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Joints Accounts-Nominations-Will, Best Use of It?

There are 3 ways one can pass on his wealth to someone – joint accounts, nominations and Will. A lot of people do not know which one is more powerful than other and when to use which one. Today let’s discuss a 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.

joints-accounts

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 the 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 in case 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 laziness, someone else is on the nominee list, but they want to transfer the asset to someone else. A lot of people think that making a WILL is the final solution, but in real life, there can be complications. What if the 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 didn’t 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 ?

Truly 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, it’s 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.

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