Section 345 Succession Act: Investment of residue bequeathed for life, without direction to invest in particular securities

Section 345 of Indian Succession Act: Testamentary & Estate Administration Procedure

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) Where the testator has bequeathed the residue of his estate to a person for life without any direction to invest it in any particular securities, so much thereof as is not at the time of the testator's decease invested in securities of the kind mentioned in section 341 shall be converted into money and invested in such securities.

(2) This section shall not apply if the deceased was a Hindu, Muhammadan, Buddhist, Sikh or Jaina or an exempted person.

Legal Commentary & Landmark Judgments: Section 345

Section 345 codifies the equitable Rule in Howe v. Lord Dartmouth, mandating the conversion and reinvestment of wasting, perishable, or speculative residue into authorized trustee securities when bequeathed to successive life and remainder beneficiaries.

Successive Interests in Residuary Estate: Applies where the residue of personalty is bequeathed to one person for life with remainder over to another, without specific investment directions.
Conversion of Hazardous or Wasting Assets: The executor is bound to convert perishable, wasting, or speculative assets (such as leaseholds, royalties, or volatile commercial stocks) into permanent government securities.
Equitable Balance of Interests: The conversion prevents the life tenant from consuming the capital substance through high speculative returns and ensures the remainderman receives a preserved corpus.

Key Landmark Precedents:

Howe v. Earl of Dartmouth (1802) 7 Ves 137: Foundational chancery precedent establishing that where wasting personal property is given to persons in succession, it must be converted into permanent investments to preserve the estate for remaindermen.
Macdonald v. Irvine (1878) 8 Ch D 101: The Court of Appeal held that the rule of conversion applies unless there is a clear testamentary intention that the property should be enjoyed in specie by the tenant for life.

Courtroom Practice & Strategic Litigation Guidance:

In estate planning, include an express 'enjoyment in specie' clause if the testator wants the life tenant to retain volatile or leasehold assets. In litigation, remaindermen should invoke Section 345 to surcharge executors who fail to convert high-risk business shares into trustee securities.

Section 345: Investment of residue bequeathed for life, without direction to invest in particular securities

Section 345 of Indian Succession Act: Testamentary & Estate Administration Procedure

Legal Commentary & Landmark Judgments: Section 345