The active involvement of women in estate planning has always been a grey area. While traditional perceptions are changing, there is still a mind block in the way of giving women a bigger say in estate planning. Let us go back to what the Hindu Succession Act, 1956, says about the property rights of women? Section 14 of the Act, which deals with the property rights of female Hindus, is categorical that any property possessed by a female Hindu, whether acquired before or after the commencement of the Act, shall be held by her as the full owner thereof and not as a limited owner. This provision essentially confers absolute ownership of property upon a female Hindu, granting her the same rights and privileges as a male Hindu in matters of property ownership and management.
One of the key implications of Section 14 of the Hindu Succession Act is that it applies to ancestral and self-acquired property of a female Hindu. Whether the property was inherited, gifted, purchased or acquired by any other means, a female Hindu is entitled to hold it as a full owner, with complete autonomy and control. This ensures that women have the freedom to manage and dispose of their property according to their wishes, without any undue restrictions.
What is holding back women’s role in estate planning?
It has more to do with legacy factors, or factors that Indian society has got used to over the years.
- For a long time, estate planning was a domain of the Indian male, and the woman did not have much say in such matters. However, the legal provisions of the Hindu Succession Act have stated that women not only have equal inheritance rights, but also equal rights in deciding how to deal with the property and enjoying unfettered rights.
- Secondly, there is some gender stereotyping—that women don’t give their best when it comes to managing money. However, reality has proved that not only are women savvier in money management, they are also willing to play the more conservative and long-haul game in financial planning.
- One of the things that has reduced the role of women in estate planning is that they have to give up quite a few years of their working life towards bringing up children and bringing about balance of priorities in the family. Hence, the belief was that this would hamper their ability to make key decisions. Once again, this is not substantiated by anecdotal evidence.
Let us turn to why estate planning for women is mandatory and a plausible model for the same.
Why, and how?
Here is why women must drive estate decisions in the emerging model:
- As per the latest National Population Survey, women have a higher life expectancy than men. That means women are more likely to inherit family property. Also, today women are a lot more socially aware, as is evident from the impact that women voting patterns have on Indian elections.
- Children learn habits like thrift and the need for financial stability from their mothers. In a sense, women act as key influencers of how the families shape up. Having a larger role for women in estate planning sends out the right message to children at a young age.
- Name women as successors in the will and as nominees for investments. Parents and spouses must ensure that women get a fair share of family property and that such transitions are documented through a registered will. Also, to ensure that the family interests are safeguarded, women must be the first choice to be nominees for all types of investments.
- Working women today have one more major challenge to worry about, and that is retirement planning. Once there is clarity on what she inherits, she can make a more rational plan for retirement. A typical retirement plan needs around 30-35 times a month’s spending as retirement corpus to take care of costs and inflation. The calculations become a lot simpler with estate inheritance imbued.
- Indian households have been aggressive buyers of gold, insurance and land. As the experience of the last few years shows, all these have stood the test of time. These are assets where women have had a strong influence. Today, women are among the major buyers of insurance and that will continue to remain a key component of women planning their finances.
A bigger share and a bigger decision-making power in estate planning for women is the need of the hour. For years, Indian women played a pivotal role in families, which was largely counted as unproductive labour. However, these are the kind of services that are remunerated at a hefty premium globally. The bare minimum that can be done is to compensate women with a fair share of estate and a major say in estate planning. That would be poetic justice!
Nehal Mota is co-founder and chief executive officer, Finnovate.