritance tax, also known as estate duty, two people aware of the development said.The tax would mean the super rich will have to part with a considerable chunk of their wealth. The tax could range from 5% to 10% and would apply only to families with a certain net worth.Ever since the super-rich circles started buzzing with the possibility of a new inheritance tax, novel methods are being devised to dodge the tax.One such method is forming a family trust which insulates their assets. Family trusts would fall outside the scope of inheritance tax—if it is introduced—because there is no transfer in ownership of assets, only a change in the trust shareholding.Recently, there has been a rise in the number of HNIs wanting to form a trust.However, many family trusts typically hold only bank accounts and equity shares and not immovable property, experts say.Since most family trusts do not transfer immovable assets in the trusts due to the additional expense of having to pay stamp duty, if such a tax is introduced these assets would be taxed when bequeathed or transferred via gift.Some of the family trusts are also being formed outside India just to circumvent Indian taxation regulations. Jersey of Channel Islands is emerging as a favourite destination for many businessmen who want to take part of their family trust outside India, say industry trackers. Rich Indian families are now sending at least one of the family members outside India to create a family trust registered in tax-friendly destinations.“We have seen a spurt in the number of HNIs who want to opt for family trusts as many of them fear that the government may introduce an inheritance tax. However, what is new in these family trusts is the constitution and rules that are being laid by the patriarchs or the promoters on how the beneficiaries must behave morally,” says Sandeep Nerlekar, founder, Terentia Consultants, an estate planning firm.