Different types of joint accounts

A joint savings account comes with operating options such as either or survivor, anyone or survivor, former or survivor and latter or survivor. These terms decide how you can operate the account and what happens to the money in case of death of an account holder.

Either or survivor: If you select this option, then either of the account holders can operate the account. For instance, if a brother and sister hold an either or survivor joint account, both can operate it.

Former or survivor: If you have picked this option, only the first account holder will be able to operate the account. For example, if a husband and wife have a joint account, and the wife is the first account holder, only she will be able to operate it.

Latter or survivor: In this option, only the second account holder can operate the account. Say, in the above example, the couple opts for the latter or survivor option. Then the husband, who is the second account holder, will be able to operate the account, and not the wife.

If there are multiple account holders, then banks offer another option-anyone or survivor. Here, all account holders can operate the account.

Things to remember

What happens to the money when an account holder dies? According an RBI notification, in case of death of one of the joint account holders, the survivor will hold the money only as a trustee of the legal heirs unless she herself is the legal heir. "Even though payment to the survivor will confer a valid discharge to the bank, the survivor will, however, hold the money only as trustee for the legal heirs (who may include the survivor as well) unless she is the sole beneficial owner of the balance in the account or the sole legal heir of the deceased," it said.

In case the legal heir of the deceased lays a claim to the amount in the account, the survivor is the person to whom the bank makes the payment. So unless the bank is restrained by an order of a court, it can make the payment to the survivors named in the account. In case of joint accounts where the terms do not indicate that the amount due should go to the survivor, in such a situation the money will go to the survivor and legal heirs of the deceased joint account holder.