Home >Money >Personal Finance >‘Life interest’ doesn’t give full rights on assets

I want to write a Will and give complete authority to my wife for all my assets. But I also want to declare in my Will who will get what after my wife’s demise. Is it possible to do both? What should be the right way to go about this?

—Ramakrishna Varma

I have assumed that you are a Hindu and accordingly are governed by the Hindu Succession Act, 1956. I have also assumed that all your properties are self-acquired and that you have complete disposing power over such assets.

You may bequeath a “life interest" over your assets in favour of your wife and direct that after her demise the assets shall vest absolutely in such persons and in such proportion as you may declare in your Will (“ultimate inheritors"). In other words, the bequest of your assets would be to the persons as named in your Will i.e. ultimate inheritors and in the proportion set out therein, subject to a life interest in favour of your wife to use and enjoy the properties during her lifetime. The ultimate inheritors’ right to inherit your assets comes into play immediately upon your death. However, the assets will devolve on the ultimate inheritors absolutely, upon the death of your wife.

The effect of such a “life interest" means that your wife will not be entitled (subject to your Will) to deal with (sell or part with) any of the assets in which she has only a life interest, whether it be financial instruments or immoveable property during her lifetime. Depending on your Will, your wife will be able to reside in the property or earn income out of it by leasing it out and to receive dividends/interest on the financial instruments during her lifetime.

On her death, the assets shall pass on to the ultimate inheritors who will be entitled to deal with the properties in a manner they deem fit. In case of financial assets, consider whether, based on the nature of the assets concerned, it would be commercially advisable not to give your wife the flexibility to liquidate the assets (based on market conditions relating to such assets) and reinvest the proceeds thereof in other financial assets.

You can also create a trust in favour of your wife and other heirs and your assets can be settled in the trust on your death for the benefit of your wife during her lifetime. On her death, it can be distributed to your ultimate inheritors. The trust deed can include directions to the trustee for distribution of income from investments to your wife during her lifetime and specify the manner in which financial assets are to be maintained from time to time and provisions for their liquidation and reinvestment of the proceeds thereof to maximise the value of the financial assets.

Marylou Bilawala is partner, Wadia Ghandy & Co. Advocates, Solicitors and Notaries

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