An HUF is a family which consists of all male lineal descendants from a common ancestor, and also the spouses and unmarried daughters of the descendants. While the male members are called coparceners, the females are referred to as members. The senior-most male member is called the karta, and a typical HUF consists of a karta, his sons, grandsons, and great-grandsons (all of whom are coparceners), and their wives and unmarried daughters (all of whom are members). Even Jain, Buddhist and Sikh families can have HUFs. An HUF is recognized as a separate assessable entity under the Income Tax Act, 1961.

An HUF automatically comes into existence as soon as a child is born to a Hindu couple.So a new HUF can come into existence after birth of a child in the family whether it is a boy or a girl. However, a married Hindu couple itself can constitute as an HUF if any ancestral property is received by it on partition. Once the HUF is created, a bank account should be created in the name of the HUF. After that, a PAN number will also be generated in the name of HUF.It is always advisable to have a written agreement as the Banks and Income Tax Dept ask for the HUF Deed.