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Ramalingam Kalirajan |10881 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 03, 2025

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Question by P on Apr 11, 2025Hindi

Sir, I would like to invest 50% of my retirement benefits in my wife name as First Applicant and 50% balance in my name as First applicant. We both are filing returns annually and am not looking for tax benefit. My wife is a housewife and want to make her financially strong so that 50% investment will be in her name as Primary Applicant in the 50% investment in my name she will become secondary applicant. I know we will fall under the tax slab applicable ( if applicable ) and may have to have to file Tax Return. Even Currently we file our tax returns every year. Please can you advise on this idea from a financial independence point of view for senior citizens. This in my view will be a more secure way than the wife remaining as a secondary applicant always. Please advice.

Ans: Your Intention Is Noble and Well Thought-Out

You wish to make your wife financially strong.

You want her to be financially independent.

You want to share your retirement benefits equally.

This thinking shows your foresight and love for your family.

Financial independence for both spouses is a wise goal.

Let us evaluate this idea step-by-step.

Your Plan – 50% in Wife’s Name, 50% in Your Name

You want to invest half of retirement funds in her name.

She will be primary applicant in that 50%.

In your 50%, you want her as secondary applicant.

This gives her legal ownership over her 50%.

She becomes a co-holder in your part.

You both file tax returns annually.

You are not seeking tax benefits from this.

Ownership, Control, and Access – Financial Perspective

As first holder, your wife controls her 50% investment.

She can operate the account and access funds.

She gains confidence and independent financial identity.

In your half, her name as second holder provides backup access.

This ensures smoother management in emergencies.

From a financial independence perspective:

She owns 50% legally and practically.

She will get capital gain and income in her own name.

She can manage her finances without full dependency.

This makes your family more secure and confident.

Taxation and Reporting – No Issues for You Both

Even though she is a homemaker, she files returns.

Interest or gains in her investments will be taxable.

You are not avoiding tax, only ensuring fair structure.

Income clubbing will not apply if money is gifted clearly.

Clubbing applies only when gift is made and income is enjoyed.

But in retirement, income is usually from interest or SWP.

Document gift clearly as transfer to spouse without tax benefit.

Maintain separate bank accounts for tracking.

You both can file individual ITRs with declared income.

Senior citizens have higher exemption limits.

Separate filings reduce tax impact naturally.

You are not violating any rule or hiding income.

You are promoting financial equality and clarity.

Risk Reduction and Emergency Access

If wife is only secondary holder, access may be delayed.

First holder’s death or disability may complicate process.

Keeping her as first applicant in her part avoids that.

She can handle her funds smoothly without legal hurdles.

Second holder status in your name also helps you.

You both have legal, tax, and access rights over your share.

Recommended Investment Instruments for Senior Couples

Choose simple, low-risk options for retirement funds.

Split investments into these types:

Debt mutual funds (SWP route for monthly needs)

Senior Citizen Savings Scheme (SCSS) in both names

Monthly Income Schemes (Post Office or MFs)

Hybrid Mutual Funds with lower equity exposure

Liquid or short-duration funds for emergencies

FDs (laddered maturity, both names for easy access)

Avoid market-linked ULIPs or high-risk instruments.

Mutual funds in her name build her financial habit.

Online access, portfolio statements, and dashboards create awareness.

Use Regular Mutual Funds, Not Direct Plans

Don’t invest in direct mutual funds without guidance.

Direct plans lack professional monitoring and review.

At senior age, mistakes can be expensive and stressful.

Use regular mutual funds through Certified Financial Planner.

You get annual review, goal alignment, asset rebalancing.

Your wife will benefit more with proper handholding.

Avoid Index Funds and ETFs

Index funds only track the market.

No active management or downside protection.

Senior citizens need stability, not just low costs.

Actively managed funds offer better control and returns.

Use diversified or conservative hybrid funds.

Nomination, Will, and Documentation – Essential Steps

After investing, update nomination for every investment.

Keep your children or trusted person as nominee.

If you have other legal heirs, write a Will.

Mention investment ownership and wishes clearly.

Keep records of gifting to spouse documented.

Maintain a central file with account statements.

Share access and passwords in a secure way.

Emergency Funds and Health Protection

Keep at least 6 months of expenses as liquid funds.

Split across both of you.

Maintain health insurance with proper sum insured.

Don’t depend only on pension.

Investments should support monthly income smoothly.

Suggested Portfolio Allocation Approach

You can consider dividing retirement corpus as below:

30% in debt mutual funds (for 3 to 5 years needs)

25% in hybrid mutual funds (for long-term growth)

20% in SCSS, with both names in separate accounts

10% in liquid funds for emergency

10% in conservative equity mutual funds (optional)

5% in FD or monthly income scheme

This is flexible based on your comfort level.

Make sure both of you invest separately in your own names.

Why This Plan Makes Financial Sense for Senior Couples

Promotes financial equality and dignity

Avoids future legal complications

Simplifies access to funds during medical events

Gives both partners confidence and clarity

Allows independent financial growth

Creates dual reporting for tax and compliance

Easier succession planning and peace of mind

Improves financial literacy of non-earning spouse

What You Must Avoid

Avoid keeping wife always as second holder only

Avoid mixing your incomes in one account

Don’t invest large sums in only one name

Don’t depend on children for financial access later

Don’t lock all money in long-term instruments

Finally

Your idea is financially and emotionally correct.

50% ownership each gives strength and balance.

Ensure documentation and clarity in all transactions.

Continue filing tax returns jointly and truthfully.

Choose low-risk, income-generating mutual fund options.

Use a Certified Financial Planner to set up everything.

Review every year with spouse for understanding.

Build not just wealth, but independence and peace of mind.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

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