Succession of legal hairs
This query is : Resolved
08 October 2011
if One person demise and left some assets as well as liability like Flat, Bank Laon and other Investments. This property will become Property of his HUF or his wife????
What about the money received in respect of death claim received for LIC Policy, this will belong to his wife or his HUF???
What about the money received in respect of death claim received for LIC Policy, this will belong to his wife or his HUF???
09 October 2011
ALL PROPERTY WILL BECOME INDIVIDUAL PROPERTY OF WIFE IN THE GIVEN SET OF FACTS
CA MANOJ GUPTA
JODHPUR
09828510543
CA MANOJ GUPTA
JODHPUR
09828510543
Message likes :
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09 October 2011
The wife is already in 30% tax slab so, is there is any "tax planning" so that all property will transferred to HUF and resultant income will be taxable in the hands of HUF so it can enjoy 160000+100000 limit.
26 July 2025
Great question involving **succession of assets on death, HUF property, and tax planning**. Here’s a detailed explanation:
---
## 1. **Whose Property Does It Become on Death?**
### a) **Assets like Flat, Investments, Bank Loan**
* If the deceased **did NOT leave a Will**, the assets devolve as per **Indian Succession Act (if Christian/others)** or **Hindu Succession Act (if Hindu)**.
* Typically, **assets in the name of the deceased become part of his estate**.
* Upon death, the **assets devolve upon the legal heirs**.
#### Important:
* **If the property is self-acquired by the deceased**, it **does not automatically become HUF property**.
* Property passes to **legal heirs individually** as per succession laws.
* **Wife is a legal heir and inherits her share**.
* **HUF property is ancestral property**, held by HUF collectively — if asset was HUF property, it remains so.
> So, **Flat, Bank loan liabilities, Investments** held by deceased will generally pass to his **wife and other heirs** individually, **NOT HUF**.
---
### b) **Death Claim of LIC Policy**
* If LIC Policy nominee is wife, **the sum received on death claim belongs to the nominee** (wife) outright.
* This claim **does NOT form part of deceased’s estate**.
* It is **exempt from income tax under Section 10(10D)**.
* It **does not become HUF property**.
---
## 2. **Tax Planning to Transfer Property to HUF**
* The wife is in 30% tax slab; HUF has separate tax slabs with basic exemption (₹1,60,000 plus standard deduction etc.).
* **If property/income can be transferred to HUF, income will be taxed at HUF’s slabs**, possibly reducing tax burden.
### How to transfer property/income to HUF?
* **Convert self-acquired property into HUF property** by **gift or transfer to HUF** (done by the coparcener during lifetime).
* After death, it is difficult to bring property back to HUF.
* **You cannot transfer inherited property of deceased directly to HUF.**
* However, **if heirs (including wife) gift their share to HUF**, it may become HUF property.
### Important Caveats:
* **Gift to HUF by wife or other heirs must comply with Gift Tax rules (though gift tax abolished, gifts to HUF are scrutinized).**
* Transferring property to HUF can trigger **capital gains tax** if it is a transfer for consideration.
* Be mindful of **clubbed income provisions** and anti-avoidance rules.
---
## 3. **Summary Table**
| Asset Type | Succession | Tax Implication | Can it go to HUF? |
| --------------------------- | --------------------------------------------------- | ---------------------------- | ---------------------------------- |
| Flat (self-acquired) | Passes to legal heirs individually (wife, children) | Income taxed in heir's hands | Only if heirs gift property to HUF |
| Bank Loan | Liability of deceased’s estate | Liability passes to heirs | N/A |
| Investments (self-acquired) | Pass to heirs | Income taxed individually | Same as Flat |
| LIC Death Claim | Goes directly to nominee (wife) | Exempt under Sec 10(10D) | No |
---
## 4. **Suggestions**
* Consult a **tax/legal advisor to draft proper gift deed to HUF**.
* Plan **income splitting through HUF** for long-term tax saving.
* Keep in mind **legal formalities and possible stamp duty/capital gain implications**.
---
If you want, I can help draft a **basic gift deed to HUF** or outline detailed **tax-saving strategies** for you!
---
## 1. **Whose Property Does It Become on Death?**
### a) **Assets like Flat, Investments, Bank Loan**
* If the deceased **did NOT leave a Will**, the assets devolve as per **Indian Succession Act (if Christian/others)** or **Hindu Succession Act (if Hindu)**.
* Typically, **assets in the name of the deceased become part of his estate**.
* Upon death, the **assets devolve upon the legal heirs**.
#### Important:
* **If the property is self-acquired by the deceased**, it **does not automatically become HUF property**.
* Property passes to **legal heirs individually** as per succession laws.
* **Wife is a legal heir and inherits her share**.
* **HUF property is ancestral property**, held by HUF collectively — if asset was HUF property, it remains so.
> So, **Flat, Bank loan liabilities, Investments** held by deceased will generally pass to his **wife and other heirs** individually, **NOT HUF**.
---
### b) **Death Claim of LIC Policy**
* If LIC Policy nominee is wife, **the sum received on death claim belongs to the nominee** (wife) outright.
* This claim **does NOT form part of deceased’s estate**.
* It is **exempt from income tax under Section 10(10D)**.
* It **does not become HUF property**.
---
## 2. **Tax Planning to Transfer Property to HUF**
* The wife is in 30% tax slab; HUF has separate tax slabs with basic exemption (₹1,60,000 plus standard deduction etc.).
* **If property/income can be transferred to HUF, income will be taxed at HUF’s slabs**, possibly reducing tax burden.
### How to transfer property/income to HUF?
* **Convert self-acquired property into HUF property** by **gift or transfer to HUF** (done by the coparcener during lifetime).
* After death, it is difficult to bring property back to HUF.
* **You cannot transfer inherited property of deceased directly to HUF.**
* However, **if heirs (including wife) gift their share to HUF**, it may become HUF property.
### Important Caveats:
* **Gift to HUF by wife or other heirs must comply with Gift Tax rules (though gift tax abolished, gifts to HUF are scrutinized).**
* Transferring property to HUF can trigger **capital gains tax** if it is a transfer for consideration.
* Be mindful of **clubbed income provisions** and anti-avoidance rules.
---
## 3. **Summary Table**
| Asset Type | Succession | Tax Implication | Can it go to HUF? |
| --------------------------- | --------------------------------------------------- | ---------------------------- | ---------------------------------- |
| Flat (self-acquired) | Passes to legal heirs individually (wife, children) | Income taxed in heir's hands | Only if heirs gift property to HUF |
| Bank Loan | Liability of deceased’s estate | Liability passes to heirs | N/A |
| Investments (self-acquired) | Pass to heirs | Income taxed individually | Same as Flat |
| LIC Death Claim | Goes directly to nominee (wife) | Exempt under Sec 10(10D) | No |
---
## 4. **Suggestions**
* Consult a **tax/legal advisor to draft proper gift deed to HUF**.
* Plan **income splitting through HUF** for long-term tax saving.
* Keep in mind **legal formalities and possible stamp duty/capital gain implications**.
---
If you want, I can help draft a **basic gift deed to HUF** or outline detailed **tax-saving strategies** for you!
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