Joints Account , Nomination or Will – Which one to use ?

There are 3 ways one can pass on his wealth to someone – joint accounts, nomination and Will. A lot of people do not know which one is more powerful than other and when to use which one. Today lets discuss few points about joint accounts, nominations and will and some scenarios which will make them clear. Also below is a good video on Wills in case you want to watch.

3 mistakes which investors make

1. Not understanding what a joint account means

If you want to make sure that after your death, your wife operates the account and should be the sole owner of the account then don’t just make her the nominee, better make her a joint account holder in the bank account itself. If you choose “either or survivor” mode, she will be able to transact and do things along with you. But if you want to make sure that she can only operate and take charge once you are not around, then choose “former or survivor” mode, so she will not be able to transact and own anything till you are alive, but once you are no more, she just becomes the owner, without any hassles. This is a better way to give control to someone after your death and more powerful and simple than making a WILL or leaving it on the mercy of fate. You can make some person joint holder in bank accounts, mutual funds, FD’s or real estate properties.

2. Forgetting about old joint holders

A lot of people have joint accounts with their father, mother, brother etc etc years back, but now they want to pass on their wealth to their children/wife on their death, so they put their names in Nominee and also write a WILL (for full proof documentation), but once they die, the nomination and WILL be of no use, because the bank account is not dormant, it’s still alive with a legitimate owner and that will be the person who was the joint owner. You might have opened that bank account long back before marriage with your brother or father as joint holder and now forgot about this, but they are next legitimate owner of the bank account (or anything else). Note that nominations are useful to pass on the control only when no one is to claim it and WILL are to transfer the rights to someone after the owner is dead, but incase a joint account is there, the control can be passed only on the death of both the holders , not just the primary or secondary holder.

3. Not changing Old nominations and WILL

A lot of people do not change the nominations of their bank accounts, mutual funds, life insurance policies due to lazyness, someone else is on the nominee list, but they want to transfer the asset to some one else. A lot of people think that making a WILL is the final solution, but in real life, there can be complications. What if nominee and the person mentioned in a WILL are different ? The nominee can take out the cash from bank or do some transaction ? Then the legal owner will have to run from pillers to post to claim that money back and do all the legal work . See this classic issue on forgetting about the WILL

Hi , I am facing a big issue .. My husband had written a WILL long back stating that all the wealth should go to his brother after his death, but this happened years back, when we were having a lot of issues in marriage and fights, but after that everything was fine and things were on track. But seems like my husband never wrote another WILL after that and didnt change the WILL.  He died recently in an accident and now his brother has claimed all our property and bank balance because of that WILL . What can I do ?

Truely speaking , This lady cant do anything … her husband was ignorant about these things and now she will pay for his mistakes !

Some best practices

  • If you are 100% sure that your wealth should go to some specific person, always have a joint account with that person with you as primary person.
  • Make sure your nominee should be the same person you want to pass on some policy proceeds or property, It does not make sense to say in WILL that your wealth should go to A , but in nominee the name mentioned is B .
  • If you have opened any accounts/properties/mutual funds/policies long back , its a good idea to revisit it and see that the nominee name is appearing and is consistent with what you want it to be .

Joint Accounts, Nomination and Wills are all ways to pass on your wealth to someone else once you die, so it is very important that you structure these in the best possible manner. Have consistency in all these 3 things. If you pass on your money to a person better open account or buy the asset along as joint owner, make sure you put his name as nominee and also make sure that the WILL is written with clear directions.

146 CommentsAdd Comment

  1. Aman

    My father opend fd and account in SBBJ, rajasthan in our village long back, we settled in bihar. Now father is no more he didnt worte any will and account dont have any nominee, when my mom went to SBBJ branch for FD settelment and account closing, Bank is refusing to settel down claim..asking my mom to show her and my father local address proof and local id of that village where my father holds account. We have death certificate of Bihar state, voter id of bihar, pan card, ration card.
    Isn’t death certificate of any other state of id proofs of any state is valid in all over india. is there any kind of rules that one should have to furnish seprate ids for ever states in india. Please suggest regarding this, can we take any action on bank regarding this

    • Hi Aman

      Any state death certificate should be valid. What they actually need is a legal heir certificate. Truly speaking you guys will be facing a lot of issues in this and will have to run around a lot for documents.

  2. sunny tuli

    Hi i opened a joint account with first name as mine n sevond name as my wife. I want to change her as first name n me as second ….wil it b possible…..? How

  3. soms

    I have a joint account with my wife. i have given nominations for my depsits .I have also made a will and mentioned that the deposits can be claimed by my children as nominees only after the death of my wife and my wife should enjoy as long as she lives in othe words with full rights on all the deposits. Is this right?

  4. Harman

    Hi, the article is realy informative. I have a further question, What is the staus of FD’s held jointly in the event of death of first holder.

    1. Can the FD be continued by the second holder/survivor if the second holder desires.
    2. If Answer to 1 is “yes”, then will the ownership FD change – as the ownership for purpose of tax liability is of First holder.
    3. What is the tax implication , i mean who will be liable for tax

  5. deepak singh

    Hallo dearest Mr. Chauhan,
    Thanks for your quick reply mistakenly sent to me, as there is no case of death and lega heirs as yet. There is dispute among the joint account holders. It has been asked to the bank for the payment on maturity by me and one more depositor of this account, so the bank considors it as disputed. So please guide me as per problem .
    Thanks.

  6. deepak singh

    Hallo everybody,
    I am facing a problem with sbi for not getting encashed my FD on maturity date, as it is joint account with other Family members and an other depositor has also asked the bank to give him the payment. Now bank watches this as disputed account and has not paid to anybody and just renewed it to for one more year as fixed deposit.
    My question is : Is this not possible to make the equal payment to all the depositors? Bank advised me to go to the court which i want to avoid as I am not good with my health and wealth to invest in Courts and I stay abroad, I cannot come to india so often. Please tell me the legal and easiest way out.
    Thanks in anticpation

      • deepak singh

        Mr. Chauhan,
        Would you please explain it little in Detail, why not, although it has the Mandate of “Either or Survivor” which law applies here. As I stay abroa and am not good with my health and I dio not have anybody in india and do not know indian judiciary, would you please guide me. My case is in dehradun, india.
        I will be grateful to you and any of the reader, who can guide me the right way
        out.
        Thanks.

        • Once the deposit holder dies, it has to be given to the legal heirs . Now you know you are legal heir, but in the court, you have to prove that .. You need to bring all the documents there ..

          Contact a good lawyer in Dehradun .. I suggest that !

          Manish

  7. SD Gupta

    I am 70 years old . I had a “single” operation saving’s account in Bank of Baroda which I changed the mode of operation to “Either or Survivor” mode with my Grandson. And i made fixed deposit of all my life saving in the “Either or Survivor” mode with my grandson.

    I want to revert my changes of “Either or Survior” in single mode both for my saving’s a/c and their fixed deposit receipts.

    I asked the manager for the same but he said I have to take consent from my grandson first in order to remove his name from my saving a/c.

    Please someone enlighten me how to remove his name from my saving a/c.

    I am willing to remove his name from account but my grandson do not want to do so.

    I want to remove his name from my account so that I can add my granddaughter name as “Either or Survivor” so that after my death she become owner of my entire life savings.

    HOW TO REVERT MY MISTAKE?

  8. Dhev

    Hi,
    I need a clarification, My (late) father and I had a joint account as former or suvivor, but another third person had produced a will stating that the money in the account belongs to him as per the will, so the bank people kept the account and loan against the account as it is- stating that there is a dispute.
    How to go about this, Does the will stand stronger or the joint account?
    kindly help.
    Thanks.

  9. neelim dutta

    hi,manish – i’m a regular reader of jagoinvestor and i’m really enriched wih your updates on financial planning.i’ve a querry i.e. me and my wife have salaried savings acc.at sbi.now,we are considering of having a joint acc.to plan our day today expenditures.can you please suggest how do we go about in opening the joint acc.thanking you,regards – neelim.

  10. Lokesh

    Excellent article…i am inclined to now convert my single holding accounts.
    Has anyone converted their single account to Joint with ICICI? If yes:

    1) Is there any issue with ECS/auto-debits/auto-credits/SIs that are already setup?
    2) Any issues with linked Debit/Credit cards?
    3) Is existing cheque book (single holder name printed on cheque leaves) fine or needs to be replaced?

    Planning to convert my salary account, but want to make sure i dont mess up the current setup.

  11. vijayaphadnis

    My father-in-law and mother-in-law have a joint fixed deposit account in State bank of India. Two months back, my father-in-law expired. The bank manager is saying that he will terminate the account and give a payorder to the nominee (incidentally my brother in law is the nominee). My mother-in-law wants to continue the account in her name as she does not want to lose the interest by closing the account prematurely. What is the significance of a joint account, if the second a/c holder does not have any say?
    In a joint account with a nominee, who gets the right – joint a/c holder or the nominee?

  12. Nanda

    My wife passed away recently. Although most of her insurance policy had me as the nominee. She had not mentioned the nominee in her bank account and for some of the MF’s she was holding. What will be the procedure to be followed for getting the same transferred.

  13. Naval Shah

    Dear manish,

    can i add my wife name as a nominee on my salary account???

    as i have discussed with axis bank,they told me that it is possible for you to add her name as nominee but at time of receiving PF i am facing lot of issue due to jont account.

    so what to do..

  14. sam

    Hello Manish
    I have been an avid reader of your blog for quite some time and seek your advice on a rather strange matter. My mother has a few fixed deposits jointly with my father , who is deceased now. These term deposits are in either or survivor mode. My mother wishes to prematurely withdraw these term deposits , however the bank is asking for indemnity , in the form of form16/bank statement etc of two other individuals who are not family members. Which means I cannot provide any indemnity in this matter nor am I allowed to write a no objection.
    I fail to understand the point in having fd’s in either or survivor mode.
    Here is a note and circular from RBI in such matters , explaining clearly either or survivor clause and premature withdrawals :

    http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7523&Mode=0

    I am completely at a loss here. I do not understand how I can ask for the form 16 and bank statement of a 3rd party ( not a family member) , so that my mother can withdraw her own money ?? !!

    please advice
    regards
    sam

    • Is it PSU bank ? If yes, check using RTI what are the rules

      If its a private bank, tell the manager that you are complaining to Banking ombudsman on this , and if they care of explain they shoudl show you the RBI rules on this matter . I think bank is just trying to create hurdles so that the money lies in bank and they make use of it !

    • JUst realised this point from the circular

      2. In this connection, it is clarified that if fixed/term deposit accounts are opened with operating instructions ‘Either or Survivor’, the signatures of both the depositors need not be obtained for payment of the amount of the deposits on maturity. However, the signatures of both the depositors may have to be obtained, in case the deposit is to be paid before maturity. If the operating instruction is ‘Either or Survivor’ and one of the depositors expires before the maturity, no pre-payment of the fixed/term deposit may be allowed without the concurrence of the legal heirs of the deceased joint holder. This, however, would not stand in the way of making payment to the survivor on maturity.

      It says that if its a premature withdrawal , then bank is suppose to make sure its going to LEGAL HEIR , not in your mind and world, you are so sure that you are legal heirs, but it does not work that way , bank needs PROOF , so either being a WILL saying that your father wanted to give it to the mother, or if will is not present , then succession certificate is required .

      I think you are clear on this point , bank is moving as per RBI notification only , you got my point ?

      Manish

  15. amarjeet

    I am amarjeet my father holds an a/c in state bank of patiyala for which he nominated my mother and we wish to continue the same a/c in my mother is name due to our emotional attachment is it possible that my mother can use the same a/c as bank manager is forcing us to cease it

  16. Sanghmitra

    Okies…
    btw..this discussion thread is very good…Looking fwd to more on ‘nomination part only’ as for different products.

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