November 30, 2021

Married Women’s Property Act

Chhaya Kothari

Founder, CK Financial Advisory

Let me begin this article with an ancient story from Mahabharata written by Maharshi Ved Vyas. This story helps us understand how to tackle the uncertainties of life.

When Yudhisthir was king of Indraprastha, one day, some needy person visited him for help. He was occupied so he told him to come the next day. When his younger brother Bhim came to know this, he announced that his elder brother has become Trikaldarshi – who has the knowledge of Past, Present, and Future. He is sure that he will be alive tomorrow. Yudhisthir realized his mistake; he called that needy person, said sorry, and gave donations.

It is said that even Bhagwan Ram was not aware, what will happen tomorrow morning. Will it be his Rajyabhishek or Vanwas?

Moral of both stories: No one can predict the future.

Friends, on one hand, we are not certain about the future and on the other hand, the uncertainty keeps us moving. Uncertainty of tomorrow motivates us to work more, earn more, acquire more, and accumulate more.

Here arises a question, why do we work so hard to earn money, for whom are we doing it? Your obvious answer is, for our family, for our loved ones.

Agreed! You earn and accumulate for your family. But, how confident you are that this wealth will go in their hands in case of any eventuality?

Eventuality maybe Death, Disability, and Bankruptcy, or any such unforeseen mishap.

We have seen cases that despite the family being financially settled, the spouse and children have suffered and were compelled to face a hard time due to an unfortunate eventuality.

Do we have any provision by which we can ensure that the family’s standard of living can be maintained even in such unforeseen situations?

The answer is a BIG YES. The Government of India has an ACT by which one can secure one’s investments from being legally attached by the authorities.

Yes, friends, I am talking about Married Women Property Act MWPA. This is a very old but seldom used Act from the British era since 1874 which the Government of India has amended in 1959 which safeguards your family against any legal attachments.

This Act was enacted with a view to protecting the properties of the women from the creditors or loans taken by the husband or the family either on the business or on themselves. The main idea of this MWPA is that all the properties belonging to women are protected from the court, the Income Tax attachments that of the husband.

Many Businessmen avail extended credit limits or loans on the business and the banks secure these credit limits against the assets of the business as collateral besides taking personal guarantees from the owners of the business. In case of the untimely death of the husband (Business owner), banks start recoveries and, in the process, they start liquidating the assets of the business and attach the properties of the guarantor that is the husband. To protect the family assets and to ensure the family’s standard of living, life insurance policies under MWPA play a vital role.

Every business owner-husband should have life insurance policies covered under the MWP Act because normal Life insurance policies are entitled to be attached and the claims will go to the bank and not to the surviving member of the family.

Once the life insurance is under MWPA, it ceases to be a part of the man’s/family’s estate. Hence, it becomes a non- attachable asset even in case the husband/ family becomes insolvent and the money under the policy is secured from creditors, the Court of Law and Tax authorities, etc.

Who can take policy under MWPA and for whom?

Section 6 of this Act permits any married man, widower, or divorcee to buy a Life insurance policy on his own life. He can buy any type of policy like Term, Endowment, or unit link. He has the option to select the beneficiary while taking the policy. He may choose, His Wife alone, his children alone, or wife and children both as beneficiaries.

Need of MWPA:

Many businesses shut down as they do not have adequate provision for the Risk (Borrowed Capital)
Families and such business houses are exposed to similar risks. Assets created by married women independently; need protection from their husband’s business debt.

Recently in December 2019, IBC, Insolvency, and Bankruptcy code amendment has brought personal guarantors under the scanner. His personal assets also can be attached in case of default of the loan. Businessmen and professionals carry risks that should not be transferred to the family.

Under MWP Act, a trust is created under which the money is absolutely safe and free from any attachments.

Moreover, it has one more important perspective. If the breadwinner becomes disabled, is unable to earn income, or loses everything without any wrong intention, in that case, this policy under MWPA comes to his rescue provided the Income Plan was bought under this Act which becomes a source of income for the family to live a dignified life.

I always wonder how people can afford not to take the right decision at right time? Many people have this habit of procrastination.

Kabir said “Kaal kare so aaj kar, aaj kare so ab”. But many of us have reversed this saying, “Aaj kare so kaal kar, kaal kare so narso”.

To conclude, look at the benefits of MWPA:

• The life to be insured has no direct control over the policy. The policy proceeds go to the Trustees.
•  The policy not being part of a man’s estate, can not be taken for tax attachment, court attachment, IBC attachment, or by creditors
• Families can be protected from the risk of financial loss/business uncertainties
• MWPA provides married women with secured money for their livelihood and provides for children’s education
• Through MWPA, you can create Tax-Free Legacy
• MWPA is the simplest way of Estate Planning which helps in Asset Equalization
• The policyholder reserves the right to revoke the appointment of the trustees
• Beneficiaries being the owner of the policy, can obtain loans under the policy
• Beneficiaries can surrender the policy
• Beneficiaries can assign the policy

Don’t you think such a provision can give any business family immense peace of mind?

Then why wait? Please read & understand this MWPA Act and take a wise informed decision today for a peaceful tomorrow because for your loved ones #YouAreTheDifference. Here we say “Jo kare apne Biwi Bacho Se Pyar, vo kaise kare MWPA se Inkar”.

IT IS TIME TO PROTECT YOUR MONIES IN THE SAFEST VAULT IN THE WORLD THAT CAN NOT BE BREACHED EVEN BY GOVERNMENTS, LEGAL ORDERS, OR CREDITORS.