Huf formation

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Querist : Anonymous

Querist : Anonymous (Querist)

30 March 2015 My father expired recently. I am currently married and issueless. My father did not create any HUF. I want to know if I can create HUF to transfer assets of father in HUF and how.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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30 March 2015 you can be a member of huf with your husband as the karta.

but in this case if your her daughter then as per hindu succession act the estate of deceased gets vested in you as you are her daughter.

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Querist : Anonymous

Querist : Anonymous (Querist)

30 March 2015 Thank you Mr Tushar for your reply.
But I am a male. So, can I be Karta of this HUF.
My concern is can I form HUF in his absence? Members can be my wife and mother. Some CAs mentioned since I don't have a kid I cannot form HUF after my father death and that too since he did not have HUF.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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30 March 2015 if you are male then you can form huf as u being karta for same and it doesnt matter whether you have kid or not and your wife and mother can be a co-parcener in that huf.

Querist : Anonymous

Querist : Anonymous (Querist)

30 March 2015 Can females be coparceners as coparceners are eligible for being karta? How do I mention them in PAN application and HUF account opening - as coparceners or members. Please advise.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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30 March 2015 http://taxguru.in/income-tax/meaning-formation-taxation-membership-and-partition-of-huf.html

Advisable to follow this link

Querist : Anonymous

Querist : Anonymous (Querist)

04 April 2015 1) In context of above...bank says creating HUF in fathers name is not possible...please advise...if HUF can be his name (HUF) or not. Or should I create my name (HUF). Is there any regulation regarding naming of HUF?

2) Also is it advisable to create ancestral HUF or normal HUF. What are the benefits of either?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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28 July 2024 Creating an HUF (Hindu Undivided Family) for managing and transferring assets involves understanding specific regulations and implications, especially when the original Karta (head) has passed away. Here’s how to navigate this process:

### **1. Creating an HUF After the Death of the Original Karta**

**1.1 Naming the HUF:**

**Bank’s Stance and Regulations:**
- **HUF Naming:** An HUF must be created with a living individual as the Karta. The name of the HUF typically reflects the current Karta’s name, not a deceased person’s name. Therefore, you would need to create the HUF in your own name rather than your father’s.
- **Regulation:** There are no specific regulations prohibiting the naming of an HUF after a deceased person. However, banks and legal documents will require the HUF to have a living Karta.

**1.2 Steps to Create the HUF:**

**Create a New HUF:**
- **Karta Selection:** As your father is no longer alive, you will be the Karta of the newly created HUF.
- **Formal Deed:** Draft an HUF deed or declaration to formally establish the HUF. This document will outline the Karta, coparceners, and initial contributions.

**1.3 Transferring Assets:**

**Transfer of Assets:**
- **From Deceased Estate:** Assets from your father’s estate can be transferred to the new HUF, but this may require probate or legal validation of your father’s will (if applicable).
- **Legal Procedures:** Ensure that the transfer of assets follows legal procedures, including compliance with inheritance laws and proper documentation.

### **2. Ancestral HUF vs. Normal HUF**

**2.1 Ancestral HUF:**

**Definition and Benefits:**
- **Ancestral Property:** An ancestral HUF includes property that has been inherited through generations. Ancestral HUF can carry forward the ancestral assets and benefit from certain legal advantages.
- **Tax Benefits:** Ancestral HUFs can maintain continuity of ancestral property, and the income from such properties is taxed at the HUF level.

**Considerations:**
- **Complexity:** Maintaining an ancestral HUF may involve complex legal and tax implications, especially when dealing with multiple generations and inherited assets.

**2.2 Normal HUF:**

**Definition and Benefits:**
- **Newly Created HUF:** A normal HUF is created by any Hindu family and can start with newly acquired assets or contributions. It does not necessarily have to include ancestral property.
- **Flexibility:** Easier to establish and manage compared to an ancestral HUF. Provides a flexible structure for managing personal and family assets.

**Considerations:**
- **Formation:** Normal HUFs are simpler to establish, and you can start with any assets or contributions from the Karta and coparceners.

### **Steps to Create an HUF in Your Name**

1. **Draft an HUF Deed:**
- Include details of the Karta (yourself), coparceners (family members), and any initial contributions.

2. **Obtain PAN for HUF:**
- Apply for a Permanent Account Number (PAN) for the HUF from the Income Tax Department.

3. **Open a Bank Account:**
- Open a bank account in the name of the HUF.

4. **Transfer Assets:**
- Transfer assets from your father’s estate to the HUF, ensuring compliance with legal and tax regulations.

5. **Legal and Tax Compliance:**
- Consult a legal professional or tax advisor to ensure proper handling of the assets and compliance with inheritance laws and tax regulations.

### **Summary**

- **Naming the HUF:** You need to create the HUF in your name as the Karta, not in your deceased father’s name. The name of the HUF will be based on the living Karta.
- **Ancestral vs. Normal HUF:** Ancestral HUFs involve inherited properties and have specific legal benefits but are more complex to manage. Normal HUFs are simpler to create and manage and can be started with any assets or contributions.
- **Asset Transfer:** Assets from your father’s estate can be transferred to the newly created HUF following legal procedures and proper documentation.

Consulting with a legal advisor or chartered accountant will help ensure that you handle the formation and asset transfer correctly and in compliance with relevant laws.

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