IS A JOINT ACCOUNT RIGHT FOR YOU?
IT DOES HAVE BENEFITS, BUT MUTUAL TRUST IS KEY
Ajoint bank account, as the name suggests, allows multiple people access, and the convenience of operating it jointly. But before one decides to open a joint account, it is important to be clear about a few things: how does it operate? Who all can open a joint account? What are the tax liabilities for joint holders? Read on to find out a few facts about joint bank accounts.
FACTS ABOUT JOINT BANK ACCOUNT:
Account holders can access/manage it jointly. It can be opened for savings, recurring deposits and fixed deposits. At the time of opening such an account, each of the joint holders needs to sign a contract detailing the terms and conditions of the account.
A primary account holder, who is the main user of the account, is responsible for the account, but can add secondary account holders later to operate it.
A couple can go for a joint account to share expenses jointly or make joint payments such as loan EMIs. The tax burden will be according to income. However, having a joint account makes sense only if the account holders trust each other.
TYPES OF JOINT ACCOUNT
‘Either or Survivor’ In this kind of account, the survivor can operate it even after the death of one of the account holders. However, only after the survivor’s death can the nominee get the money. ‘Former or Survivor’ Only the primary holder can operate the account, the secondary holder can operate it only after the death of the primary holder ‘Latter or Survivor’ Only the secondary account holder can access and operate the account, the primary holder can do so only on the secondary account holder’s death Joint All account holders have to sign for any transaction. If any of the holders dies, the account becomes inoperable, the balance is payable to the survivor.
WHEN CAN JOINT HOLDERS BE ADDED/ DELETED?
Joint holders can be added while opening the bank account, or later. To convert an existing single account into a joint or Either or Survivor (E or S) account, a letter from the original account holder, attesting the sample signature of the new holder, has to be attached to the account opening form. At the request of all the joint account holders, the bank may allow the addition or deletion of the name of a joint account holder.
If any of the holders wants to discontinue the joint account and convert it into a single account, then he or she must obtain the written permission of all the joint account holders. Only after this permission has been submitted can they open a single account.