My mother is a widow. My father passed away 10 years ago. We have two (head) sons and a married daughter. We brothers have formed a HUF with an initial capital of 50,000 as gift in marriage Can my mother form a HUF as a karta and we two sons as coparceners?
-Pirani
Hindu Undivided Family (HUF) includes all individuals who are part of a ancestral family branch and have a common ancestor. This includes fathers, mothers, sons, their wives (daughter-in-law) and daughters – each of these parties has a different bundle of rights.
The father of the family, if alive, or in his absence, the senior most male member of the family is entitled and deemed to manage the HUF and is known as the ‘Karta’ of the HUF.
In the absence of a senior male member of the family, the Delhi High Court has ruled that the eldest female coparcener can be the Karta of the HUF. [Sujata Sharma vs. Manu Gupta (CS (OS) No 2011/2006)], However, only a coparcener can become a Karta. The spouse of a coparcener (or a karta) is only a ‘member’ (who has limited rights and no ownership of the underlying property at birth) and is not eligible to become a coparcener. Only in exceptional cases where the male members are minors and in the absence of the karta, their mother, as guardian, can represent the HUF for assessment and recovery of tax.
In your case, between you and your brother, if there is a desire to set up a new HUF, the eldest son will be the Karta of the HUF and not your mother. On a different note, it is worth questioning why HUFs would be needed, as they are not common or desirable in the modern estate planning context. Please talk to a lawyer and explore the use of a trust instead, where you can make your mother the trustee.
Rishabh Shroff is partner, Cyril Amarchand Mangaldas. Questions and thoughts at mintmoney@livemint.com
Never miss a story! Stay connected and informed with Mint.
download
Our App Now!!
,