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RIGHTS OF AN UNBORN CHILD UNDER THE TRANSFER OF PROPERTY ACT

 

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Written By:  Shajeeda Tajdeen

Introduction:

The ‘Transfer of Property Act’ deals with the transfer of both movable and immovable property, but this Act excludes the transfer of property which is hereditary or by will. It specifically deals with the inter vivos transfers i.e. in order to be recognised as a transfer with the meaning of this Act the transaction of transferring the property should take place between two or more living persons. This Act specifically excludes the transfer which is not inter vivos. The term inter vivos means the act of transferring or conveying the property from one living person to the another. The act recognises both presents as well as future transfers but it should be noted that whether it is a present or a future transfer the property which is in question should be in existence on the date of transfer. However, the Act requires two persons for transferring the property, i.e. the transferor and the transferee. Thus, one cannot transfer a property to himself, but he can transfer his property in some other capacity as for instance, a person can make any settlement of his property in a trust and can appoint himself as the sole trustee.

So the question that arises is that whether a property can be transferred to an unborn child under the Act? if yes then how?

 

Rights of Unborn Child Under Property Act:

Section 5 of the Transfer of Property Act states that a property can only be transferred to a living person. Whereas, the provisions of section 13 and 14 talks about transferring the property for the benefit of an unborn child.

Section 13 of the Act states that:

Where, on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect, unless it extends to the whole of the remaining interest of the transferor in the property.”

Explanation to section 13:

       The Act prohibits the transfer of property directly in favour of an unborn child. So in order to execute a valid transfer for the benefit of an unborn child, the property which is being transferred has to be first conveyed to a living person who is in existence on the date of the transfer. The Act states that there should be a prior interest which has to be preceded by the interest of the unborn child.

     The unborn child will acquire the interest only if he is born alive. Section 13 further states that the person who disposes of the property to another shall not fetter the free disposition of the said property in the hands of more than one generation.

Therefore, section 13 uses the expression “for the benefit of” instead of “transfer to an unborn person”. Because the act prohibits direct transfer to a person who is not in existence on the date of transfer.

Section 14 of the Act states that:

“No transfer of property can operate to create an interest which is to take effect after the lifetime of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.”

Explanation to section 14:

      Section 14 states that the interest which had been created for the benefit of an unborn child will only become effective if the interest is to vest in such unborn child before he attains majority i.e. before he attains eighteen years of age.

      It also states that the unborn child in whose favour the interest was created should be born or should be in existence on or before the death of the person(s) in whose favour the prior interest under section 13 had been created. In order words, the unborn child should be in existence before the life or lives of the person who had acquired the prior interest comes to an end.

      It is to be noted, that a child in a mother’s womb is considered to be in existence as per the law. Thus, it is not necessary that he should be born before the death of the last life estate holder.

Thus, it means a trustee needs to be appointed for an unborn child who shall hold the property of the unborn till the unborn child is born. The interest which is transferred to the trustee should contain the whole of the remaining interest in the property of the person who wishes to transfer the property. If the entire interest is not transferred, then the transfer will not take place. As soon as the child is born he shall become the absolute and sole owner of the property vested.

Conclusion:

The Transfer of Property Act has recognized the concept of transfer for the benefit of an unborn however the property can only be transferred subject to the guidelines laid down under section 13 and 14 of the Act. The property can only be transferred to an unborn child by way of a trust and if there is no trust then the property needs to transferred to a living person first and then subsequently it shall pass onto the unborn child once he is born. This Act only governs inter vivos transactions and other hereditary transfers shall be governed under their specific personal and succession laws, depending on their applicability on an individual.

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