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Limited role for wife in HUF

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Several landmark judgments have improved the woman’s position in a Hindu Undivided Family (HUF), such as one that ruled the eldest daughter, even if married, can replace her father as karta in an HUF after his death. However, a karta ’s wife or daughter-in-law cannot replace him.
According to HUF laws, when a karta –or manager – of an HUF passes away, his eldest son automatically replaces him. But, cases where a karta only has daughter/s, or his children are minors, have been subjects of dispute.
The position of a karta is a powerful one, for this person controls, and is also the custodian of, the finances of an HUF. “The karta borrows money on behalf of the family. He can spend money for the family without being accountable to the members, as all his actions are assumed to be carried out for the benefit of the family. The decisions of the karta are binding on other members,” says Hitesh Jain, senior partner at ALMT Legal. But, the karta cannot divide the estate disproportionately, or use the assets for the benefit of one member, without the consent of others. In an HUF, an individual does not have a claim on any assets unless they are partitioned. The assets belong to everyone and everyone benefits from them.
According to Daksha Bakshi, executive director at Khaitan & Company, the Hindu Succession Act was amended in 2005 and now recognises daughters to be coparceners. This means they have rights in an estate, and can call for partition of the HUF. To be a karta in an HUF, a family member needs to be a coparcener. Subsequently, courts have ruled that because daughters are allowed to be coparceners, the eldest daughter can also succeed her father as karta in an HUF started by him. “But, if the father was a karta in his father’s HUF, then typically the father’s siblings, who are coparceners in the HUF, would have a first claim to be the karta ,” says Bakshi.
Also, the Act recognises wives and daughters-in-law only as members of an HUF but not as coparceners. They, therefore, cannot become karta .“In case the karta passes away and is survived only by his wife and minor children, the wife can act as a guardian of the HUF until the eldest child turns major,” says Bakshi. This means, she can run the business, maintain property and file taxes. But, she cannot borrow or sell assets of the HUF.
If a person wants to pass assets he created to wife after his death, he can either make a suitable will or form a trust and make wife the sole beneficiary. In an HUF structure, it’s not possible to divide estate disproportionately. The individual will first need to dissolve his HUF before bequeathing his estate to wife. Also, if the person has inherited an HUF or any assets; these need to be divided among sons, daughters and him equally, in accordance of the Hindi Succession Act. Inherited assets cannot be passed on as an individual wishes.
The law, however, is not clear on whether the children of a married daughter can also become members or coparceners in her father’s estate, like children of a son can. Lawyers say that as the daughter is married and her children become coparceners in her in-laws’ HUF, they may not have the right to become coparceners in her father’s estate.
Business Standard New Delhi,13th October 2016

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