Unlock the Power : Hindu Undivided Family (HUF) account rules

Co-parceners and members

A Hindu Undivided Family (HUF) account rules may encompass a substantial number of members, including both female members and distant male blood relatives. However, coparceners are specifically defined as those males who are within four degrees of lineal descent from the common male ancestor. The significance of the coparcener concept lies in the fact that only coparceners possess the right to request a partition. Other male family members, who are not classified as coparceners within the HUF, do not have a direct claim to the HUF property; instead, they can only assert their claims through the coparceners.

Features of the “Hindu Undivided Family (HUF)”

1. The Karta is capable of operating in a dual role and is entitled to receive compensation and additional benefits from the Hindu Undivided Family (HUF) account rules. (The criteria for who may serve as Karta will be addressed in subsequent slides.)
2. Each of the aforementioned family types may possess property in its own right and can be evaluated for income as independent entities.
3. It is not necessary for there to be more than one male member to establish a Hindu Undivided Family (HUF) account rules.
4. In the event that the family is limited to a sole surviving coparcener alongside other family members, the income tax is applicable to the joint family as a whole rather than being imposed on the male members individually.
5. A Hindu Undivided Family (HUF) account rules may consist solely of female members.
6. If a family member engages in a separate business, the income generated will be classified as their personal income, regardless of whether they utilize capital borrowed from the joint family resources.
7. Typically, any fees or salary received by the Karta in their capacity as a director or partner will be regarded as their individual income.
8. Furthermore, the salary income of an individual will not be considered part of the HUF’s income solely because the individual was educated, maintained, or supported entirely by the funds of the joint family.

“Karta” in HUF

1. The eldest male coparcener, regardless of age, infirmity, illness, or even leprosy, may still retain the position of Karta. Hindu law does not specify whether conditions such as insanity, other mental disabilities, or physical impairments will allow the other coparceners to dismiss him from this role. If the eldest member is not serving as Karta, the next senior male member assumes this responsibility.

2. A junior coparcener is recognized only when there is unanimous agreement among all coparceners.

Rights of the “Karta”

1. The responsibilities associated with managing the affairs of a Hindu Undivided Family (HUF) account rules include overseeing and safeguarding its financial resources.
2. The Karta has the authority to borrow funds on behalf of the Hindu Undivided Family (HUF) account rules and is permitted to allocate expenditures for the family without the obligation to provide accountability for such spending. Furthermore, Karta is not required to submit financial accounts to any external party.
3. The Karta possesses the right to initiate a partition of the family assets at their discretion, with the extent of the partition determined according to their preferences.
4. It is important to note that the Hindu Undivided Family (HUF) account rules are not authorized to enter into contracts, establish partnership firms, or represent itself, except through the Karta, who may permit others to act on behalf of the HUF.
5. The Karta can gift movable properties of the HUF guidelines out of natural love and affection, provided it remains within reasonable limits. The transfer of immovable properties may also occur for charitable purposes or the benefit of the family.

Powers of Secession

The authority to alienate property is exclusively vested in the Karta, and the joint family property may only be alienated for three specific purposes:

1. Legal necessity.
2. Advancement of the family’s estate.
3. Performance of essential duties.

The Karta has the authority to transfer the joint family property with the agreement of the coparceners, even in the absence of any of the aforementioned exceptional circumstances. Furthermore, if all coparceners are of legal age, such a transfer is legally binding on the entire joint family.

Repercussions of the Revision in the Hindu Succession Act.

Impact of the Hindu Succession (Amendment) Act, 2005 – entitlements and responsibilities of a daughter as a member.

1. A daughter shall be recognized as a coparcener in Hindu family property.
2. Upon the death of a Hindu, the coparcener property shall be distributed to the daughter in the same manner as it is to the sons.
3. If a female coparcener passes away before partition, her children will be entitled to a share as if a partition had occurred immediately before her death.
4. The doctrine of pious obligation does not permit the recovery of ancestral debts from a son, grandson, or great-grandson.
5. A female member can request a partition of the family dwelling.
6. A widow of a deceased son, even if she has remarried, is now entitled to a share in the property as a legal heir of her deceased husband.
7. Additionally, a female is permitted to dispose of her share in coparcenary property at her discretion.

Expenses incurred by a Hindu Undivided Family (HUF) account rules for the marriage of a daughter.

1. The implications of the amendment to the Hindu Succession Act of 1956 are significant.
2. Daughters are now recognized as coparceners. However, under Hindu law, the family remains responsible for arranging a daughter’s marriage.
3. Consequently, a reasonable gift provided at the time of her marriage should not be contested by the male coparceners.

General Principles of Inheritance as per Sec-8.

The estate of a male Hindu who passes away without a will shall be distributed according to the following provisions:

1. Primarily among the heirs listed in Class I of the schedule.
2. In the absence of Class I heirs, the distribution shall occur among the heirs of Class II.
3. If there are no heirs in either class, the estate shall be allocated to the agnates of the deceased.
4. Finally, if no agnates are available, the distribution will be made among the cognates of the deceased.

Definition of homogeneous and agnatic

1. Relatives of the deceased are related through the maternal side. “An individual is considered a cognate of the deceased if they are related by blood and adoption, not solely through the male line.”
2. Relatives from the father’s side are known as agnates of the deceased. An individual is considered the Agnate of the deceased if there exists a familial connection between them through blood and adoption, not exclusively through male lineage.

Ways to form the ‘Hindu Undivided Family’ ‘Corpus’

1. Integration of personal assets with the characteristics of a Hindu Undivided Family (HUF) account rules
2. Donations/grants
3. Collaborative efforts
4. Testamentary provisions
5. Division of property

The establishment of the HUF Corpus through the process of blending.

1. HUF can be generated by imprinting.
2. Property obtained by oneself
3. With the nature of HUF property
4. through the act of creating.
5. An HUF consists of the individual, his spouse, and their children.
6. Blending can be used to create smaller HUFs.

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