Married Women Property Act – A 360 degree protection

Married Women Property Act – I am sure, not many people have heard about this act. I was under the impression that lawyers must be aware of Married Women Property Act but i was wrong. Recently, i was discussing a case with one of the lawyer (I am not a lawyer). I shared reference of Married Women Property Act from a personal finance perspective. He was clueless on the same. Anyways, there can be multiple reasons for the same. Only info available on the web is related to section 6 of the Act. In other words, people know about this act because of section 6. Any insurance policy under section 6 of Married Women Property Act is immune from creditors of male proposer or court attachment. Legally this policy does not belong to husband and does not form a part of his estate. I shared a reference of same in my previous post, Housewives – 5 Steps to financially secure the future.

Married Women Property Act should be looked beyond section 6 holistically. It was formulated in 1874 i.e. it is 142 years old act. This is one of the most powerful act that safeguards the interest and rights of the women. As there is not much awareness, therefore, i thought of writing a post on this topic. Let us first discuss what is not covered under Married Women Property Act.

1. The provisions of this act are not applicable in the state of Jammu and Kashmir

2. Any property acquired before marriage is not covered under this act. For example, if i acquired a 2BHK flat before marriage. In this case, my wife cannot claim any stake in my property acquired before marriage. I am free to dispose of according to my will. The reverse is also true. If my wife acquired any property before marriage then i don’t have any claim or stake on same by virtue of marriage.

Married Women Property Act

1. Any debt of the married women before marriage is the liability of the husband. Though there is no special clause but this act does not provide any kind of protection to the husbands from such liabilities. For example, if my wife took education loan before marriage then after marriage, the liability is shared by me. The best part is if women buy a property on a home loan before marriage. As per the Married Women Property Act, the husband will not have any rights to the property as i shared in exclusions but home loan liability is of husband :). There is no provision to file claims against such debts.

2. The rules may vary from state to state: The act provides power to state govt to amend provisions of the act retrospectively or prospectively to include/exclude any race, sect or tribe. Therefore, it is not necessary that it is applicable to all.

3. Streedhan or Separate Women Property: The following assets/income/earnings are classified as a separate property of women on which husband cannot claim any RIGHT. At her own wish or will, married women can share/part her streedhan but it can be recovered in future as i shared in next point.

(a) Salary/income/earnings of a women before or after marriage from employment/occupation/business/trade.

(b) Income/Asset from her literary/artistic/scientific skills.

(c) Any savings, investment, income or earnings from above-mentioned salary/income/asset

(d) Any insurance policy purchased before marriage or independently after marriage. The benefits of such policies are deemed to be a separate property of women.

4. Recovery of Separate Women Property: Even if the women part away or share her separate property as explained in point no 3 with husband or in-laws. It can be always recovered through legal proceedings. An advice for husbands is to keep women property separate only :).

5. Policy under section 6 of Married Women Property Act: Some of the important points related to policy effected under section 6

(a) The beneficiaries of the policy once declared cannot be changed without the consent of beneficiaries. Some questions are still unanswered that is what will happen in the case of divorce?

(b) As i mentioned policy does not belong to the policyholder, therefore, he cannot avail loan or assignment of policy is not possible. Also, it is not clear what will happen if the policyholder stops paying premium i.e. claims of beneficiaries in this regard. Technically, the policy will lapse.

(c) A change in policy is possible only with a consent of the beneficiaries

(d) The biggest limitation is that a policy can be covered under MWP Act only at the time of buying a policy. You cannot apply to convert existing policy under MWP Act. You can find the option in the proposal form. The existing policyholders can execute an absolute assignment of the policy in wife’s favor.

(e) All the benefits of the policy will go the beneficiaries of the policy. There is a misconception among policyholder that only death benefits will be passed to beneficiaries.  For example, in the case of money back plan, the regular payout will be credited to the beneficiary account. Also, if the policy is surrendered then the surrender value will go the beneficiary.

7. Personal Guarantee of Women: The provisions of this act are not applicable if the women have given a personal guarantee of any credit/loan. For example, in a very recent query, a woman was the guarantor of husband’s business loan. In this case, she cannot claim immunity under Married Women Property Act. In another scenario, if she avails loan and default then the provisions of this act are not applicable.

Insurance Policy under Married Women Property Act

I can think of two possible cases under which the insurance policy under Married Women Property Act is beneficial

(a) A family under debt or Business Family: There is a misconception that with the death of a person his debts are gone or waived off. The creditors reserve the right to recover from the assets or insurance proceeds of the deceased. Though it can be done mostly through court orders. Therefore, male members of a business family or family under debt may buy a policy under section 6 of Married Women Property Act to take care of the financial interest of their wife and  children.

(b) Married women buy a policy in the name of a child: I came across certain circumstances under which married women want her assets or proceeds from insurance coverage to be passed only to her child. In one of the case, the husband was alcoholic. Therefore, the concern of my reader was that her husband will not take care of the children. She was working and wanted to safeguard the interests of the children. In this case, insurance policy under section 6 of MWP Act is the only solution.

I tried to cover all the important points. This option may not be useful in all the cases. It can be used selectively under special or extraordinary circumstances. Though the provisions of the act are good but always remember that policy under married women proportion act will not belong to the husband. Maybe it will be a good idea to buy online term insurance plan under Married Women Property Act. On the other hand, investment-linked insurance plans like ULIP, money back policy etc should be avoided under Married Women Property Act.

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