Quite often, splits in a joint family leads to split in relations as well. Conflicts on who has financially contributed more to the family will always arise with both parties believing that they had more to do with the success, thus creating a lot of animosity amongst the members of the family.

"Things become a lot less complicated if the founder member, i.e. the head of the family is alive and still plays an active role in the carrying on of the business since settlements and divisions between the siblings tend to be more easily accepted by them," says Prerana Salaskar, Certified Financial Planner.

Ideally, the creation of a succession plan should be suggested as soon as possible in order to prevent any further disputes between the siblings after the death of the founder. This would take care of all the succession issues, which arise in case of future conflicts. In other words it could work like a 'business will' of the founder.

In case of the absence of the founder member, things could take an ugly turn with none of the parties willing to settle on issues such as who gets to use the company name. How does one divide the assets? On what basis is the splitting of assets done? So on and so forth.

The most important consideration from this point of view would be ownership and valuation of the business and assets.

Experts suggest that approaching the judiciary system for resolving disputes is not a good idea since it could take long years to settle, besides having to wash the family's dirty linen very publicly.

It is not uncommon to have at least one party nursing feelings of 'having been cheated' at the end of the judiciary-approached settlement. Therefore, it is better to solve the disputes amongst yourself and do fair and justified asset allocation by working on the guidelines as mentioned below.

1. Making a log of your assets/ Log network valuation

Valuation of the assets is the first thing that needs to be done while you are planning to split. One must value all the assets at the given point of time. Like, valuing shares, gold, property, investment instruments and so on. This gives an overall idea of the capital to the head of the family and also the other members of the family.

2. Choose the method

There are two methods of planning distribution -- one could be with elementary planning taking the current value of the assets in effect and another way would be with prudent planning taking the future value of assets into consideration.

However, everybody in the family would perceive the future value of an asset in a different way. So, people might want to make things easy by going for an elementary planning and allocate assets based on the current value, however unprofitable that may be.

Certified Financial Planner Kartik Jhaveri explains this with an example. "If the head of the family decides to give gold worth Rs 5 lakh (Rs 500,000) to one of his son and Rs 5 lakh worth of shares to his other son. The value of the gold, ten years down the line, could probably be Rs 10 lakh (Rs 1 million), but the value of shares then could be Rs 25 lakh (Rs 2.5 million). This proves that the son having gold has not benefited as much as his brother has.

A prudent way of distributing assets would be to take 10-20 years horizon. This helps in preventing uneven distribution of assets. Like, a better option to the mentioned scenario could be giving gold worth Rs 2.5 lakh (Rs 250,000) and shares of Rs 2.5 lakh to each son, which would lead to a better and cautious planning.

3. Distribution ratio

Conflicts on who has contributed more to the business will always arise with both parties believing that they had more to do with the success of the company. The head of the family is often in confusion as to how much is to be given and to whom.

According to Jhaveri, one must put the law aside and think about the conscience. "If it is an inherited property, which is being carried forward by the generation, each member of the family must ideally get an equal share. You have to be honest to distribute it honestly. Whereas, if there is something that you have created/built all by yourself, you have a complete right to decide how you want to distribute it."

4. Consulting family members/ financial planner

Once the value of the assets, method and the distribution pattern are chosen, all members of the family must sit together to come to a decision.

The distribution plan must be put forward and if anyone is not satisfied with the plan, they can voice their opinion. However, to prevent any kind of bias or confusion, it is best to also consult a financial expert or a mediator, who can give an unbiased and honest opinion.

5. Preparation of a will

With family's consent, the head of the family must finally prepare the will stating the distribution of the assets. At the end of the day, it may not be possible to please everyone, but the head of the family must be fair in his decisions to prevent bitterness between blood relations.

Salaskar suggests, "In case, the families are unable to settle amicably amongst themselves, a mediator equally respected by both the parties and who is in a position to give an impartial judgement for resolving conflicts is necessary."

The family could turn to a senior member of the family (possibly the spouse of the founder who also happens to be the parent of the siblings) or could be a long-trusted senior legal advisor / financial advisor / CA of the family or an individual close to the founder member who isn't part of the family.

For more on succession planning, click here.