TRANSFER FOR THE BENEFIT OF UNBORN PERSON BY: E. NIVEDHA DEVI & DR. P. BRINDA
TRANSFER FOR THE BENEFIT OF UNBORN PERSON
AUTHORED BY:
E. NIVEDHA DEVI
LLM-
Department Of Property Law School Of Excellence in law, TNDALU.
CO-AUTHOR – DR.
P. BRINDA
H.O.D,
Department Of Property Law, School Of Excellence in law, TNDALU.
ABSTRACT
The Transfer of Property
is the right which is intended for the benefit of a person and for their
interest. The transfer for the benefit of unborn person is the right intended
for the benefit of unborn person and to secure their future interest. It is
also ensures that they granted rights and benefit after their birth. And this
concept rooted in both Equity and the Law of trusts. It came into effect when a
person i.e., transferor makes a transfer of property or gift with the intention
that it will benefit an unborn individual i.e., a child or legal heir of that
person who is not yet born at the time of transfer. This type of legal
mechanism is one of the important aspects regarding the rights and benefits of
the unborn person.
INTRODUCTION
Section 5 of transfer of
property Act 1882, deals with the transfer of property between two living
persons in present or future or more than one living persons. The term “Living persons”
includes a company or association or body of individuals. This section helps us
understand that the transfer of property should be between two living persons,
however an exception to this section is section 13 which facilitates the
transfer of immovable property in favor of an unborn person. The meaning of the
term unborn person in this case is the person who does not in existence but may
be born in future is considered to be an unborn child or person. Even though a
child in mother’s womb is simply not a person in existence, but has been
treated as a person under both Hindu Law and English Law. The concept and other
provisions comprising of this act is clearly defined in this article with
related case laws.
SECTION 13
OF TRANSFER OF PROPERTY ACT 1882
Section 13 of Transfer of
Property Act, 1882 provides that when a person created an interest in
transferring his own property for the benefit of unborn person at the date of
transfer.
A prior interest should
be created in respect of transferring the property and interest created for the
benefit of unborn person shall not take effect, unless it extends to the whole
of remaining interest of the person transferring the property in the property
to be transferred.
In order to transfer a
property for the benefit of unborn person on the date of transfer, it is
imperative that the said immovable property must vest in some other living
person from the date of transfer until the child comes into existence as the
property cannot be transferred directly in favor of an unborn person.
The underlying principle
in section 13 is that person disposing of the property to another person shall
not cause free disposition of that property in the hands of more than one
generation.
This section doesn’t
provide any restriction for successive interest being created for several
persons at the time of transfer of property.
But the only restriction
is the grant of interest limited by time or otherwise to an unborn person.1
For Example:
i.
A
Hindu undivided family owned a certain property governed by the Mitakshara
school of Hindu law. A member of that family created a will attempted to dispose
of ancestral property. He also attempted to create a gift for the benefit of
his unborn great grandsons who were not in existence at the time of the testator’s
death.
ii.
This
was challenged under section 13 of transfer of property act for the violation
of Hindu law principles, particularly alienation of ancestral property and the
rules concerning transfer of property under Hindu law.
iii.
Court
held that alienation of ancestral property is impermissible without the consent
of the coparceners, i.e., other members of the joint Hindu family. The
disposition in favor of the unborn great grandsons is invalid since they were
not in existence during the time of the testator’s death and also it is consistent
with the principle that property could not vest in an unborn unless prior
interest created upon a living person.[1]
LEGAL
MECHANISMS FOR BENEFITING THE UNBORN: UNDERSTANDING PROPERTY TRANSFERS
3(a) NO DIRECT
TRANSFER:
A direct transfer of
property for the transfer of unborn person is not permissible. Such transfer
can be brought into existence by the mechanism of trust.
It is an important principle
of property law that every property will have an property, so if the property
is transferred to an unborn person it will lead to property without owner from
the date of transfer until the unborn come into the existence.
However, the property can
be transferred for the benefit of unborn person, subject to certain specific
conditions:
3(a)(?) PRIOR LIFE
INTEREST
Transfer to an unborn
person to be valid, it must be preceded by a life interest in favor of a person
who is alive at the time of the transfer. This conveys that a living person
holds the property during their lifetime until the unborn person or child comes
into existence.
After the termination of
this life interest only the property will pass to the unborn person, who by
that time must be in existence (alive) or else it will revert back to the
actual transferor.
For Example:
i.
A
testator attempted to create a life estate for a living person and then transfer
to an unborn person through a will.
ii.
whether
the property be validly transferred when the interest is contingent on the life
estate upon the unborn person.
iii.
The
court held that the transfer to unborn person failed because property must vest
in a living person at the time of transfer.[2]
3(b)(?) ABSOLUTE
INTEREST
Transfer to an unborn
person should be in an absolute interest. Only an Absolute Interest in the
property may be transferred to an unborn person and there should be no further
transfer from him to any other person. Limited or life interests cannot be
granted to an unborn person.
Section 13 stipulates
that the interest given to the unborn person must be given entirely including
the remaining interest of the transferor in the property. An interest remains
only for the lifetime cannot be conferred to an unborn person. The transfer of
interest to an unborn person permitted only if it is absolute and not just the
life estate.[3]
PROVISIONS
AND CHALLENGES IN TRANSFER FOR BENEFIT OF UNBORN PERSON
The some of provisions
and challenges faced during the transfer of property for the benefit of unborn person
under section 13 of Transfer of Property Act, 1882 are as follows:
4(1) Rule against perpetuity
4(2) Doctrine of Conditional Vesting
4(3) Bequest to the person not in
existence at the time of testator’s death subject to prior interest
4(4) Gift Deed for unborn Person
4(5) Wills and Trusts for the benefit
of unborn person
4(1) Rule against
perpetuity:
The term perpetuity means
indefinite period or endless time, but this provision is against the perpetuity
which means the period of time is specified for the transfer to unborn person.
When a life interest is
created for an unborn, the vesting of such interest cannot be post ponded beyond
the life time and also until the person attains majority.[4]
The right of enjoyment of the property can be post pond until the child attains
majority.
For example:
A is transferring a
property to C (unborn) but prior interest is with B vesting with condition that
C can enjoy the property and get absolute interest only after the lifetime of B
in addition to 1 year.
Till then C cannot enjoy
or alienate the property. Whether this condition is void? No, it applies rule
against perpetuity where the unborn will definitely get the absolutely interest
after that condition is fulfilled.[5]
For Example:
i.
A
executed a will regarding the devolution of his estate. The will created successive
life interest in favor of his certain family members. The first interest is in
favor of his wife after her death only the interest will transfer to his son.
Then after the death of son, the remainder was intended for son’s unborn
descendants.
ii.
whether
the will created by the testator is valid this was challenged under section 14 Rule
Against Perpetuity.
iii.
the
court held that the transfer to unborn descendants was void because it violated
the rule against perpetuity where the interest for the unborn extended beyond
the limited period of time.[6]
4(2) Doctrine of
conditional vesting
The rights of the unborn
person in a transferring of the property do not vest until they are born and
have legal personality. However, under the doctrine of condition precedent a
transfer may be considered to vest upon birth, provided certain conditions such
as creating prior and absolute interest.
For example:
i.
A creates a will in favor of a living person which is his wife for life interest, with remainder to vest in the unborn
children of him.[7]
ii.
The
court upheld the transfer stating that the interest should vest in the unborn
person once they were birth, so condition vested here is valid.
4(3) Bequest to person
not in existence at the time of testator’s death subject to prior bequest:
Section 113 of Indian succession Act
1952 defines When a bequest made in a person not in existence or unborn at the
time of testator’s death, subject to a prior bequest contained in the will, the
later bequest shall also be void, unless is comprises the whole of the
remaining interest of the testator in the thing bequeathed.
The intent is to
safeguard the unborn child’s right to inherit the property once they are born.
If incase a person dies
without writing a will in Hindu estate then its meant to be inherited by an unborn
heir.
The bequest should be
made in favor of an unborn person at the time of transfer. It should be made in
favor of more than one generation.
For example:
i.
If
a bequest or transfer is made for the benefit of an unborn person, the actual
enjoyment or interest of the property takes place only after the unborn person
is born.[8]
4(4) Gift deed for
unborn person
A Gift deed for the
benefit of unborn person refers to a transfer of property or the assets by the
donor to the beneficiary who is yet to be born. A gift deed is a voluntary
transfer of property during a person’s lifetime.
The gift deed must be
structured in a way that the gift takes effect only after the child is born. A
gift deed can be conditioned upon the birth of the child. This means that the
property is not actually transferred until the child is born and becomes a
legal person.
This type of gift deed
creates a contingent interest for the unborn person, i.e., the property is
transferred but the right to enjoy, alienate or having possession is transferred
only after the birth of the person.
The considerations
required for gift deed for the benefit of unborn person:
Registration:
If a gift deed involves immovable
property, it should be registered with the local sub-registrar under the Indian
Registration Act, 1908. i.e., in case of land or
house.
Possession and Title:
Even though the gift is
made in favor the unborn person, the possession and Title of the property will
still remain with the donor. until the birth of the unborn person.
Validity of the gift:
If in case the unborn
person is not born or dies before he was born or the condition is not fulfilled,
the gift would become void unless there is any alternative provision in the
deed for such an event.
For example:
i.
If
a person made a bequest in favor of an unborn child and the enforceability of
such a bequest
ii.
whether
such enforceability of such a bequest is valid
iii.
The
supreme court held that while a bequest to an unborn is valid, the gift or
transfer takes effect only after the birth of the unborn.[9]
4(5) Wills and Trusts for the benefit of
unborn person
Transfer through
trust:
One of the most common
methods for making a transfer of the property in the benefit of unborn person
is through trust. The transferor may create a trust that trust holds the
property or assets for the future benefit of the unborn person. The trust is
typically structured to come into effect once the child is born or attains
certain age i.e., majority.
The condition for the
validity of this trust is the unborn person must have been conceived at the
time of the transfer, even if they are not yet born. In some jurisdiction, if
the person is born alive only the transfer or trust is valid; or else if the
unborn is not born alive, then the transfer or trust may fail.
Transfer through wills:
A person leaves his
property through a will to a trust for the benefit of the unborn person i.e.,
his grandchildren. This allows the grandchildren to benefit once they are born.
Section 113 of Hindu
Succession Act, 1956 provides that if an heir is born at the time of death of
testator, the property can be transferred for their benefit, but the transfer
will only effect when the unborn heir is born alive.
For example:
i.
whether
the unborn person can inherit property through a will. The supreme court upheld
the validity of the bequest made in favor of an unborn child, as long as the
unborn is born alive.
ii.
The
gift would not vest unless and until the child was born alive. If the child was
not born alive then the property would revert back to the actual owner or to their
legal Heir descendants or lapse.[10]
CHALLENGES
IN TRANSFERRING OF PROPERT FOR THE BENEFIT OF UNBORN PERSONS
The legal system do
generally allow for transfers for the benefit of unborn persons, they do not
always make such transfer in a straight forward manner, it should be always
vested upon a living person before the birth of the unborn person.
The complexity arises in
proving the intention behind the transfer of such property for unborn person
and ensuring the unborn person eventual entitled to the property.
Uncertainty of Birth:
There is always the
possibility that the unborn person may not Born alive during their birth, which
can create ambiguity in the transfer. Legal doctrines such as “gestation”
period or “Live birth” requirements can complicate the issue more.
Dispute over the
intent property:
In some cases, the family
members or heirs may dispute the validity of a transfer made for the benefit of
an unborn person, particularly if the conditions of the transfer are vague or
unclear. This can lead to litigation regarding the interpretation of the
transferor’s intentions.[11]
CONCLUSION
Transfer for the benefit
of an unborn person is common and useful tool in estate planning and trust law,
ensuring that future generations are provided for even before their birth.
However, such transfers must be carefully structured to comply with legal requirements,
such as the rules surrounding the vesting of rights, the rule against
perpetuity, and the status of the unborn person in legal terms. With proper
legal advice and documentation, transfers for the benefit of an unborn person
can serve as a secure and lasting means of providing for future heirs. Thus,
the validity of a transfer in favor of an unborn person, it is important that
the property should be transferred including the whole of the remaining
interest of the transferor upon the property should be conveyed to the unborn
person. However, as soon as the transfer of property comes into effect, the
vested interest is also transferred to the unborn person. The transfer of
property to benefit of unborn persons, take effect only according to the
provisions discussed above. Or else, the transfer will be declared as void.
[1] Girjesh Datt v. Data Din (1934)
[2] Tagore v. Tagore (1872)
[3] Transfer of property act –
S.N. Shukla New edition – ALLAHABAD LAW AGENCY
[4] Raja Bajarang Bahadur Singh v
Thakurain Bakhtraj kuer (AIR 1953 SC 7)
[5] Transfer of property act – S.N. Shukla New edition – ALLAHABAD LAW
AGENCY
[7] Sopher v Administrator – General
of Bengal AIR 1944 PC 67
[8] K. K. Verma v. Union of India (1955) AIR 1955 SC 114
https://indiankanoon.org
[9] Jeev raj v. Gopinath (1950) AIR
1950 SC 42
[10] S. Krishnan v. K. Krishnamurthi (1998)
4 SCC 415
[11] Transfer of property act S.N.
SHUKLA’S- ALLAHABAD LAW AGENCY