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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Estate Planning

Caselet: Mr. Iyer (age 58) has a flat in Chennai, a bank deposit and mutual funds. He wants his wife to use the flat for life and, after her death, his two children to own it equally. He wants to avoid his wife selling it. Which estate planning arrangement best achieves this?

The best arrangement is a will, ideally through a trust, giving the wife a life interest with the remainder to the two children. This lets her live in the flat but not sell it, while an absolute gift or bequest would give her full control.

  1. AGift deed of the flat to the wife
  2. BA will leaving the flat to the wife absolutely
  3. CA will creating a life interest for the wife with the remainder to the children, ideally via a trustCorrect
  4. DAdding the children as joint holders of the flat's bank loan

Explanation

A life interest, ideally held through a trust, lets the wife use the flat during her life while ownership passes to the children afterwards. An absolute gift or bequest gives her full power to sell or bequeath it, defeating his intent. Loan joint holding does not govern ownership succession.

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