Prop­erty trans­fer for an un­born child

Though a prop­erty can be trans­ferred only to a liv­ing per­son, in cer­tain cases, in­ter­est in it can be cre­ated in favour of a yet-to-be born child

HT Estates - - HTESTATES - Su­nil Tyagi

Ques­tions may arise as to whether a prop­erty can be trans­ferred to a per­son who is not in ex­is­tence at the time of trans­fer. Though the Trans­fer of Prop­erty Act of 1882 pro­vides that a prop­erty can be trans­ferred only to a ‘liv­ing per­son’, in cer­tain con­di­tions in­ter­est in prop­erty can be cre­ated in favour of a per­son who is not in ex­is­tence at the time of trans­fer.

The first con­di­tion is that there must be a prior trans­fer of prop­erty in favour of a liv­ing per­son on the date of trans­fer. The in­ter­est in prop­erty should vest in a liv­ing per­son till the time the un­born per­son comes into ex­is­tence. This can be achieved by cre­at­ing a life es­tate in favour of a liv­ing per­son after whom the prop­erty may vest in the un­born per­son or by ap­point­ing a trustee to hold the prop­erty for the ben­e­fit of the un­born per­son.

For ex­am­ple, ‘A’ trans­fers his prop­erty, by gift, to ‘B’ for life and after B’s death to B’s el­dest child who is not born at the time of trans­fer. Here ‘B’ acts as in­ter­me­di­ary be­tween ‘A’ and the un­born child.

The sec­ond con­di­tion is that the whole of the trans­feror’s in­ter­est in the prop­erty must be trans­ferred to the un­born per­son in ques­tion, mean­ing thereby that there should be an ab­so­lute trans­fer of prop­erty to such a per­son (un­born). Thus, the trans­fer of in­ter­est should be with­out any con­di­tion. In the ex­am­ple cited above, trans­fer of prop­erty to B’s un­born child is valid if an ab­so­lute in­ter­est on prop­erty is trans­ferred and the trans­fer is not sub­ject to any lim­i­ta­tions.

How­ever, any trans­fer of prop­erty, where whole of the in­ter­est is not trans­ferred to the un­born per­son, may be void. For ex­am­ple, ‘A’ trans­fers prop­erty, by gift, to ‘B’ for life and after B’s death to B’s el­dest child, say ‘C’, and after C’s death to B’s sec­ond child, say ‘D’. On the date of trans­fer, nei­ther ‘C’ nor ‘D’ are in ex­is­tence. Here ‘A’ has cre­ated a life es­tate in favour of ‘B’ and a sub­se­quent life es­tate in favour of B’s un­born child, ‘C’.

The life in­ter­est on prop­erty cre­ated in favour of ‘C’ would en­ti­tle her a right to en­joy­ment and pos­ses­sion of prop­erty. How­ever, she may not be en­ti­tled to ex­er­cise all the rights of own­er­ship on such prop­erty, such as right to alien­ation. Thus trans­fer of prop­erty to B’s el­dest child is void as it en­tails trans­fer of limited in­ter­est on the prop­erty, and not whole of the in­ter­est, in favour of the un­born per­son.

It is im­por­tant to note that an in­ter­est, be­ing cre­ated in favour of an un­born per­son, is ac­quired by such per­son upon his/ her birth although t he en­joy­ment of such prop­erty may be post­poned beyond his/her birth. In the above ex­am­ple when life in­ter­est is cre­ated in favour of ‘B’, ‘C’ would ac­quire vested in­ter­est in the prop­erty on his birth. How­ever, ‘C’ would not be en­ti­tled to the prop­erty

till the death of ‘B’.

THINKSTOCK

The whole of the trans­feror’s in­ter­est in the prop­erty must be trans­ferred to the un­born per­son in ques­tion, mean­ing that there should be an ab­so­lute trans­fer of prop­erty to such a per­son (un­born)

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