Gifting property to children? Take note

In several cases, parents give away their wealth to their children in their lifetime to avoid any confusion after their demise and keep the paperwork in order. While doing so makes perfect sense, here are some points to consider and some precautions to take when giving away your self-acquired property to your children.

Unlike the West where the social fabric is based on individuality, Indian social system promotes deep family ties. As a result of this, parents are emotionally programmed to love and care for their children no matter what the age of their progeny is. In the West, the moment an individual comes of age, they are on their own, financially speaking.

The merits of the Indian parenting system notwithstanding, parents tend to keep supporting their children for as long as they live. The giving away of their assets in the name of the children is a continuation of that process. However, oftentimes, the children are not that supportive or caring — Indian courts have many cases dealing with instances of total neglect of senior citizens of their children.

This makes it extremely important for parents planning to gift their property to their children through a gift or a settlement deed to keep in mind some important points to safeguard their own interest, just in case.

 See also: Gift deed format

Spell out what you expect from your children in return in the gift deed/settlement deed

Property buying and gifting both are primarily emotional decisions for most people. However, if the gift is made with an expectation of care and support from your children, the gift or settlement deed must clearly mention it. If that is so, you are legally empowered to take back the gift if your children ill-treat you or neglect you.

The Maintenance and Welfare of Parents and Senior Citizens Act, 2007, provides for certain circumstances under which gifts of property made by parents and senior citizens can be cancelled by parent/senior citizen. This provision is contained in Section 23 of the Act.

Sub-Section 1 of Section 23 of the Maintenance and Welfare of Parents and Senior Citizens Act says that property transfer will become void only if the condition “that the transferee shall provide the basic amenities and basic physical needs to the transferor” is part of the gift deed, and “transferee refuses or fails to provide such amenities and physical needs”. If the condition is not spelt out, you will not be able to take back the gift.

“When it is alleged that the conditions mentioned in Section 23(1) are attached to a transfer, existence of such conditions must be established before the tribunal,” the Supreme Court has ruled.

“When a senior citizen parts with his or her property by executing a gift or a release or otherwise in favour of his or her near and dear ones, a condition of looking after the senior citizen is not necessarily attached to it. On the contrary, very often, such transfers are made out of love and affection without any expectation in return. Therefore, when it is alleged that the conditions mentioned in sub-section (1) of Section 23 are attached to a transfer, existence of such conditions must be established before the Tribunal,” it added.