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Joint Bank Accounts Guide

Joint Bank Accounts Guide
Cynthia Paez Bowman
Updated January 13, 2022
4 Min Read

A joint bank account is owned by more than one person or entity. It’s typically opened by two parties, although you could have more than two owners. Certificates of deposit (CDs), brokerage, checking and savings accounts are some of the most popular types of joint accounts you could open. 

Joint bank accounts are a good solution for married couples or partners who would like to share finances. Another good reason to open a joint bank account is to allow for someone to manage your bills or deposits when you’re unable to, due to traveling or a busy schedule. 

Opening a joint bank account gives each accountholder equal responsibility, requiring some level of trust. It’s important to understand how joint bank accounts work to ensure that sharing finances is a positive experience for all.  

How do joint bank accounts work?

Joint accounts work nearly the same way as a regular bank account. The only difference is two or more people or entities are named on the account and have control over it. When opening a joint bank account, all parties will need to provide their personal info. The account holders are eligible to receive a linked debit card and could even have separate checkbooks.

Joint account holders don’t need permission from each other to access the account. All account owners can deposit money into the account — or spend the funds. Co-owners are responsible for any overdrawn balances or bounced checks, even if they didn’t cause the problem.

Right of survivorship

Nearly all states (except for Louisiana and Texas) designate joint bank accounts automatically as right-of-survivorship accounts. If one of the account holders dies, the surviving account owner(s) become the sole owners. The estate of the owner who passed away will have no rights to the account or funds.

To remove the designation, you can note that the account is created without the right of survivorship on the account title and signature card. You could designate a beneficiary and set up the account as “payable on death” (POD) or “in trust for” instead. In such a case, a POD will be paid to the beneficiary after the death of the remaining owner.

Joint bank accounts with the right of survivorship are a great way to avoid lengthy probate because the funds/account transfer automatically to the surviving account co-owners. But if you don’t intend on leaving the funds to the joint account holder, be sure you indicate it to a bank representative and amend the account.

Pros and cons of a joint account

If you’re wondering whether opening a joint account is a good idea, consider the following pros and cons.

Pros 

  • Anyone can open a joint account together.
  • You could have two or more account owners.
  • It’s convenient when sharing/managing funds.
  • All parties have equal access.
  • It’s a simple way to share expenses and bills.
  • Money can be pooled to access premium account features reserved for higher bank balances.
  • FDIC insurance doubles from $250K to $500K for the account since federal rules say each account holder is eligible for deposit insurance.
  • Save on fees from having separate bank accounts.
  • The survivor automatically receives full account ownership without probate if the other account holder dies.

Cons

  • All account holders are responsible for issues such as overspending or an overdrawn account.
  • Joint account holders don’t need permission from the co-owners to access the account.
  • You won’t be able to hide spending from co-owners.
  • Unless the account was changed from right of survivorship, the dependents/estate of a joint account holder who passes away will not have access to the account’s funds because the ownership is transferred to the surviving account holder(s).

How to open a joint account

Opening a joint bank account is as simple as opening a regular account. However, you’ll need documents and information for all parties that will be named as co-owners. 

To open a joint bank account:

  • Sign up for an account online or visit a local bank branch.
  • Provide personal information for all parties including email addresses, legal names, addresses and phone numbers.
  • Provide Social Security numbers or tax IDs and dates of births.
  • Provide government-issued photo IDs such as passports or driver’s licences for the account holders.

You can also add a joint account holder later by providing the information and documents listed. 

When should you open a joint account

Some of the reasons a joint account is a good idea are:

  • A married couple who would like to share finances
  • Two parties (such as roommates) who would like to share in the living expenses
  • Partners when one is the breadwinner and the other is a stay-at-home parent who needs access to funds
  • Business partners who want to share in paying for business expenses and payroll
  • Adult children who would like to manage an aging parent’s finances 
  • Parents who would like to oversee a child’s saving and spending habits as they learn 

FAQ

Can you have a joint bank account without being married?

Joint bank accounts don’t have any relationship-based requirements. This means you can open an account with anyone, even if you’re not married.

Who owns the money in a joint bank account?

All account owners own the money in a joint bank account. Co-owners can deposit and withdraw funds without the joint owners’ permission. That’s why it’s important to establish trust with the parties you plan on opening a joint account with. 

Does a joint account need both signatures?

Not all financial institutions require both signatures for transactions. Check with your bank about its rules.

What happens to a joint account when one person dies?

Joint accounts in most states are classified as right of survivorship, which means the account and its funds go to the surviving co-owner. If you’d like someone else to receive your share of the account, you can designate a beneficiary and change the account to “payable on death” (POD) or “in trust for”.

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