A joint bank account is an account that is shared by two or more people. These accounts are used by the closed inner circle of people like relatives, wife/husband, business partners where there is an element of trust within the members. Anyone who has access to a joint bank account can do the transactions. In joint banking, individuals collectively or solely who have access to the account are responsible for the operation of the account.
Opening Joint account in UAE
Expats who are the residents should provide passport copy, work permit, residential visa, Emirates ID copy, salary letter, No objection certificate from employer or even from the sponsor.
You can get the benefits of two debit cards and two ‘cheque books’ when you open a joint account. Anyone of the joint account holders can issue a cheque or make any purchases. Account-holders can do transactions such as depositing funds into an account or withdrawing funds from an account. The fund amount in the joint account belongs to the owners of the account holders.
Owner of money in the joint account
All the account holders in the joint account are the owners of the money in that account. There can be two or more persons as owners of joint accounts. Every owner has the right to withdraw money from the account. In some banks, one person is named as the primary account holder. This will not take away the right of joint account holders as every account holder has the right to the money in the joint account.
Joint account operation in the UAE
All the joint account holders or any of the account holders can deposit money into the account or withdraw money from the account. The cheque signing authority remains with the single person or two or more persons as agreed upon. The account holder’s names are printed on the cheques along with the address and contact number. All the parties in a joint account can claim the right on the account and its assets.
In case of the death of the joint account holder and any discrepancy arises, the account gets frozen. The expenses for liquidation and outstanding amounts will be paid from the account. Sometimes even without the notification to the other joint account holders the account may be frozen.
The deceased person’s share in the joint account is suspended. The option of cash withdrawal will be revoked by the bank. If an account holder is a married person and in his will, he/she can mention inheriting the funds in the account. If there is no will, the court will give the decision to end the freeze on the account. The provisions of the law will apply and the distribution of legal inheritance will be done accordingly.
Advantages and disadvantages of Joint Account
Advantages of Joint account
If you are married and staying with your spouse or if you are into business and have dealings with someone you trust. You can open joint accounts and get the benefits. Joint banking can make it easier for you to do the following.
- Sharing expenses
- Paying bills collectively
- Paying a mortgage or rent collectively
- Budgeting collective bills and sharing expenses
With a joint bank account, you can reduce the financial burden as the expenses will be shared. If the couple has a joint account then savings can be increased and meeting financial obligations will be easy and straightforward. The account holders can contribute to the fund amount and get the benefits on accumulated interests.
After the month’s expenses, any balance remaining in the account can be used for emergency purposes. You can transfer funds to the high-interest savings account to earn higher returns on the savings. The success of the relationship between the members determines the success of the joint account. The higher fund amount, honest operations in approvals and disbursements of funds.
Click here for How to manage multiple bank accounts?
Disadvantages of Joint Account
Frozen account
When somebody dies in the UAE, the accounts are frozen to clear all their financial debts. Until all the financial debts are cleared the account remains frozen and the same logic applies even to the joint accounts. The law in UAE states that a joint account is one that is equally owned by all the members. Unless agreed and specified to operate differently.
Conditions of ‘Either’ or ‘And’ Account
The joint bank account is operated with conditions of either or and relationship. It means that in a relationship the instructions should be agreed with both parties. In an ‘either’ condition account, any of the joint account holder signatories can be accepted in the operational procedures.
Non-relative in a joint account
The official website of the UAE government says that people can open joint accounts with any family member. This family member should be a resident of the UAE. However, some banks in the UAE allow non-relatives to open joint accounts. If it is a family member there is a greater sense of security and privacy. If the account holder is not a family member, then it is very difficult to manage. There is a lack of trust, no sense of responsibility, and security. Everyone will not be willing to share their earnings and spendings with their spouse. It is even more difficult to share financial matters with non-relatives through a joint account.
Impact of Divorce
If something goes wrong between the couple and they have a joint account then allocation and distribution will be difficult. In the UAE, there is no family law for the coverage of the allocation of the property after the divorce.
The assumption under the law says that all the members are jointly the owners of the property or the cash asset. This includes any property or gold held jointly together, the joint account holders have an equal share of the property.
Inheritances and will
If a man dies in the UAE, then his wife is not primarily responsible to get money from the joint account. Unless it is clearly written in the will, the money will not be entitled to his wife. If that man writes a will then the amount in a joint account will be given to his wife. Otherwise, the Sharia law will be applicable and all the funds in a joint account will be distributed to the male’s relatives.
Related: Things to consider while writing your will
Take away
Having a joint account will reduce the financial burden as it makes a good corpus fund amount. Apart from the advantages, if you want to ensure peace of mind to your spouse, then keep funds in an offshore account. Draw up a will which gives surety that money will be distributed only to the people you wanted to give them.
About the author
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.
