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Female inheritance rights in India: Empowered women a key to economic progress

Haigreve Khaitan     October 7, 2019

On July 5th at 11 am, India witnessed a historic moment - a woman finance minister, Nirmala Sitharaman, rose in Parliament for the first time to present the Union Budget for the fiscal year 2019-20. There is no doubt that the women in this country are more empowered today than ever before, with the ability to choose their own careers, start their own businesses, and generate and manage their own wealth.

It is no surprise then that when it comes to estate planning, it is the women of this country who are ahead of the curve, asking the precise questions of their advisors that were earlier deemed "uncomfortable" or "inappropriate". Be it open discussions regarding a pre-nuptial agreement or spousal trust, or uninhibited queries about situations of marital discord, separation, family arrangements and measures to ringfence their wealth - more and more Indian women are leading the way when it comes to being practical and intelligent about planning and managing their wealth.

Before we venture into the new trends, let us first take a quick look at the evolution of women's property and inheritance rights in India.'

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The journey so far:

Women's rights to own assets under their own name can be traced back to the ancient practice of Stridhan (meaning 'woman's wealth') under Hindu customs wherein a woman was gifted jewellery and other assets by her paternal family at the time of her wedding in order to help smoothen her transition into married life.

It also included gifts received from family at various other occasions and assets inherited from her father through his will. This was different from dowry, as these assets were meant to be solely owned by the bride after her marriage. For its time, it was progressive as it sought to set aside a certain portion of the family's wealth to belong solely to the woman.

Section 14 of The Hindu Succession Act, 1956 clearly provides for the property acquired by a Hindu woman to be absolutely her property, and therefore her Stridhan. Under Muslim law, the equivalent of Stridhan is Meher, which is again gifted to a woman at the time of her wedding and is solely her property.

Coming to inheritance rights, Iceland stands out as a pioneer in this area, becoming the first ever country to grant unconditional equal inheritance rights to women all the way back in 1850. We were somewhat late to this party, but the landmark amendment to the Hindu Succession Act in 2005 put India on the map with respect to this subject, granting equal inheritance rights to sons and daughters and including daughters as "coparceners" in a Hindu Undivided Family (HUF).

Indian laws have strived to protect a woman's rights to assets throughout her life (inheritance rights for daughters, alimony and maintenance for married women and the role of Karta as well; Karta refers to the head of an HUF).

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Times, they are a changin':

A decade or so ago, the mere mention of a pre-nuptial agreement would usually result in raised eyebrows and shaking heads, especially from women. But cut to 2019 and an increasing number of women are now unafraid to mention this 'P' word which was earlier considered taboo.

With a steady rise in the number of women entering family businesses and family offices in managerial roles, it is no surprise that the number of women looking to ringfence and safeguard their wealth from untoward and unexpected situations is also on the rise. In fact, a pre-nuptial trust or a spousal trust is very much in vogue right now with many young women choosing to protect their assets using such an instrument.

The benefits of setting up a spousal trust include protection against matrimonial discord, smooth inter-generational transition of assets, financial stability to members, protection against potential estate duty, flexibility to amend as per requirement and limiting the role of the court in case of separation. It also allows modern, socially-aware couples to set aside a portion of their wealth for philanthropic causes of their choice.

Not just spousal trusts, women are now more open to discussing things like alimony and maintenance and the idea of being self-sufficient is immensely appealing to the modern Indian woman, especially women entrepreneurs.

Miles to go:

Despite all the long strides our society has taken towards women empowerment and their rights to property and inheritance, there are still areas that require more work. For example, the law itself requires more clarity on aspects like whether a woman's children get to dip into her father's family wealth by way of her inheritance - this is a hotly debated aspect as the maternal grandchildren have a share in their father's family inheritance. Whether they get to dip into the family wealth of both, their maternal and paternal grandparents, is a grey area that needs to be cleared up.

Moreover, there is a need to raise more awareness among women about their own rights. While educated and empowered women may be asking bold questions about spousal trusts to ringfence their wealth, there are many Indian women who do not know about the concept of Stridhan and how it solely belongs to them, or about their right to alimony and maintenance in case of a separation or divorce.

Another practice that some families mention only in hushed tones is that of Haq Tyag which translates to "sacrificing one's right". Daughters are made to sign away their inheritance rights by the male family members in an attempt to keep their shares larger. This continues to happen in many parts of the country and raising awareness among women will help put a stop to this.

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The remedy:

One of the first things that India must seriously consider is implementing the recommendations of the Law Commission of India presented in a consultation paper released on August 31, 2018. The paper recommended a slew of reforms to family law, many with a view to bring about real gender parity at the ground level.

Some of the key recommendations in this consultation paper are an equal share in marriage property to women, regardless of whether she contributes to the family income and the abolition of the HUF structure wherein the Karta , who is usually the male head of the family, enjoys strong centralised control over the family assets.

The paper also highlights the need to reform personal laws of all religions in India to ensure true gender parity in terms of inheritance and protection of widows and unmarried women. It also recommends protecting Parsi women's inheritance rights, even if they marry outside their community.

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Introduction of a "no-fault divorce" in all personal laws featured in the recommendations, along with a provision to divide the property acquired after marriage.

Given the rise in the popularity of pre-nuptial agreements and spousal trusts, it would perhaps be prudent for such agreements to be recognised by the law itself, recommending them to citizens.

Ensuring women's inheritance rights and rights to own assets are protected will result in an economically empowered population of women, and studies have shown that there is a positive correlation between the economic empowerment of women and rise in household income, healthcare spends, education spends and childcare spends for a family.

So while we have come a long way, we are only about halfway there and cannot afford to be 'livin' on a prayer' anymore. It is time to take bold steps to ensure that all of India's women are aware of their existing rights and empowered to exercise them.

(The author is a partner at Khaitan & Co.)


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