Direction for Accumulation

(iii) the preservation or maintenance of the property transferred.

A portion is a share of property or money set aside to provide for a child, most often on marriage or on coming of age. The word is old but it is the Act's own.

All three exceptions have the same character, and saying so is worth a mark. Each is accumulation for a defined and productive purpose that will exhaust itself: paying off debts, providing for children, keeping the property in repair. None of them is accumulation for its own sake, which is what the section is aimed at. Accumulation for these purposes may be directed accordingly, without the cap.

Section 18 adds a fourth escape from outside: a transfer for the benefit of the public in the advancement of religion, knowledge, commerce, health, safety or any other object beneficial to mankind is exempt from section 17 altogether, as it is from sections 14 and 16.

A worked example

In January 2026 Sudha transfers a commercial property at Pune to trustees, directing that the rent be accumulated and not paid to anyone for forty years, after which the whole fund and the property go to her grandson.

If Sudha dies in 2031, five years after the transfer, the two candidate periods are her life, which ran five years from the transfer, and eighteen years from the date of the transfer. Eighteen years is longer, so accumulation is lawful until January 2044. The direction is void as to the remaining twenty-two years, and from January 2044 the property and income are dealt with as if the accumulation period had ended.

If Sudha lives until 2056, thirty years after the transfer, her life is the longer period, so accumulation is lawful for those thirty years, and void for the remaining ten.

If the direction had been that the rent be accumulated for forty years to pay off the mortgage debt Sudha owed on the property, section 17(2)(i) applies and the cap does not bite at all, because the accumulation is for the payment of the transferor's debts.

If the direction had been to accumulate the rent for forty years to fund a free school on the property, section 18 exempts it, since that is a transfer for the benefit of the public in the advancement of knowledge.

What it does NOT mean

It does not make the transfer void. Only the excess period of accumulation is void, and the property is then dealt with as if the accumulation period had run out.

It does not offer a choice of periods. The longer of the two applies on the facts. A transferor cannot elect the shorter, nor is he confined to eighteen years merely because he chose to name a number.

Eighteen years is not a period of minority. It runs from the date of the transfer, and it has nothing to do with anybody's age. Confusing it with the minority in section 14 is the standard slip on this topic.

The three exceptions are purposes, not people. What matters is what the accumulation is for.

It does not apply to accumulation happening by accident. The section strikes at a direction in the terms of the transfer. Income that piles up because no one has claimed it is not caught.

Distinctions

Quick revision

• Section 17: accumulation may be directed for the life of the transferor or eighteen years from the date of the transfer, whichever is longer.
• Only the excess is void; at the end of the lawful period the property and income are dealt with as if the accumulation had run its course.
• Three exceptions in section 17(2): payment of debts; provision of portions for children or remoter issue; preservation or maintenance of the property.
• The eighteen years runs from the date of the transfer and is not a period of minority.
• Section 18 exempts transfers for the public benefit.

Test yourself

1. State the two periods in section 17 and how the choice is made. The life of the transferor, or eighteen years from the date of the transfer. The direction is void only so far as it exceeds the longer of the two on the facts, so the law takes whichever turns out to be longer.

2. A directs accumulation for twenty-five years and dies four years after the transfer. How long is the accumulation good for? Eighteen years from the date of the transfer, that being longer than his life after the transfer. The direction is void as to the remaining seven years.

3. Does a bad direction destroy the transfer? No. Only the excess period is void. At the end of the permitted period the property and its income are disposed of as if the directed accumulation period had elapsed.

4. Name the three purposes exempted by section 17(2). Payment of the debts of the transferor or of any person taking an interest under the transfer; provision of portions for children or remoter issue of the transferor or of such a person; and the preservation or maintenance of the property transferred.

5. Is the eighteen-year period connected with the age of any beneficiary? No. It runs from the date of the transfer. The minority in section 14 is a different idea and belongs to the rule against perpetuity.