Can Legal Heirs Claim Shares In Joint Accounts?

Joint accounts are common in both personal and business financial planning. The primary characteristic of a joint account is that multiple individuals have access to and ownership of the account. When the primary account holder passes away, the question of how the account balance is distributed arises. Legal heirs may be entitled to claim shares in joint accounts, but the manner of this claim depends on the type of joint account and the specific terms of the account.

Can Legal Heirs Claim Shares in Joint Accounts?

Types of Joint Accounts:

Joint Tenancy with Right of Survivorship (JTWROS):

In this type of joint account, the surviving account holder automatically inherits the entire balance upon the death of the other account holder. This means that legal heirs cannot claim the deceased’s share since the survivor(s) have full control over the account.

Tenancy in Common:

This type of joint account may allow the deceased’s share to pass to their heirs, rather than to the surviving account holders. In this case, legal heirs may be entitled to a portion of the account, based on the deceased's share.

Joint Account with Nomination:

If a nominee is named for the joint account, the nominee may claim the entire balance upon the account holder’s death, depending on the bank’s policies and applicable laws. Legal heirs may still have a claim, but it could be subject to legal challenges or the will of the deceased.

Rights of Legal Heirs:

If the joint account is held under JTWROS, the surviving account holder is typically the only person entitled to the entire balance. Legal heirs cannot claim a share of the account in this situation, unless there are other conditions, such as a will specifying otherwise.

If the joint account is held as Tenancy in Common, the deceased’s share may pass on to their legal heirs, subject to the account’s terms. Legal heirs may need to provide a death certificate and prove their legal heirship before making any claims to the account.

In cases where there is a nominee, the legal heirs might have a claim to the funds if the nominee is not the legal heir, depending on local inheritance laws and the terms of the will or account agreement.

Role of Nomination:

Many joint accounts allow the account holder to designate a nominee who will inherit the account balance upon their death. However, a nominee does not have ownership rights to the account during the account holder's lifetime. If the account holder passes away, the nominee steps in to claim the account balance, subject to any applicable succession laws.

In the absence of a nomination, the balance of the account will be treated as part of the deceased's estate and will be distributed according to the deceased’s will or, if there is no will, in accordance with the laws of succession.

Bank’s Role in Inheritance:

Upon the death of an account holder, banks typically require the legal heirs or surviving joint account holders to submit a death certificate, proof of identity, and legal heirship documentation (e.g., a succession certificate or legal heir certificate).

The process may vary by bank and jurisdiction, so heirs should be prepared to follow the specific instructions provided by the bank to claim the funds.

Challenges to the Claim:

Disputes may arise in cases where the joint account holder dies, and multiple individuals (such as children, spouses, or other relatives) claim the funds. Legal heirs may challenge the distribution of funds, especially if there is a question of whether the account was held under JTWROS or Tenancy in Common, or if the nominee was not legally entitled to the funds.

In such cases, the probate process may be necessary to resolve the dispute and determine the rightful heirs to the account.

Example

Ravi and his wife, Sunita, held a joint account under the right of survivorship (JTWROS) at a bank. When Ravi passed away, Sunita automatically inherited the entire balance of the account. However, Ravi’s children from a previous marriage believed they should receive a portion of the account balance. Since the account was held under JTWROS, Sunita had full legal ownership of the account funds, and the children had no claim to the account.

In another scenario, Arjun held a joint account with his brother, Nitin, under Tenancy in Common. When Arjun passed away, his children were able to claim his share of the account after providing proof of their legal heirship to the bank.

Conclusion:

The ability of legal heirs to claim shares in joint accounts depends largely on the type of joint account and the specific terms of the account agreement. In cases where the account is held as Joint Tenancy with Right of Survivorship, the surviving account holder typically inherits the full balance. However, if the account is held under Tenancy in Common or there is a nomination involved, legal heirs may be entitled to a share. It’s important for legal heirs to understand the nature of the joint account and to be aware of the documentation required by the bank to claim the funds.