The mode of operating a bank account is important and the instructions given at the time of opening it will be final till the account exists. The mode assumes significance as future access can be restricted or some problems may arise while using the account in case of death of the account holder.
One of the best ways to protect the bank account is through the joint operation mode. As the name suggests, joint operation is not difficult to understand. In case of a single holder operating a bank account, there is only one person in whose name the account stands and due to this reason, the individual operates it without any interference from anyone.
When it comes to a joint operation, there is more than one person in whose name the account stands. Even within the category of joint account there has to be clarity on the mode of operation. If the mode of operation says only joint, then all of them would need to sign at the appropriate place in order to complete the requirement of operating the account.
The presence of more than one person would serve as a safeguard whereby the account cannot be misused.
Also, the joint account holders can ensure that the operation of the account by either one of them or by an unknown person is restricted as the signature of all the holders will be needed.
There is another variation of the joint holding that is actually used very frequently and the final objective is slightly different.
The variation is called joint operation by either or survivor. This is a technical term but is very easy to understand. This means that when both of the holders are not present or if there are multiple holders then when all the holders are not present, either of the holders can operate the account.
For example if an account is held by person A and person B, then the either or survivor clause will mean that on their own person A can operate the account and so can person B. This ensures that the transaction is completed smoothly and efficiently without the need for both of them.
In the case of death of one of the holders then there is an option given -- the survivor can operate the account. This will also prevent the account from being locked as the joint holder will be able to access the account and use the funds as needed.
(The writer is a Certified Financial Planner)