Rs 0 tax today, big trouble tomorrow: What seniors ignore about joint account withdrawals
A joint bank account may seem like a smart way for Indian seniors to manage money with their children or caregivers, but it comes with hidden legal and financial risks. From losing control over funds to overriding your will, one wrong move can jeopardise your entire life savings.
- Jul 22, 2025,
- Updated Jul 22, 2025 2:34 PM IST
As senior citizens look for ways to simplify money management in their later years, many choose to open joint bank accounts with children or caregivers. However, this well-meaning step can expose them to serious legal and financial risks if not handled carefully, warns CA Sakchi Jain.
“Adding a child to your account in ‘Either-or-Survivor’ mode gives them the power to withdraw every rupee, even without your consent,” says Jain. While most family members act with good intentions, access to funds can become a source of conflict, especially after the account holder’s death. In such cases, the joint holder automatically becomes the sole owner of the funds, potentially bypassing the senior’s will and sparking inheritance disputes.
One of the biggest risks, she adds, is misuse — knowingly or unknowingly. “A child might withdraw money during a personal crisis or set up automatic payments from the account assuming they’re helping. But these actions could drain the senior’s savings or even cause tax issues,” Jain explains.
Taxes on joint accounts
From a taxation perspective, the primary holder of the joint account is liable for tax on the interest earned, unless contributions from multiple parties are clearly documented. Without such clarity, seniors may end up facing tax scrutiny they weren’t prepared for. “If withdrawals are questioned later by the Income Tax Department, there should be clear proof whether they were gifts, loans, or personal expenses,” says Jain.
Jain urges seniors to stay vigilant for red flags, such as unexplained large withdrawals, account changes without consent, or alterations in nominee details. “Even if you trust the person completely, monitor your account regularly and keep all alerts switched on,” she advises.
As for inheritance planning, she recommends using nominees instead of joint holders. “A nominee can only claim funds after your death and cannot operate the account while you’re alive. This adds a layer of safety and control,” she explains.
For seniors who need help managing their money, a Power of Attorney (POA) is a safer alternative. It gives a trusted person the right to act on their behalf, without surrendering ownership. “It’s better than joint ownership because it preserves your authority and protects your wealth,” Jain says.
What to keep in mind
Before opening a joint account, seniors should understand the two operating modes: ‘Either-or-Survivor’ (where either party can operate it) and ‘Joint’ mode (where both signatures are required). “Choose wisely based on your comfort level, and have a clear conversation with the other person about usage terms,” she adds.
She also advises seniors to keep digital and physical records of all transactions and changes, inform multiple family members of account arrangements, and consult a financial advisor or lawyer when in doubt. “Planning ahead isn’t just smart — it’s essential,” Jain says. “Your money should serve you, not become a source of stress or conflict.”
In conclusion, Jain stresses that financial independence is key to secure aging. With proper planning, documentation, and awareness, seniors can protect their wealth and their peace of mind.
As senior citizens look for ways to simplify money management in their later years, many choose to open joint bank accounts with children or caregivers. However, this well-meaning step can expose them to serious legal and financial risks if not handled carefully, warns CA Sakchi Jain.
“Adding a child to your account in ‘Either-or-Survivor’ mode gives them the power to withdraw every rupee, even without your consent,” says Jain. While most family members act with good intentions, access to funds can become a source of conflict, especially after the account holder’s death. In such cases, the joint holder automatically becomes the sole owner of the funds, potentially bypassing the senior’s will and sparking inheritance disputes.
One of the biggest risks, she adds, is misuse — knowingly or unknowingly. “A child might withdraw money during a personal crisis or set up automatic payments from the account assuming they’re helping. But these actions could drain the senior’s savings or even cause tax issues,” Jain explains.
Taxes on joint accounts
From a taxation perspective, the primary holder of the joint account is liable for tax on the interest earned, unless contributions from multiple parties are clearly documented. Without such clarity, seniors may end up facing tax scrutiny they weren’t prepared for. “If withdrawals are questioned later by the Income Tax Department, there should be clear proof whether they were gifts, loans, or personal expenses,” says Jain.
Jain urges seniors to stay vigilant for red flags, such as unexplained large withdrawals, account changes without consent, or alterations in nominee details. “Even if you trust the person completely, monitor your account regularly and keep all alerts switched on,” she advises.
As for inheritance planning, she recommends using nominees instead of joint holders. “A nominee can only claim funds after your death and cannot operate the account while you’re alive. This adds a layer of safety and control,” she explains.
For seniors who need help managing their money, a Power of Attorney (POA) is a safer alternative. It gives a trusted person the right to act on their behalf, without surrendering ownership. “It’s better than joint ownership because it preserves your authority and protects your wealth,” Jain says.
What to keep in mind
Before opening a joint account, seniors should understand the two operating modes: ‘Either-or-Survivor’ (where either party can operate it) and ‘Joint’ mode (where both signatures are required). “Choose wisely based on your comfort level, and have a clear conversation with the other person about usage terms,” she adds.
She also advises seniors to keep digital and physical records of all transactions and changes, inform multiple family members of account arrangements, and consult a financial advisor or lawyer when in doubt. “Planning ahead isn’t just smart — it’s essential,” Jain says. “Your money should serve you, not become a source of stress or conflict.”
In conclusion, Jain stresses that financial independence is key to secure aging. With proper planning, documentation, and awareness, seniors can protect their wealth and their peace of mind.