Misuse of guardianship power is punishable under sections of IPC

Besides choosing guardians carefully, parents should put in additional layers of oversight

Children who have lost both their parents to the pandemic will receive Rs 10 lakh from the PM CARES Fund. They may also receive additional aid from their state governments. While assistance from the government will help, one question these children face is whether they will inherit their parents’ property without hassles, and will be cared for properly by their guardians.

When a Will exists

The existence of a Will smoothens the inheritance process. Says Kirat Singh Nagra, partner, DSK Legal: “It ensures that the beneficiaries named in it — including orphaned children — get the property. It is the task of the executor of the Will, or the appointed guardian, to ensure that the rights, title and interest in the testator’s (person who makes the Will) property devolve upon the minor.” Things become easier if the Will is registered.

There is no bar on parents transferring property in favour of a minor through a Will. Says Abhinay Sharma, partner, TAS Law: “The child will, however, have limited rights till he or she attains adulthood.”

When there is no Will

When the parents pass away without leaving a Will, the Indian intestate succession laws come into play. Says Sameer Jain, managing partner, PSL Advocates & Solicitors: “Such a person’s property is transferred among his legal heirs, including his children, according to one of the succession laws that are based on religion.”

According to the Hindu Succession Act, 1956, for instance, if no parent survives, the property goes to the child, a Class-I heir. But the absence of a Will can create uncertainties. Says Shri Venkatesh, founding partner, SKV Law Offices: “Some other person may produce a document purporting to be the parents’ Will, which could lead to a long court battle.”

Ministry’s guidelines

The Ministry of Women and Child Development (WCD) recently issued guidelines to state governments on how children orphaned by Covid-19 should be handled. They emphasise the need to ensure children are not exploited financially. Says Venkatesh: “The guidelines include a structure that prevents the sale of the child’s ancestral property, and seek to ensure that the financial support the child will receive from the state government and the PM CARES Fund is not adjusted against pending debts or other liabilities of the parents. It should be used strictly for the child’s education, expenditure and welfare.”

Abuse of position is punishable  

In the case of minors, there is always the risk that the guardian could take advantage of her helplessness. There are laws aimed at deterring such activities. Says Bharat Chugh, independent counsel and former judge: “If the appointed guardians breach the trust or misappropriate the property of which a minor is the beneficiary, they can be held liable under various provisions of the Indian Penal Code or the Guardians and Wards Act, 1890.” They can be prosecuted under both civil and criminal law.

The guardian can be prosecuted and jailed for a maximum term of three years on the grounds of “abuse of trust” and “failure to perform the duties of his trust”.

According to the Guardians and Wards Act, the guardian needs to get a court’s approval before selling or transferring any property. The Hindu Minority and Guardianship Act, 1956, has a similar requirement. Says Chugh: “This ensures that sale or transfer of property is done only for a genuine necessity, or for the child’s benefit, and not for the guardian’s enrichment.”

What parents should do  

To ensure their children don’t suffer when they’re not around, parents need to undertake comprehensive estate planning. Says Nagra: “Such a plan should, among other things, include making and registering a Will, giving financial power of attorney, and creating a trust.”

Creation of a trust can also ensure that wealth gets transferred smoothly to the children and is used in their interests. A private trust can be created under the provisions of the Indian Trusts Act, 1882. Says Sharma: “The person creating the trust can decide which properties should be transferred to it. He can impose certain conditions on the beneficiary (the minor children).” A parent can create a trust and have it running during his or her lifetime.

Finally, parents need to select the guardian or successor trustees with care. They must be trustworthy and willing to take on the additional responsibility. The Will should require the executor to disclose all details about the estate’s expenses, assets, and financial transfers so that it becomes difficult to hide misappropriation or theft. Says Shabnam Shaikh, partner, Khaitan & Co: “The Will or trust deed may provide for a reporting or oversight mechanism, wherein the guardian or trustees have to periodically report to another trusted individual, who is independent of the trustee or guardian.” This additional layer of protection can reduce the chances of fraud or misappropriation.