Issues between legal heirs

Let us give an example. If two sons are abroad and the mother has made the third son, the joint holder of a big FD, on her death what happens?

If the two other legal heirs are not even aware of the deposits, they may not end-up getting their share.

They may need an order from the Court, by which time the bank would have paid the second holder.

Maybe used for recovery

If the second holder goes bankrupt, a bank deposit maybe used to recover and pay for the debts.

What if the second holder has not contributed towards such an FD?

Hassles with changing nomination

Say you have opened a joint account with your brother who is settled abroad. In order to change the nominee you would have to get his signature.

Change of nominee requires the signature of all the holders of the deposits. This can be painstaking at times.

Taxation clarity

Let us take the case of taxation on a cumulative fixed deposit.

The entire interest income is taxed on the first holder. If the first holder dies, the second holder inherits the entire FD amount without having paid a penny in taxes on the interest income.

He gets the principle amounts along with interest.

Various other relationship issues

There have often been joint account issues in between aged parents and children, couples in a live-in relationship, couples filing for divorce etc.

Does this mean you do not opt for joint account?

No, the advantages of a joint account far outweigh that of a single account. Though, adding a nomination to a single account is not a bad idea.

We have highlighted just risks

All of the mentioned reasons may not be applicable to all individuals. Your accounts must either have a joint holder or a nominee or even both.