What makes these joint accounts so famous? In this article, we will look into joint Demat accounts, their features, and their advantages.
What is a joint Demat account?
A joint Demat account allows multiple individuals to hold and manage their securities, such as stocks, bonds, and mutual funds, in a digital format. This account is similar to a joint bank account in that two or more individuals hold it, and all account holders have equal access to the account and can make transactions. In India, the Depository Participants (DP) are the entities that open Demat accounts on behalf of the investors.
Uses of joint Demat account
Joint Demat accounts can be useful for married couples who can open a joint Demat account to manage their investments together and make joint investment decisions.
- Additionally, adding a joint account holder can help with estate planning as the account can pass directly to the surviving account holder upon the death of one of the account holders.
- Another advantage of a joint Demat account is that it can be used for tax planning. Income generated from joint accounts is typically split between the account holders, allowing them to take advantage of lower tax rates.
- The biggest benefit of a joint Demat account is that the annual maintenance fee of the account will be the same as an individually held Demat account. Thus allowing multiple members to function in an account with minimum maintenance cost.
However, it is important to remember that joint Demat accounts also come with certain liabilities and responsibilities for all account holders. It is hereby important, to clearly agree on how the account will be used and managed and any decision-making process. This will help to avoid any confusion or disputes in the future.
IPO application form and Demat account
A maximum of three account holders can use one Demat joint account. Even though three people can use one account, only one member can be the primary holder. You can apply for an IPO only once with a joint Demat account.
The application must be submitted in the primary account holder’s name.
A joint Demat account can be useful for managing investments and other financial matters. It allows multiple individuals to pool their resources and make joint investment decisions. However, it is important to fully understand the terms and conditions of the account and to trust and communicate with the other account holders before opening a joint Demat account.