Joint Account

What is a Joint Account?

A joint account is a type of bank or brokerage account that is shared by two or multiple holders. It is generally opened for purposes for sharing payment responsibilities, deposits or savings for a common purpose. Most often, joint holders of such accounts are related or known individuals, like brothers, spouses or business partners. It is purely a choice made by them to have a common transaction account with a bank. It based on a level of trust they share with one another as it typically allows both holders to access funds within it. The holders are both responsible for how the account is handled. One may become the sole beneficiary on the death of the joint holder. Holders may be individuals or firms, as permitted by state laws.

• A joint account is a shared banking or brokerage account used by two or more holders/ beneficiaries.
• All the account holders have equal responsibilities and access to funds available in the joint account.
• Authentication of all transactions may not need the agreement of all holders. If one holder passes away, the remaining holders can continue to jointly hold the account.

Frequently Asked Questions (FAQs)

How to Open a Joint Account?

Individuals decide to open a joint account if they wish to take advantages of features that may not be available to an individual account holder.

Opening a joint account is not very different from opening an individual account. All the parties who agree to become holders need to provide personal information like name, address etc. They also need to submit identification documents like identity proofs, address proofs or age proofs.

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Joint accounts can also be opened online nowadays. All KYC formalities are updated online. Accounts offer online transaction facilities. It is a much quicker and easier option. Once the initial deposit is provided, all relevant account statements are available online. The entire online account is protected by passwords.

It is possible to add one or more holders to an individuals’ existing account and convert it into a joint account.  All the co-owners will then have access to funds. Once the account is set up, holders can decide how to manage and monitor funds in it. All procedures need to be agreed upon, including signatories and the person who will receive alerts.

What is a Joint Investment Account?

Investing with another individual using a single access account is called a joint investment account. It is more often an investment account of a minor, where the guardian is the joint account holder. Essentially, the number of funds available for exposure increases. The bigger the corpus one has for investments, the bigger returns it will generate. It has the added advantage of easier management as it can be jointly managed using the expertise of both. Costs are reduced to individuals, and more assets are accessible as investment options.

Generally, aging individuals prefer to set up joint accounts with a trusted family member. It allows a trusted individual from their family to take care of financial matters. Aged individuals do not have to keep track of their investments anymore.

It allows sharing control and benefits of one’s investment assets.

What are the features of a Joint Account?

A joint account has the following characteristics as compared to an individual account-

• The control in a Joint account doesn’t lie in the hands of one individual but is with all holders.
• Access to funds for withdrawal is to all the joint holders.
• There is a joint cheque book available, along with one for each holder.
• Similarly, cards are also issued against it can make purchases using it.
• There is no distinction between money deposited by one person or the other.
• Handling charges and any other accrued expenses are shared by holders.
• The personal information of all owners is linked to the account

What are the rights and responsibilities of Joint Holders?

The holders of a Joint account share the following rights and responsibilities-

• The Holders share Joint withdrawal and transaction rights.
• The survivor clause entitles one holder all the rights if another passes away, especially on brokerage accounts.
• Any interest accrued is shared by all holders.
• All charges like commissions or handling charges are to be shared by all holders.
• All holders are collectively and individually responsible for defaults.
• A trustee of a minor joint holder shares all rights and responsibilities on his/her behalf.

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What are the benefits of a Joint Account?

A joint account offers the following benefits-

• Minimum balance requirements are not to be met by a single individual; pooling in the needed money is allowed.
• Joint accounts often offer features like fee waivers or a higher interest and other rewards.
• Accessing a larger amount is possible for all holders.
• There is the convenience of holding money earned by all at a commonplace.
• Helpful to fulfil joint responsibilities, like running a business.
• Responsibilities are divided amongst multiple people.
• The joint account helps manage finances easily.
• Bigger loans can be taken on behalf of a joint account.
• Increased insurance coverage is also available.

What are the disadvantages of a Joint Account?

Following are the disadvantages accruing to Joint Accounts

• Difficult to control expenses as access provided to all holders.
• Default by one holder is to be borne by all other holders.
• Charges on overdrafts by one holder have to be borne by all owners.
• Negative balances and extraordinary charges are very likely.
• Problems and conflicts amongst holder are unavoidable.
• It has a higher risk involved as compared to a personal account.