Changing inheritance laws -Rich parents don't have to mean rich children-economic sense -www.nepalitimes.com.np

Economic Sense

Changing inheritance laws

Rich parents don't have to mean rich children

ARTHA BEED

MIN RATNA BAJRACHARYA

FRAGMENTED FACADE: Streetfront traditional house in Kathmandu that has been developed separately by brothers who inherited the property from their ancestors.
Initiatives are finally being taken to scrap the age-old inheritance laws that make children automatic heirs to their parents' property. A panel led by Justice Khil Raj Regmi this week submitted a report recommending a change in the law so an inheritance becomes something bequeathed through a will rather than through birth.

The automatic transfer of property from parents to their children, especially given the rocketing prices of land and gold, has secured earnings for some people whether they have earned it or not. It has perpetuated 'rent-seeking behaviour' among Nepalis, wherein people do not feel the need to think of how to make money or pay their bills. Why take the risk of entrepreneurial pursuits when one can be content living off the rent from ancestral properties? This attitude has led to the mushrooming of the 'shutter' culture: people simply open retail stores on their ground floors, rent them out, and secure a monthly cash inflow without working at all.

In many corporate entities, the scions of the family automatically become shareholders and directors irrespective of their competencies. Ancestral land is often sold to finance lavish desires for these fortunate young people, be it the latest motorbike or resources to record an album or music video.

In a country where there's no state-instituted social security, surely having parental property provides a necessary cushion? However, this legal provision is usually taken as bait to ensure a good after-life than to face challenges post-retirement. The inheritance law stems from the Hindu principle of chain of command, where it is deemed necessary to hand over one's mantle (and property) to the eldest son in exchange for smooth passage after death. As Dor Bahadur Bista said, we are more concerned about the dead than the living.

We are a democratic republic now, but we are yet to become a real democracy, stuck as we are in a feudal mindset. We say we have become a secular country, but electricity subsidies are only available to temples. When we light lamps at inaugurations, idols belonging to specific faiths guard the entrance. The seating arrangements at conferences are still the same as they were during the monarchy. The king has been substituted by a head of state, but he still spends much of his time attending religious functions. It may be a transitional period, but if we are to evolve as a democratic society that is secular and equal, we need to ring in the changes.

A real democracy talks about equal opportunities and helps to foster a society where there is a level playing field. The challenge is to build a society based on merit and deeds rather than who your parents were. An inheritance law that is based on wills rather than automatic inheritance will definitely help us move towards a meritocratic society. Will-based inheritances will also minimise reckless investments in the non-productive sector. The need to draft a will should force people to plan for their properties and investments, and convince them to put their money to productive use rather than just buy land or hoard gold. But the most important side effect of this change might be that people will begin to think about how much property they should actually transfer to the next generation, and how much they should set aside for philanthropic purposes. This could usher in a new era of private philanthropy in Nepal, where people make social investments in schools, hospitals or old age homes.

www.arthabeed.com