TRANSFER OF PROPERTY TO AN UNBORN PERSON
Unborn person means a person who has not come into existence.
As a general rule, a property can be transferred between the two living persons that means persons should be in existence at the time of the transfer of the property.
Section 5 of the Transfer of Property Act,1882 defines the Transfer of property as :
“Transfer of Property” means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself, 1[or to himself] and one or more other living persons; and “to transfer property” is to perform such act.
But, Section 13 of the TRANSFER OF PROPERTY ACT provides for remedy by which a property can be transferred or an interest can be created in the property in favor of an unborn person. This is not an exception for the general rule, in fact it is an extension of the general rule which widens the scope to make the transfer of the property.
Where on a transfer of property, an interest therein is created for the benefit of a person not in existence at the date of the transfer, subject to a prior interest created by the same transfer, the interest created for the benefit of such person shall not take effect unless it extends to the remaining interest of the transferor in the property.
FOLLOWING ARE THE ELEMENTS KEPT TO BE IN MIND WHILE CREATING AN INTEREST IN FAVOR OF AN UNBORN PERSON :
- Transfer for the unborn must be preceded by a life interest created in favor of a person in existence at the date of the transfer.
- Absolute interest must be transferred that is the whole remainder.
- The unborn person must come into existence.
- enjoyment of interest may be postponed.
- Transfer must not be in perpetuity.
- No direct transfer.
EXAMPLE : A transfers property of which is the owner to B, in trust for A and his intended wife successively for their lives and after the death tog the survivor, for the eldest son of the intended marriage for life, and after his death for A’s second son. The interest so created for the benefit of the eldest son does not take effect, because it does not extend to the whole of A’s remaining interest in the property.
The transfer in favor of unborn person must be preceded by a life interest and that only absolute may be given to the unborn has following legal consequences :
- The intermediary person living at the date of the transfer is to be given only life interest. It means giving him only the right to enjoyment and possession. He has to preserve the property like a trustee during his life-time on behalf of the unborn.
- The unborn must come into existence before the death of the person holding property for life. If the unborn comes into existence say, after month after the death of the last living person, the property shall revert back to the transferor or his heirs.
POSTPONEMENT OF ENJOYMENT
The enjoyment of the property transferred for an unborn person can be postponed for some future date. Section 14 of the Transfer Of Property act,1882 makes rule against perpetuity which means the postponement cannot be for unlimited period.
INTEREST AT THE TIME OF BIRTH
Section 20 of the Transfer of Property Act, where on a transfer of property, an interest therein is created for the benefit of unborn person not then living, he acquires upon his birth, unless a contrary intention appears from the terms of the transfer, a vested interest, although he may not be entitled to the enjoyment thereof immediately on his birth.
A property can not be directly transferred to an unborn person but if prior life interest has been created and the absolute interest has been made that is the whole of the remainder to unborn, then a property can be transferred in favor of an unborn person.