Use Married Woman Property Act to safeguard your family's future

Everyone wants to safeguard their family’s future, once they are no longer around. And, for that many buy life insurance policies as they ensure at least your wife and kids won’t have to struggle even if something happens to you.

The Married Woman Property (MWP) Act is one such law you could use to safeguard your wife’s and kids future. In fact, the Act was put in place with the intention to safeguard a married woman’s property from creditors and family members.

While the act covers a whole lot of things, from a personal finance point of view you need to know a few things. When you buy a life insurance policy on your life as a husband, you can actually buy the policy under the Married Woman Property Act. Of course, you will have to create a trust for that, but the advantage is huge.

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[caption id=“attachment_540977” align=“alignleft” width=“380”]  If you already have a life insurance policy and bring it under this act, call your insurer for more details. Reuters[/caption]

" When you buy life insurance under this Act, this ensures that your creditors, even the Income Tax Department does not get hold of this money," saysSuresh Sadagopan, a Mumbai-based Certified Financial Planner.None of your creditors, neither banks, nor any kind of court attachments done, can get hold of this money.

To buy a life insurance policy (in your name) under this act you have to fulfill a few criteria. One, you should be a married man, or a divorcee or a widower. “The life insurance policy has to be taken in your name, not your spouse’s name,” saysSadagopan.As far as the beneficiary goes, it could be your wife or children or wife and children together.

Also, have to appoint a trustee; it could even be your wife. All you have to do is have the trustee sign an addendum, stating the permission of appointment of trustee to perform the duties of the trustee. In fact, you can change the trustee any time.

The most important thing to remember is that once you buy a life insurance policy under this Act, you will lose all control over the policy, since it will belong to the trust for the benefit of your wife and children, so it’s no longer part of your estate. However, you will need to pay the premiums. The best part is that you don’t need to pay anything extra to get a policy under this Act. Simply sign an addendum stating the same. Sadagopan says, “These days signing a separate addendum is not needed. We have seen many insurance application forms themselves have the MWP option mentioned on them.”

If you already have a life insurance policy and bring it under this act, call your insurer for more details. “This will work well, for those who are self employed or have their own business. But, even if you are salaried individual would to good to buy a policy under this act,” saysSadagopan.

Now that you know a thing or two about MWP, we suggest you call your insurer or your Certified Financial Planner to take action.