LGBT Indians and personal financeThe Supreme Court is shortly expected to pronounce its verdict on Section 377, IPC which criminalises India’s gay, lesbian, bisexual and transgender (LGBT) citizens. A survey of India’s financial structure shows that discrimination also extends to this sphere. And it’s time the Indian financial industry and lawmakers made changes to the archaic rules so that LGBT community is not discriminated against. Here’s how the current rules that do not help LGBT.

  1. Medical Insurance

Most medical insurers provide what is known as ‘family floater’ policies. These policies cover all the individuals within a particular family. They allow one or two earning members to pay premiums that cover the entire family, providing a degree of mutual support. Since LGBT partnerships are not recognised as ‘families’, LGBT Indians cannot take the benefit of family floater policies.

  1. Life Insurance

Life insurance traditionally protects members of a family from the financial consequences of the death of an earning member. One member of a family can take out a life insurance policy on the life of another member but a ‘stranger’ cannot do so. The legal concept involved is called ‘insurable interest.’ The policyholder must show that he or she will suffer financial harm by the death of the insured person. In practice, life insurance companies only consider family members as having ‘insurable interest.’

  1. Gifts and Financial Support

Family members often extend financial support to each other through the medium of ‘gifts.’ For instance, parents might give their children money to pay the down-payment on a house. Husbands may give jewellery to wives. Gifts between ‘recognised’ family members are exempt from income tax. Such recognised family members include parents and spouses. LGBT partnerships do not fall within this category. Gifts between such persons will be treated as gifts between strangers and subject to tax above the limit of Rs 50,000 in value per annum.

  1. Inheritance

Inheritance in India is either ‘testamentary’ (through a Will) or intestate (if there is no Will). In case of testamentary succession, LGBT Indians can make each other the beneficiaries of Wills, just as any two unrelated individuals can. However, family members are likely to challenge such wills as forgeries or made without mental capacity during the actual succession. Since LGBT relationships are not officially recognised, courts are likely to reject the validity of such Wills on these grounds.

In the case of intestate succession, Indians are governed by their ‘personal laws.’ For example, Hindus are governed by the Hindu Succession Act, 1956, Christians by the Indian Succession Act, 1925 and Muslims by the Muslim Personal Law. However, none of these laws recognises LGBT partnerships or relationships and hence LGBT Indians will not inherit anything under them.

  1. Nomination

Anyone can be a nominee in a bank account or mutual fund and this can include LGBT partners. However a nominee is not the legal heir but merely a custodian of assets until they are passed to the legal heirs.

Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.