Points to keep in mind when jointly holding financial assets

Capitalstars Investment Advisor

When spouses own assets jointly
Other than sharing their joys and sorrows, a couple could also be owning financial assets together jointly. Such assets could include bank accounts, shares, bonds, mutual funds, FDs, insurance policies, post office schemes etc. When husband and wife own assets jointly, they are deemed by the law to have equal ownership rights.

Starting the process
The application for account opening should be jointly made and mode of operation should be clearly specified in the form. KYC documents of both holders are required to be submitted and the application too needs to be signed by both.

Account operation
In case of a joint account– whether a bank or investment account- either spouse can transact and operate if the mode of operation specified is ‘either or survivor’. In case the mode chosen is ‘jointly’, both have to sign each time to operate it or carry out transactions.

Death of a spouse
In the event of death of a spouse, the surviving holder has superior rights compared to the rights of nominees. For this, an application of the surviving spouse, notarised death certificate, FIR copy (in some cases) and KYC documents are required. The surviving spouse can continue to own the asset after the spouse’s demise and is free to dispose them off as and when he/she wants.

Tax aspects
Any gift given to a spouse is exempt from tax. However, if the spouse has no income and the gift is an income generating asset, such income may be clubbed with that of the spouse who gifted it, under clubbing provisions. If both husband and wife wish to claim tax benefit for their joint investments, they may have to enter into a simple agreement, dividing proportionate ownership for housing loan repayment to reflect in their respective tax returns.

Points to note

1. Though the financial asset is owned jointly, all payments-redemption proceeds, dividend, communication etc are made to the first holder.

2. In the absence of a specific agreement indicating shares of each spouse, jointly owned assets are usually deemed to be owned equally.