Joint Account In Bank! Not Always A Good Idea!

I know, as a banker I have to be careful of what I am saying here. Joint accounts in banks may not always give the account holders what they expect.

In fact the legal protection under ‘negotiable instruments act’ gives the survivor access to funds, when the accounts are opened with condition ‘E Or S’ which is ‘either or survivor’.

Two people who trust each other and also trust the bank open joint accounts with E or S instruction. They enjoy the advantages like anyone can operate the account etc etc.

But there will be a time when one of them is no more and the surviving person is to do many things which include a decent funeral of the diseased.

The money is legally available to the Survivor in the bank as the account is E or S. And the Survivor should be in a position to access the funds.

But, wait! What does the banks (at least in India) do! They block the account and ask the Survivor to produce the death certificate. Some of the banks even may go further and ask for a succession certificate to complete their documentation.

Backed with some banking qualifications, I can say that E or S under negotiable instruments act gives the survivor in the joint account the right to use the money any which way desired.

But no, the banks ask for death certificate which can take a couple of days or more to get. And the survivor has to find money for the funeral, elsewhere.

I know this from experience where i was executor of a will. And i asked some Bank branch managers and they agree about the condition for death certificate. But they are happy to block the account on just hearing about the death.

So then, it’s a good idea to open individual accounts in each name and fund them at least to cover the funeral expenses.

I wish I am wrong about joint accounts and E or S, but it doesn’t look like.

Joint Account In Bank! Not Always A Good Idea!