Vested interest under a Married Women's Property Act policy can form part of the estate passing on death for duty purposes
A life insurance policy taken under section 6 of the Married Women's Property Act, 1874 creates a trust for the wife, and the beneficiary acquires a vested interest from the date the policy is effected. The wife's interest extended to the policy's surrender value at death, so that value was treated as property passing on her death under the Estate Duty Act, 1953. Because the interest already existed during her lifetime, the surrender value did not fall within the exclusion for property arising only on death and was properly included in the aggregate estate for estate duty computation.
Issues: (i) Whether the surrender value of a life insurance policy taken under section 6 of the Married Women's Property Act, 1874, and assigned in favour of the wife was liable to be excluded from the estate of the deceased wife or treated as property passing on her death; (ii) Whether the surrender value of that policy was liable to be aggregated with the other property passing on the death of the deceased for estate duty purposes.
Issue (i): Whether the surrender value of a life insurance policy taken under section 6 of the Married Women's Property Act, 1874, and assigned in favour of the wife was liable to be excluded from the estate of the deceased wife or treated as property passing on her death.
Analysis: A policy taken under section 6 of the Married Women's Property Act, 1874 creates a trust for the benefit of the wife, and the beneficiary acquires an interest from the moment the policy is effected. The husband has no control over the trust property, and the wife's interest extends at least to the surrender value of the policy at the date of her death. Such interest is property passing on death within the meaning of section 5 of the Estate Duty Act, 1953.
Conclusion: The question was answered in the affirmative and against the assessee.
Issue (ii): Whether the surrender value of that policy was liable to be aggregated with the other property passing on the death of the deceased for estate duty purposes.
Analysis: The deceased had an existing interest in the surrender value at the time of death, and the property did not come into existence only as a consequence of death. It therefore did not fall within the exception under section 34(3) of the Estate Duty Act, 1953 and was properly included in the aggregate estate.
Conclusion: The question was answered in the affirmative and against the assessee.
Final Conclusion: The surrender value of the policy was treated as part of the estate passing on death and was includible in the aggregation for estate duty computation.
Ratio Decidendi: A beneficiary's vested interest under a policy created by section 6 of the Married Women's Property Act, 1874 constitutes property passing on death and is includible in the estate where the interest existed during the deceased's lifetime.
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AI Drafter ✕
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